Digital Marketing - The Future is Now! Sao Paulo, May, 2007 Casper M øller, CEO

INDEX SLIDE INSERTED HERE!!! INDEX Introduction What is Digital Marketing? The Opportunity Why Use Digital Marketing? How Can You Use Digital Marketing? Digital Marketing Strategy

INDEX SLIDE INSERTED HERE!!!

INDEX

Introduction

What is Digital Marketing?

The Opportunity

Why Use Digital Marketing?

How Can You Use Digital Marketing?

Digital Marketing Strategy

Introduction

BRAND

HOW CAN YOU STAND OUT?

BRAND COMMUNICATION Who can shout the loudest?

Noise! This is what the consumers hear…

HOW DO YOU PLAN ON STANDING OUT?

THE WORLD IS CHANGING … WHETHER WE LIKE IT OR NOT

THE WORLD

IS CHANGING

“ If you don’t like change, you’re going to like irrelevance even less.” General Eric Shinseki, Former Chief of Staff, U.S. Army

Female Fever Eco-ecosystem Post-consumerism Modernism Generation C Transumerism Innovation Hypertasking LIFE CACHING MASSCLUSIVITY PLANNED SPONTANEITY CONFUSION Too many trends, and not a lot you can do about them Gravanity FLORIDASATION 5*STAR*LIVING Counter-Googling Dormandise EARLY BIRDING Diaspora Management HOME TROTTING IT-ISM MATURIALISM NOUVEAU NICHE POP-UP RETAIL SNOBMODDITIES SYMPVERTISING TRYVERTISING YOUNIVERSAL BRANDING VIRTUAL ANTHROPOLOGY BEING SPACES

IT’S NOT ABOUT TRENDS… CHANGE

IT’S ABOUT FUNDAMENTAL CHANGES CHANGE

ELVIS HAS LEFT THE BUILDING The marketing rule book has been torn up and thrown out the window

HYPERREALITY “ The World”, Dubai, United Arab Emirates

HYPERREALITY Las Vegas

HYPERREALITY Virtual, rather than real, communication Young people are scorning social interaction for virtual relationships.

HYPERREALITY MySpace has 120 million members

HYPERREALITY A sample MySpace profile

Proliferation of media and consumption choices has meant that the rulebook gets thrown out the window FRAGMENTATION

300 FRAGMENTATION In the UK alone there are more than 300 TV channels

Demographics are no longer enough FRAGMENTATION

ONE “SIZE” NO LONGER FITS ALL

Product and media consumption proliferates ONE “SIZE” NO LONGER FITS ALL

Consumers have got a VOICE… and can make or break a brand CONSUMER POWER

EXPERIENCE ECONOMY Luxury consumption has shifted

THE OLD VALUE CHAIN Resources Goods/services Solutions

Resources Goods/services Solutions EXPERIENCES THE NEW VALUE CHAIN

Resources

EXPERIENCES = KNOWLEDGE!

EXPERIENCES

=

KNOWLEDGE!

“ OPPOSITE”-ISM =

STIMULI ORGANISM RESPONSE WHITE NOISE ??? INDIFFERENCE THE COMMUNICATION MODEL The old model is now officially dead!

TRADITIONAL COMMUNICATION Above the Line: One to many communication BRAND X CUSTOMERS

Perceived, rather than real, customer feedback AUTO-COMMUNICATION

BRAND COMMUNICATION + CUSTOMERS = RESPONSE APATHY or DO YOU GET A RESPONSE? Do your customers care about what you try to tell.. and SELL?

EVOLVED COMMUNICATION BRAND X THE CUSTOMER One-to-one communication: a TRUE dialogue. BTL at its best.

THE NEW MARKETING PARADIGM The power of digital channels CUSTOMERS CUSTOMERS

BRANDS ARE NO LONGER IN CONTROL

BRANDS

ARE NO LONGER

IN CONTROL

IT’S MORE IMPORTANT THAN EVER… To know your customers To know how to communicate WITH your customers To deliver what THEY want… when they want it

To know your customers

To know how to communicate WITH your customers

To deliver what THEY want… when they want it

ARE THESE PEOPLE YOUR CUSTOMERS?

… OR ARE THESE YOUR CUSTOMERS?

From auto communication… CLARITY

CLARITY To true INTERACTION, CUSTOMER DIALOGUE & PURCHASES

BRAVE NEW WORLD Are you ready for it?

What is Digital Marketing?

Email on the move TECHNOLOGY IS CHANGING

UMPC – Ultra-mobile PC. Laptop power in the size of a PDA TECHNOLOGY IS CHANGING

Get content anywhere TECHNOLOGY IS CHANGING

View content anywhere TECHNOLOGY IS CHANGING

The Media Center PC – the new heart of the home? TECHNOLOGY IS CHANGING

Watch your TV away from home TECHNOLOGY IS CHANGING

CONTENT VS. MEDIA Not necessarily all life-changing… + ?

DIGITAL CHANNELS DIGITAL CHANNELS PODCASTS GAMES E-MAIL MOBILE PHONES VIRAL ELEMENTS VIDEO INSTANT MESSAGING BLOGS WEB SITES SEM BANNERS Some examples of digital channels

WEB Sell products and services online

Sell products and services online

WEB Increase brand awareness

Increase brand awareness

WEB Build your own car… and DRIVE it!

Build your own car… and DRIVE it!

WEB Online origami from BMW

Online origami from BMW

Source: IAB 2006 MTV Starzine – Creative Showcase winner, September 2005 WEB – EXCITING AD FORMATS Rich media, video banners, tenancies, micro sites, sponsorships, email

Rich media, video banners, tenancies, micro sites, sponsorships, email

User makes a search Contact A company presents itself in the search engine WEB - SEM Search Engine Optimisation

Search Engine Optimisation

WEB - ADVERTAINMENT Increase brand awareness

Increase brand awareness

WEB - ADVERTAINMENT

34% WEB - ADVERTAINMENT … and drive conversions

… and drive conversions

WEB - ADVERTAINMENT Even serious companies can do advertainment and viral marketing

Even serious companies can do advertainment and viral marketing

BLOGS Social media marketing spend is becoming big business

Social media marketing spend is becoming big business

PODCASTS Users actively choose to engage with social media

Users actively choose to engage with social media

EMAIL Product focused email

Product focused email

VIRAL MARKETING Viral videos

Viral videos

VIRAL MARKETING Viral videos

Viral videos

INSTANT MESSAGING Channel extension and engagement

Channel extension and engagement

DESKTOP APPLICATIONS Useful tools for the user to have on their desktops…

Useful tools for the user to have on their desktops…

DESKTOP APPLICATIONS And a great way to increase brand awareness

And a great way to increase brand awareness

Estimated cost to build: $80,000 Confirmed revenues: $20 million + DING… $ $ $

INTERACTIVE POSTERS What looks like an ordinary street poster

INTERACTIVE POSTERS Allows you to interact and download your own ring tone

INTERACTIVE POSTERS Or how about printing your own?

INTERACTIVE MIRRORS

HOLOGRAPHIC PROJECTIONS Just about any product can be re-produced in a 3D hologram

The Opportunity

Global, extensive reach More than 1 billion Internet users in the world 250 million have broadband Source: eMarketer, May 2006 THE NUMBERS

62% of UK population is now online & 71% are using broadband Source: IAB 2005 Broadband users are far more active online, spending twice as long online as narrowband users and viewing 3.5 times as many web pages * UPTAKE HAS BEEN FAST

It is currently a relatively small market… In Turkey: 16 million Internet users 2.5 million broadband users – 1.72 end of 2005 Source: CIA World Factbook, 2005 Source: wi-fitechnology.com & Quantum-Web TURKEY

But one that is growing fast!! In 2015: 24 million broadband users in Turkey CAGR: 31%! Source: Quantum-Web TURKEY

Phones: 20 million fixed lines in Turkey 48.7 million mobile phone users Source: Turkcell, Telecommunications Authority, 2006 TURKEY

26% of people’s media time is spent online on an average weekday Source: BMRB Internet Monitor 2005 MEDIA CONSUMPTION

26% of people’s

media time is

spent online

on an average

weekday

Source: BMRB Internet Monitor 2005

Q: If you had to live on a deserted island and could take only one of the following with you, which would you take? Base = 1,000 online households Source: Ipsos U.S. Express, August 2004 CHANGING MEDIA CONSUMPTION Consumers can’t live without the Internet INTERNET Newspaper subscription 1 % Cell phone 4 % Radio 6 % TV 6 % Large supply of books 18 % Computer with Internet access 64 %

Have these changes had an impact on advertising? MEDIA CONSUMPTION

Have these

changes had

an impact

on advertising?

GLOBAL ADVERTISING SPEND Internet ad spending will account for 7.0 percent of global ad spend in 2008 Online advertising spend is expected to reach $23.9 billion in 2006 $28.6 billion in 2007 $32.5 billion in 2008 = an increase of 75% from the $18.5 billion in 2005 Sources: ZenithOptimedia report, ClickZ

Internet ad spending will account for 7.0 percent of global ad spend in 2008

Online advertising spend is expected to reach

$23.9 billion in 2006

$28.6 billion in 2007

$32.5 billion in 2008

= an increase of 75% from the $18.5 billion in 2005

So where does this money go? ONLINE ADVERTISING

So where does

this money go?

EMERGING MARKETING TECHNIQUES Source: CMO Magazine, April 2005

ONLINE ADVERTISING SPEND Source: ZenithOptimedia report, Financial Times, 01/10/2006 Search engine marketing is believed to account for more than half of all Internet advertising spend.

Who is spending it? ONLINE ADVERTISING

Who is spending it?

GLOBAL ADVERTISING SPEND Source: ZenithOptimedia report, MediaPost 2005 Biggest sectors in online ad spend Financial services $1.6 billion Telecommunications $1.5 billion Retailers $1.3 billion Automobile $ 700 million

Why Use Digital Marketing?

WHY USE DIGITAL MARKETING? “ Catch the next wave before it catches you”

WHY?

BECAUSE IT WORKS!

Source: NMA Oct 2005, Brand Republic 2006 IT WORKS! Information now readily available to advertisers about online effectiveness

THE CONSUMER PROCESS Digital, unlike all other, channels offer a return path Brand awareness measuring the level of familiarity with the brand Message association measuring how messages are linked to brand Brand favourability see if respondents have positive opinions to brand Purchase consideration likelihood of consumer purchasing the brand Actual purchase

Online advertising spend INTEGRATED CAMPAIGNS WORK Brand awareness lift - TV: 17% - TV & online: 45% Source: Dynamic Logic Europe Online works well with other media

ADVERTISING EXPOSURE Additional ad exposure increases brand awareness Awareness is 2.5 X higher among those with 10 exposures versus those with 1 exposure Diminishing effectiveness after three exposures Exposure Frequency Point Change Effective Frequency For Brand Awareness Effective frequency

Additional ad exposure increases brand awareness

Awareness is 2.5 X higher among those with 10 exposures versus those with 1 exposure

Diminishing effectiveness after three exposures

Branding effect Marketing spend Television Internet DIMINISHING RETURNS Synergy Pattern TV & Online

COST DRIVERS vs. ROI AWP % $/AWP % Ca. 20 % Internet TV COST/BENEFIT Source: MINDSHARE Using the Internet is the most cost-efficient way to create your first 20% awareness

COST/BENEFIT Driving low cost awareness

Source: Dynamic Logic MarketNorms MarketNorms data through June 30, 2004; N=199 European campaigns, n=163,262 respondents Percent Online Ad Effectiveness, European Averages ONLINE BUILDS BRANDS +5.4% Which of the following [brands, products] have you heard of before?” Of those who had not seen the online ad, 68.9% were aware of the brand Of those who had seen the online ad, 72.6% were aware of the brand So, the ad caused a 5.4% increase in awareness

Which of the following [brands, products] have you heard of before?”

Of those who had not seen the online ad, 68.9% were aware of the brand

Of those who had seen the online ad, 72.6% were aware of the brand

So, the ad caused a 5.4% increase in awareness

Percent Source: Dynamic Logic MarketNorms ONLINE BUILDS BRANDS Online Ad Effectiveness, European Averages +5.4% +45.3% +21.6% +5.6% +5.0%

IMPACT ON BRAND ATTRIBUTES % Lift Source: NFO/Infratest Study Both media impact key brand attributes separately yet are more powerful together

As a result of using the Internet 42% 74% 76% 42 77% Changed their mind about a brand they were going to buy and switched to a different brand Have personally researched and looked for information about a product or service before making a purchase Felt that the internet helps them make a more informed purchase decision Agreed that if they saw a negative review on the internet about a product or brand they would think twice about buying it Source: AOL Brand World Research 2005 PERCEPTION AND BEHAVIOUR Changing perceptions and behaviours through online

Source: IAB 2005 Lots of case studies, research and data showing that online advertising improves brand metrics such as awareness and favourability IT IS EFFECTIVE

Lots of case studies, research and data showing that online advertising improves brand metrics such as awareness and favourability

Source: 2004 AAF Survey of Industry Leaders on Advertising Trends THE BENEFITS There are several benefits to using digital and online marketing

Source: 2004 AAF Survey of Industry Leaders on Advertising Trends THE BENEFITS Measurable ROI

Source: 2004 AAF Survey of Industry Leaders on Advertising Trends THE BENEFITS Geographic, demographic and psychographic targeting

Source: 2004 AAF Survey of Industry Leaders on Advertising Trends THE BENEFITS Can massively increase effectiveness of traditional advertising

Integrated campaigns offer more bang for the buck! KEY LESSON

Integrated campaigns offer more bang for the buck!

10 – 15% Online advertising spend RECOMMENDED DIGITAL SPEND Optimal media mix includes 10 – 15% spend on digital

10 – 15%

US: 6% UK: 7.8% Online advertising spend CURRENT DIGITAL MEDIA SPEND As a percentage of total advertising spend

US: 6%

UK: 7.8%

Source: NMR, Top 20 advertiser’s spend in 2005 UK TOP 20 ADVERTISERS Total spend Internet spend % spent online % spend on all other media Top 20 advertisers 1,757,128,753 30,683,912 1.75 98.25 Unilever UK Ltd 217,374,235 467,782 0.22 99.78 Procter & Gamble Ltd 183,764,561 531,664 0.29 99.71 COI Communications 168,949,805 1,536,482 0.91 99.09 BSkyB Ltd 104,769,013 9,832,258 9.38 90.62 L'Oreal Golden Ltd 103,712,826 171,439 0.17 99.83 DFS Furniture 93,461,848 0 0.00 100.00 Masterfoods 79,091,280 381,082 0.48 99.52 Orange Plc 77,778,373 5,842,074 7.51 92.49 BT Ltd 76,469,097 1,494,089 1.95 98.05 Nestle 68,510,585 283,873 0.41 99.59 Reckitt Benckiser Ltd 67,473,880 10,324 0.02 99.98 Vauxhall Motors Ltd 63,460,028 497,881 0.78 99.22 Tescos Plc 62,885,215 197,954 0.31 99.69 Ford Motor Company Ltd 62,807,418 867,839 1.38 98.62 Renault Uk Ltd 60,126,322 709,243 1.18 98.82 Kellogg Company 58,840,448 0 0.00 100.00 Lloyds TSB Plc 56,139,386 161,677 0.29 99.71 Sainsbury's 52,925,167 80,653 0.15 99.85 Vodafone Ltd 50,572,728 300,328 0.59 99.41 Capital One 48,016,538 7,317,270 15.24 84.76

Source: NMR, Top 20 advertiser’s spend in 2005 UK TOP 20 ADVERTISERS Total spend Internet spend % spent online % spend on all other media Top 20 advertisers 1,757,128,753 30,683,912 1.75 98.25 Unilever UK Ltd 217,374,235 467,782 0.22 99.78 Procter & Gamble Ltd 183,764,561 531,664 0.29 99.71 COI Communications 168,949,805 1,536,482 0.91 99.09 BSkyB Ltd 104,769,013 9,832,258 9.38 90.62 L'Oreal Golden Ltd 103,712,826 171,439 0.17 99.83 DFS Furniture 93,461,848 0 0.00 100.00 Masterfoods 79,091,280 381,082 0.48 99.52 Orange Plc 77,778,373 5,842,074 7.51 92.49 BT Ltd 76,469,097 1,494,089 1.95 98.05 Nestle 68,510,585 283,873 0.41 99.59 Reckitt Benckiser Ltd 67,473,880 10,324 0.02 99.98 Vauxhall Motors Ltd 63,460,028 497,881 0.78 99.22 Tescos Plc 62,885,215 197,954 0.31 99.69 Ford Motor Company Ltd 62,807,418 867,839 1.38 98.62 Renault Uk Ltd 60,126,322 709,243 1.18 98.82 Kellogg Company 58,840,448 0 0.00 100.00 Lloyds TSB Plc 56,139,386 161,677 0.29 99.71 Sainsbury's 52,925,167 80,653 0.15 99.85 Vodafone Ltd 50,572,728 300,328 0.59 99.41 Capital One 48,016,538 7,317,270 15.24 84.76

Source: NMR, Top 20 advertisers’ spend in 2005 TOP 20 ADVERTISERS SPEND BY MEDIA UK data 2005 TV 50 % Radio 6 % Outdoor 9 % Newspaper 13 % Magazines 8 % Direct mail 9 % Cinema 3 % Internet 2 %

BUT There is ONE major problem afflicting traditional advertising…

Falling marginal advertising EFFECTIVENESS!

Falling

marginal

advertising

EFFECTIVENESS!

IN THE GOOD OLD DAYS… It was all about selling an image

Then it all became about telling a story IN THE GOOD OLD DAYS…

Then it all became about telling a story IN THE GOOD OLD DAYS…

THESE DAYS… Online advertising spend

THESE DAYS…

CONSUMERS ARE TIRED OF LISTENING!

CONSUMERS

ARE TIRED

OF

LISTENING!

… Unless your story is very compelling to them or it has been promoted by a trusted third party consumer

INSTEAD OF TELLING YOUR STORY…

LET CONSUMERS TELL THEIRS!

GIVE THEM A PLATFORM Coke was initially slow to react Do you know what can be done with a bottle of Diet Coke and a handful of Mentos ? These guys do!

GIVE THEM A PLATFORM But has now wholeheartedly embraced the phenomenon

Instead of TELLING A STORY … Create the TOOLS to allow a story to be told

CO-CREATION THE NAME OF THE GAME

Are not just about CONSUMPTION It’s as much about PARTICIPATION CONSUMERS…

THE PARTICIPATION ARENA

We’ve all heard about Generation X And then came Generation Y

Now it is all about… GENERATION C

GENERATION C(ONTENT) Self-broadcast

GENERATION C(ONTENT) Self-publish

GENERATION C(ONTENT) Self-publish

Generation C changes the rules of consumption

CURATED CONSUMPTION Bill

CURATED CONSUMPTION CURATED CONSUMPTION Josh

CURATED CONSUMPTION And Josh II

DANGERS DANGERS Great reach… shame about the target market BIG AD

How Can You Use Digital Marketing?

Branding Acquisition / Lead Generation Direct Response / Promotions CRM DANGERS WHAT IT IS USED FOR?

Branding

Acquisition / Lead Generation

Direct Response / Promotions

CRM

CORPORATE TOUCHPOINTS Allowing companies to communicate with stakeholders 24/7

CORPORATE TOUCHPOINTS Allowing companies to communicate with stakeholders 24/7

PUBLIC SERVICES Allowing governments to communicate with citizens 24/7

CROSS-MEDIA INTEGRATION “ Anders & Henriette” financial services webisode

CONTENT EXTENSION Big Brother in Second Life

Integrated clothing and technology PRODUCT DEVELOPMENT

NEW PRODUCT DEVELOPMENT PRODUCT DEVELOPMENT

PRODUCT DEVELOPMENT

PRODUCT DEVELOPMENT What will they think of next, eh?

EXAMPLE

BRITISH AIRWAYS British Airways web site

BRITISH AIRWAYS Executive Club

BRITISH AIRWAYS Executive Club

BRITISH AIRWAYS On Business – the business loyalty programme

BRITISH AIRWAYS E-mail newsletters

BRITISH AIRWAYS Banner advertising

BRITISH AIRWAYS Content sponsorships

BRITISH AIRWAYS B2B advertainment

EXAMPLE NIKE FOOTBALL

NIKE FOOTBALL Web sites and viral videos

NIKE FOOTBALL Branded games

Instant messaging applications NIKE FOOTBALL

NIKE ID Customise and buy your own football boots

EXAMPLE

EXAMPLE

Digital Marketing Strategy

Vision New business concepts New products, services, experiences Marketing, advertising, PR APPLYING THE KNOWLEDGE

Vision

New business concepts

New products, services, experiences

Marketing, advertising, PR

Branding Acquisition/Direct Response Dynamic/Interactive Measurable/Accountable THE STRENGTHS

Branding

Acquisition/Direct Response

Dynamic/Interactive

Measurable/Accountable

THE PROCESS

Traditional marketing view Traditional on- and off-line communication Traditional on- and off-line communication Below the line Above the line TTL TTL DIGITAL MARKETING BRAND DIGITAL MARKETING

Marketing View Below the line Above the line CRM Digital New on- and off-line communication New on- and off-line communication BRAND DIGITAL MARKETING The new marketing view

Identify ideal scenario Measure current position Determine waypoints Plan process DIGITAL STRATEGY

Identify ideal scenario

Measure current position

Determine waypoints

Plan process

STRATEGIC DIRECTION The shortest way is not always the right way

STRATEGIC CHOICES You may find your strategy changes along the way

STRATEGIC PROCESS Constant goal setting, project planning and alignment

Where, why and how search visit info action Information requested Buy online (direct/retailer) Buy in store Information sent SEO PPC Sponsorship Partner Viral Advertising Etc. Campaign Product Service Brand Company INTEGRATION A simplified explanation of the process from usage to purchase

STRATEGY CONCEPT DESIGN PRODUCTION EXECUTION Channel independent Channel dependent THE DIGITAL PROCESS Similarities, differences and media agencies

What do the users really need? A process of identifying and matching the user’s particular needs to the company’s relevant products, services and online offerings This process shapes each user’s individual experience at the digital touchpoints USER NEEDS

What do the users really need?

A process of identifying and matching the user’s particular needs to the company’s relevant products, services and online offerings

This process shapes each user’s individual experience at the digital touchpoints

THE PAST Quaint… and ineffective

To the point – and sole reason why! THE FUTURE › Everything that ’ s already in the world when you ’ re born is just normal. ‹ Douglas Adams, Author of The Hitchhiker's Guide to the Galaxy

We help brands connect with their audiences! We help brands establish trust! We help brands interact with their customers!

Casper M ø ller CEO, T-Viral E: [email_address] T: +44 (0)20 7231 1320 42 Pump House Close London SE16 7HS United Kingdom I: www.t-viral.com