Tech Bound #50: Adobe – 5 reasons to adopt a subscription business-model

9 min read

Hooray, episode #50! If you’re new to Tech Bound: welcome. If you’ve been a subscriber before: good to see you again.

Before we jump into today’s main topic, I need to write about Google. So much Google lately, I know.

Google announced that Mobile-friendliness will stay a ranking factor but the label will not be shown in the search results anymore.

To keep search results uncluttered, we’ll be removing the label, although the mobile-friendly criteria will continue to be a ranking signal. We’ll continue providing the mobile usability report in Search Console and the mobile-friendly test to help webmasters evaluate the effect of the mobile-friendly signal on their pages.

According to Google, 85% of sites now meet the mobile-friendliness criteria.
But another sentence caught my eye:

Two years ago, we added a mobile-friendly label to help users find pages where the text and content was readable without zooming and the tap targets were appropriately spaced. Since then, we’ve seen the ecosystem evolve and we recently found that 85% of all pages in the mobile search results now meet this criteria and show the mobile-friendly label.

So, it seems that Google measures these two factors, text size and spacing, specifically. Interstitials were also called out again as negative ranking factor. Especially three cases:

  • Showing a popup that covers the main content, either immediately after the user navigates to a page from the search results, or while they are looking through the page.
  • Displaying a standalone interstitial that the user has to dismiss before accessing the main content.
  • Using a layout where the above-the-fold portion of the page appears similar to a standalone interstitial, but the original content has been inlined underneath the fold.

On the contrary, cookie verification, login-popups, and small banners are fine.

One sentence confused me a lot, in the announcement:

We previously explored a signal that checked for interstitials that ask a user to install a mobile app. As we continued our development efforts, we saw the need to broaden our focus to interstitials more generally. Accordingly, to avoid duplication in our signals, we’ve removed the check for app-install interstitials from the mobile-friendly test and have incorporated it into this new signal in Search.

I’m not sure Google means that interstitials other than mobile-app install popups (as mentioned above) are fine or that those interstitials affect ranking negatively?

? Adobe – 5 reasons to adopt a subscription business-model

You might know Adobe from Photoshop, Flash, or Acrobat Reader (Adobe developed the file format PDF). The company, founded in 1982 in founder John Warnock’s garage, sold 19% equity to Steve Job in 1982, 7 years before the commonly known Photoshop came out. It’s a business full of twists and turns; one of the most famous one occurred 5 years ago.

In 2013, Adobe switched from perpetual licensing to subscription, meaning instead of buying Photoshop for $499, you can now subscribe and use it for $19 per month. That – together with the fact that there’s no real alternative to Adobe – quintupled (that’s 5x) the stock price in the last 5 years!

Adobe’s stock price since 2013.

Switching to cloud subscriptions has a couple of benefits, five of which I want to cover here.

First, the SaaS model (Subscription as a Service) opens the door to heavy data network effects. Because of the cloud, the barrier to entry is much lower, which means more customers, which means more data, engagement, and usage, which means more testing, which means faster learning. If you learn faster you win, nowadays.

Second, better segmentation. It’s easier to understand why certain customers churn when they can cancel their subscription monthly, instead of annually. In general, monthly payments give a company more agility than annual ones because they allow for a finer segmentation of customers. You can look at customers who upgrade after 3 months vs. 6 months, for example, and get a better understanding of their commonalities.

Third, there’s a higher likelihood of cross- and up-selling. It’s easier for users to subscribe to several products, which increases revenue and strengthens lock-in effects. The more of a tool stack a customer uses, the more likely she is to stick to it.

Fourth, a cloud-app allows for more experimentation and faster iteration, as mentioned under “lower barrier to entry”. Local installs can’t really be monitored, but cloud-apps can. Not only can you measure in-product, but you can measure pre acquisition, activation, and retention. That allows you to build customers journey, identify power users, and so much more.

Dan Cohen summarizes this well in a McKinsey interview:

From an engineering standpoint, for instance, in the past, we would think about adding new features to the next version of a product, and we would take 18 to 24 months between major launches of new products. Nowadays, two years is an eternity. We’re in an agile development model, where a scrum team delivers service updates that are revised, tested, and released.


Fifth, revenue is more predictable with a subscription business-model. Monthly subscriptions are 11 more data points than annual-ones and that allows for finer revenue forecasting.

The McKinsey interview I mentioned before contains a strong proof for Adobe’s adoption of a “Growth mindset”:

Our website is no longer just the place where you get product and company information. It is the product. It is the start of a dynamic customer experience. As a result, there are now closer interactions among the functional groups that contribute to that experience, groups that used to be separate—product management, engineering, marketing, and IT.

(same McKinsey interview)

The vanishing border between Marketing and Product is exactly hat all of this is about. All of these five factors are hinted at in the interview I mentioned earlier:

We are using predictive analytics and our own marketing tools to listen to our customers and strengthen our relationships with them.


We are offering a broader and better value proposition to our customers. We’re adding new features and services on multiple devices and making frequent updates to our creative products, which help customers better address today’s content-creation challenges. We’re attracting new customers for our mobile products and building up our marketplace for content. Additionally, our entry-level price point is attracting customers we were not engaging with in the past. None of this would have been possible under the old model. Our brand value has gone up, and our ability to attract top talent has grown along with it.

(same McKinsey interview)

On top of that, Adobe doesn’t shy away from acquiring communities: Behance, 99u, an all belong to Adobe. They play a vital role in addressing the very specific target audience of designers. Now, as Adobe expands more towards marketers, it’s going to be interesting to watch whether Adobe will snatch away a marketing community, besides

Very recently, Adobe bought Marketo for $4.75bn but it seems none of the two companies are the biggest winner in the deal:

There was a curious omission from Adobe’s news release Thursday announcing it is paying $4.75 billion for marketing software firm Marketo. Adobe failed to mention who owns Marketo now. Adobe’s reticence notwithstanding, the seller is no secret. It is Vista Equity Partners, which took Marketo private in 2016 for about $1.8 billion. Adobe likely didn’t want to draw attention to the fact that it didn’t buy Marketo for far less a mere two years ago. Back then Marketo’s business was flagging because its one-time partner,, had purchased a Marketo competitor called Exact Target. Jefferies analyst Brent Thill thinks Adobe is a two-time loser in the buyout game. He thinks Exact Target was the better asset as was Adobe acquisition Magento compared with a similar company Salesforce bought, Demandware. “They are late to the dance with these two deals,” Thill says. The biggest winner here is Vista, which prides itself for being able to spruce up middling software companies by applying its long list of best practices to them. A $2 billion return in two years is about as good as it gets.

(From Fortune’s Data Sheet)

To be fair, there’s also no loser in the deal.

Adobe’s stock price has risen almost fivefold in the last five years. It’s migrated to a subscription-based approach to selling its products as opposed to traditional software licensing (now you can get Photoshop for $9.99 a month, when it used to be $699 to buy outright) – meaning the company’s revenue is more predictable, and its customers stickier. Adobe’s software is so well-used (“Photoshop” is both the name of its photo editing software and a verb, as “Google” is to online searching), some analysts believe Adobe could become a third “A” in the FAANG group of tech companies (Facebook, Amazon, Apple, Netflix, Google).

(from Finimize)

Adobe has a history of acquisitions, 48 since 1990, to be exact (Wikipedia). The biggest acquisitions were Marketo for $4.75bn, followed by Macromedia for $3.57bn, Omniture for $1.8bn, and Magento for $1.68bn. The challenge with acquisitions is always whether you want to leave the business independent or integrate it with your tool stack. In most cases, a new acquisition fills a gap in the portfolio – it’s a strategic decision. Trello’s acquisition by Atlassian in 2017 is a good example: Trello is a very easy to use tool and therefore the most “B2C-like product” in the portfolio, which compensates for a relatively complex Jira.

As such, Marketo fills an important whole in Adobe’s Marketing & Analytics stack. It’s a great addition to Magento (CMS + commerce), Adobe Analytics (web analytics; former Omniture, now integrated), Campaign Execution (campaign  management) and other products.

Awesome stuff you should check out

Slideshare: “Software Testing for SEO
Mike King’s presentation about how SEO is very related to engineer testing and how you can prevent many issues in SEO by testing before rolling out to production.

Medium: “A one year PWA retrospective
One year after deploying a PWA (Progressive Web App), Pinterest increased weekly active users by 103%, session length by 295%, and pins by 401%.

Portent: “How to implement hreflang and canonical tags correctly

Animalz: “The Content Growth Cycle
It’s something we see often—a virtuous cycle of compounding growth where every new article improves the performance of the next, generating better and better results over time. Stick with it and content marketing becomes a sustainable growth engine.

More Bezos. But… ??‍♂️