In a troubling sign for digital advertising, Adobe’s third-quarter digital ad revenue was down 19.2% from the previous quarter and 19.7% year over year. It took in $67 million last quarter compared to $83 million in the second quarter and $81 million for 3Q 2022. The company’s total ad revenue for this year is $234 million so far, down 12.3%
Dig deeper: How Homethreads is leveraging data to create a new customer experience
Improved earnings for Adobe Customer Experience Cloud more than made up for these losses. That brought in $1.2 billion this quarter, roughly flat compared to the second quarter but up $100 million versus 3Q 2022. Total Customer Experience Cloud revenue through the third quarter of 2023 is $3.62 billion, which is $350 million ahead of the same time last year.
Why we care. Digital advertising will come back, but this is a reminder that it isn’t everything. Businesses appear to be moving more dollars to the areas of digital marketing where they have more direct control — such as customer experience. Retail media networks, which can deliver to targeted audiences, will likely continue to see more ad spend than more general outlets.
“Customers continue to prioritize investments in CXM solutions despite increased scrutiny of enterprise IT spend,” Anil Chakravarthy, Adobe’s president of Digital Experience Business said in an investor call. “Adobe Journey Optimizer book of business more than doubled year over year as customers increasingly drive omnichannel personalization and engagement.”
Overall, Adobe’s third-quarter results topped Wall Street estimates on both the top and bottom lines. The software company reported adjusted earnings of $4.09 per share compared to estimates of $3.98. It also reported record revenue of $4.89 billion versus expectations of $4.87 billion.
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