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Adobe’s Digital Experience chief on how to navigate a cookieless future

Anil Chakravarthy explains why digital transformation isn't slowing down, and why "first-party data" should be words to live by.

Anil Chakravarthy, the executive vice president and general manager of Adobe's Digital Experience business

Anil Chakravarthy runs Adobe's Digital Experience team, and would like to talk to you about first-party data.

Photo: Adobe

Anil Chakravarthy joined Adobe at a unique moment. And that's putting it lightly. Chakravarthy, the executive vice president and general manager of Adobe's Digital Experience business, started at the company in January 2020 and two months later found himself leading a team at the center of a massive pandemic-necessitated digital transformation.

For the next year, Chakravarthy said, his job and Adobe's was just to help wherever they could. He said he saw two kinds of companies: the ones that had relatively stable businesses but had to do a decade's worth of digital change in no time flat, and the ones that saw their business more or less flatline. Now, as businesses and people begin to emerge from the pandemic, Chakravarthy said he has a new job: to help companies grow in a market that looks hotter every day.

But there's another crisis coming for the industry: the transition away from cookies created by Google and others, the new privacy-focused features led by Apple and a regulatory environment increasingly hostile to the kind of massive data collection that so many industries have relied on.

Chakravarthy and I recently sat down to talk about all those changes, why he doesn't think digital transformation is going to slow down post-pandemic and whether anybody knows anything about the cookieless future. (Repeat after me: First. Party. Data.)

This interview has been edited for length and clarity.

One thing Adobe has done differently in this space is you've just tried to build a much more complete solution. I talk to a lot of folks who are building data and marketing platforms, and they're thinking about how to do APIs and integrate with other services and build a big partnership business. It seems like you're focused on how to make the surface area of the core platform as big as possible because that's just what it requires. Is that fair?

That's 100% right. Think about it this way: Let's say the average [marketing tech] company has an average deal size of $100,000. So if you're a customer who spends a million dollars on martech, you have 10 companies that you're working with already, right? Now, think about it. You are a customer using 10 products from 10 companies, which all have their own roadmaps, which all have their own preferences and biases. And some of them overlap with each other. Some of them complement each other. Each of them is evolving and trying to jostle for space and attention. So you as a customer suddenly realize that for a million dollars of spend, you're probably now spending 10x that just putting it together. You are a system integrator now, keeping it going.

Customers say three-quarters of their budget is just keeping the lights on. But those companies have no incentive — everybody says that of course partnerships make sense, but ultimately, the customer has to make it work for them.

So we'll be looking at it and saying, "Hey, if the customer is trying to look at a critical set of channels, there is a critical set of marketing activities that need to happen, and there's a critical set of data about customers that needs to be not only brought together but well-managed and governed and private and secure and so on." If I have 10 different applications, which are approaching data management separately, which have their own data silos, and so on and so forth, at some point I'm just treading water at best. And that's not even a big company! What if you have a $100 million martech budget? At that point, I mean, you're just like a system integrator. That's all you're doing.

It does seem like, all over tech, people are gravitating back to things that feel like all-in-one solutions. It's a total rebundling trend.

Yeah, exactly. I think it's been particularly pronounced in martech, too. Partly because maybe it is true that in martech there's a lot of innovation, which is great. There's a lot of different ways of doing things, which is also great. But it led to a lot of experiments, right? And it's great to do some experiments, but you can't run a big company on experiments. A collection of science projects is still a collection of science projects.

OK, let's talk about cookies. I've talked to all kinds of people who are in this position of feeling like the future of analytics in general, and cookieless life in particular, is sort of this existential crisis that no one yet understands. Everything's going to be different at some point, but nobody knows how and nobody knows when, so there's just this sort of latent panic over the industry. What are you telling folks right now? Are you beating down people's doors being like, "You need to get ready for the future?!?!?"

Yes.

Every CMO we talk to, every senior executive we talk to, we say, "Look, this is here." This is here now, and for a variety of reasons, right? You've already seen Apple, with what they have done. And Google is very serious about where they are headed with Chrome, and for good reason. The timeline might vary, but it's not going to be an indefinite extension. And so the way digital marketing happens has to change, and has to change substantially.

So, yeah, we are beating the drum as much as we can. And we think, especially now as people come closer to the deadline, and as also people come close out of the pandemic, there's a lot more attention being paid.

What are you telling them? Do we know what it will look like on the other side of this?

We do. There are companies that have already had some of this data. For example, member-oriented companies. You have a membership organization, and you know every member ID — it's not a new idea; membership-oriented companies have been around for hundreds of years. Those kinds of companies have always collected data; that's basically first-party data. So you really then have to gravitate towards first-party data.

You could then say, "Hey, I have other data, other things that I do with prospects, but I just can't keep somebody as an 'unidentified prospect' for too long." That was the thing that we had in the world of cookies: that somebody could kind of stay anonymous or semi-anonymous, and I could still do things with them. The main big difference is going to be that consumers are going to quickly realize that, because everybody's doing that. So from a consumer's perspective, I have to decide whether I'm going to identify myself to you as a business, and if I value you enough to identify myself so that you can then tell me what you're trying to sell me, and whether it's worth giving up my information in order to do that.

So the consumer has to make that decision a little bit earlier in the cycle, and then you, as a business, have to then use that data responsibly. The answer is not rocket science, right? You have to have first-party data, you have to have the consent of the person providing you the data. And then you have to make sure that the business processes in which you're using the data, including digital marketing and so on, are consistent with the consent you've received.

But that's easy to say, and much harder to do.

I was just going to say! On the one hand, requiring consumers to willingly give you data much earlier in the process, coupled with the fact that people are getting both more suspicious of anyone wanting to take their data and better at protecting that data, raises the stakes and the bar for success for a lot of these companies in a huge way. Especially for the folks who are not accustomed to doing things like member programs, they're going to have to totally change the way that they think about how they interact with customers. Right?

I completely agree with you. It's a massive change. But we've seen massive changes before, where consumer behavior has changed significantly pretty quickly. Digital marketing is one of the key ingredients of our digital economy. So both the marketer and the consumer will arrive at this kind of equilibrium pretty quickly.

Do your customers understand how that new relationship is supposed to work? Data collection has always been done kind of covertly and behind the scenes, and it's a very different kind of relationship when it is thrust out into the open. And I wonder how long it's going to take — for both sides, really — to understand how that relationship is supposed to work.

Many of our larger customers who operate internationally, because of GDPR, they're already there. And then many of the customers in California, with CCPA, they're kind of already there. I think the big "aha" that we have seen in the last couple of years is that people say, "Tracking — I let the data move, people within the business do what they need to do, and then I track what is potential privacy issue or violation and so on — I can't do that, that's too difficult. So I have to do it at the source." In other words, I have to make sure I have better controls when I gather the data. I have to have better controls over distributing the data for use.

If I can do it at source, then I don't have to worry about, "Hey, this marketing campaign should not have gone to customer A, B and C." Because I know that by the time they got access to their data, it had already gone through those filters. From us from our perspective, that's what's built in. It's called DULE: data usage labeling and entitlement. And that basically governs what data a marketer has access to, via which channel. Again, it's not easy, because it means a big change in how the process has worked in the past. But it's really the best way of addressing the new requirements and handling first-party data responsibly.

What is your sense of the timeline on all of this? I mean, obviously, we just spent the last 15 months accelerating what feels like five years of change. Will the next 15 months be another five years?

I think the next year and a half is going to be as packed as the last year and a half was. What people are going to realize is that some of them will have to reprioritize the second-half budget in order to focus on this. Almost everybody will say, "Hey, I'll do a pilot in my second half. But I really have to bake this into my 2022 budget, and make sure that I invest in 2022 for this transition." We definitely see clear evidence of customers saying they need to prioritize this.

Data privacy seems like the most moving of all the moving targets here. Whether it's going to get settled through legislative means or otherwise, how are you thinking about where we're headed?

I think the first-party data is always the cleanest, right? If I have your authorization, and I got the data directly from you, and you told me what you want to use it for, that is the cleanest. So that's the sweet spot. So let's try to get as much as possible there.

Then from there, you sort of widen the circle. I have first-party data, but I had to get it through other things. Maybe I can't do it in one shot, but as I engage with you, can I collect your consent? Then, second-party data is a little bit harder. I have to make sure if I get the data, even before I use it the first time, I have to get some consent from you. So I think it's going to be a phase of evolution where we do that, but I think it's going to move in concert with the privacy changes.

But ultimately, there is a huge incentive for everybody to make this work. Because virtually everything is digital. And if you can make this work, it'll have a significant impact.

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