The Engauge 2011 Digital Innovation Playbook
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The Engauge 2011 Digital Innovation Playbook

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Featuring key takeaways for CMOs, creatives and technologists, this comprehensive guide to emerging digital platforms outlines best-in-class strategies for innovative campaigns that connect brands and ...

Featuring key takeaways for CMOs, creatives and technologists, this comprehensive guide to emerging digital platforms outlines best-in-class strategies for innovative campaigns that connect brands and people.

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The Engauge 2011 Digital Innovation Playbook The Engauge 2011 Digital Innovation Playbook Presentation Transcript

  • 1 THE 2011 DIGITALInnovation Playbook
  • 2 contents mobile marketing | 05 location-based marketing | 11 loyalty and action | 17 gaming | 25Excerpted from The Engauge 2011 Digital Outlook. interactive tv | 35 Download the full report @ www.engauge.com/2011-digital-outlook. augmented reality | 45
  • 3Innovation in ActionDizzied by the breathtaking pace of digital innovation, marketers fast-following competitors. Even category leaders rarely have time torisk being swept up in the crush of the trend-chasing crowd, running rest. Gap, for example, lent major credibility to online coupon companyscattershot without a clear strategy, entering a flash-mob marathon Groupon with its first national promo deal in August. But within threewithout a finish line. months, the apparel company had changed course and rolled out a new offer with Groupon’s newest and biggest rival, Facebook Deals.Though brands increasingly recognize the value of establishing digitalrelationships with audiences, the fundamental choice of finding the From livecast video to virtual goods, interactive TV to location-basedright interactive platform is more difficult and complicated than ever. services, social gaming to next-generation mobile ads, marketersThe channels are multiplying. Online, social and mobile ad alternatives face an incredibly diverse mix of new opportunities. Much of thecontinue to proliferate. Every day we face a fresh deluge of tech overall acceleration in online and mobile marketing can be attributedupdates and trend alerts. Marketers need to be more than merely to emerging companies such as Facebook, Zynga and Twitter. Yetfamiliar with these new technologies; they need to be strategic. They large incumbents, such as Apple, Google and Microsoft, have alsomust see beyond the hype to accurately evaluate their options, then proven capable of pushing the pace with innovations, moving fasterdeploy the best new digital tools for their brand. than their smaller competitors. The competitive field of technology firms is guaranteed to reconfigure again within the next five years andThe pressure—and potential payoff—is immense. Groundbreaking marketers will need to remain nimble, attentive and ready to reallocatemarketing campaigns are generally only a few months ahead of their resources accordingly.
  • 4 Jeff Hilimire chief digital officer FOLLOW JEFF ON HIS BLOG AT JEFFHILIMIRE.COM OR ON TWITTER @JEFFHILIMIREMarketing mastery of digital technology goes far beyond knowingwhat’s hot today, what’s launching tomorrow and how it all works. Thebest interactive campaigns are more than just a buzz-driven choice ofa new media channel. They reflect a deep understanding of the targetaudience and its technographic profile combined with potent creativeconcepts that affirm and amplify the cultural connections between brandand consumer. Those campaigns represent innovation in action.Engauge’s Digital Innovation GroupThe Digital Innovation Group, also known as DIG, researches,tests and experiments with emerging technology with the goal ofconnecting brands and people. Launched in late 2009, clients nowinclude Coca-Cola, Chick-fil-A, Reese’s, Cisco, IHG, NGK SparkPlugs, Nationwide Insurance and Food Lion.
  • Consumers Hands5| 5 Hold the World in Their Is this finally the year of mobile? As a profession, But given the history of hype in this subject, we’ve been asking—and dodging—this question it’s important to keep these numbers in for an absurdly long time. It’s a shopworn refrain context. The most wildly optimistic forecasts that’s become a joke: Mobile is the future of suggest that mobile ads will become a marketing—and always will be. $10 billion market in the U.S. in 2011, but most industry analysts put the numbersMobile Not anymore. Mobile is now. Brands spent much lower. Middle-ground estimates from 80% more on mobile ads in 2010 than in 2009. eMarketer indicate that mobile marketing The launch of Apple’s iAd mobile advertising (display, search and message-based ads) in network and Google’s acquisition of AdMob the U.S. will grow from $1.1 billion in 2011 have given mainstream credibility to mobile ads, to $2.4 billion in 2014. One or two billion Can Innovative making them a legitimate choice for mainstream hardly qualifies as a major breakthrough marketers. when compared to the $120 billion spent Brands Deliver the on advertising in the U.S. across all media, Right Message at In the year ahead, brands will spend over $1 billion on mobile marketing in the U.S. for the much less the $450 billion in global ad spend. That’s not a drop in the bucket, it’s a the Right Time? first time. Globally, too, the growth curve shows nanoparticle in the Pacific. a significant arc. Google, in fact, has reported a $1 billion run-rate for its worldwide mobile Marketers, of course, recognize that budgets ad revenues since late 2010. Marketers are are rarely the best barometer for valuable responding, in part, to the rapid adoption of innovations and future-shaping trends. smartphones by consumers. Forecasts from Indeed, in mobile marketing, there are very Morgan Stanley suggest that global smartphone good reasons why the level of excitement sales will outpace personal computers in 2012, exceeds current expenditures. just five years after the introduction of the first iPhone.
  • 6$1B In the year ahead, brands will spend over $1 billion on mobile marketing in the U.S. for the first time.
  • 702 Within two years, global sales of smartphones will outpace PCs.
  • 8What Makes the iAd Special? Apple opened the door to “freemium” discovered that the demographic profiles content when it began allowing in-app and usage patterns of mobile-empoweredSince the iPhone and iPad don’t support purchases in late 2009, enabling developers shoppers can be extremely attractive.Flash, Apple has been hard-pressed to find to distribute a free trial version of apps witha workaround that can deliver the interactive additional features that could be “unlocked” Retail is a top-ten activity for Americancontent that marketers crave. Enter the iAd. when users requested and paid for them. mobile users, but in terms of popularity, it The model proved successful: one-third of lags behind social networking, news, sportsApple’s new HTML5 advertising platform the top-grossing apps (34 out of 100) were information, banking, weather, movies andenables brands to build better mobile available as free downloads as of November maps. Last year, 7 million Americans perads—with interactive content, video and 2010. The iAd platform is freemium with a month visited retail sites via mobile browsers,games—and serve them seamlessly to twist—consumers now “pay” to unlock the and 2.7 million used mobile shopping apps,consumers within apps. Nike, Toy Story 3 and content by watching ads within the app. according to comScore. The U.S. is behindTarget have produced entertaining iAds that the global curve in this category: 57% offunction, essentially, as apps within apps. In a related development, Apple also claimed shoppers in Asian-Pacific countries, like a leadership position with the iPhone 4, Japan and Korea, compared to 14% in theBut the greatest significance of iAd is its with its high-resolution retina display that U.S. regularly make purchases after receivingnew monetization model for the App Store. can convey a premium visual experience. a promotional text message, according toThe iAd platform effectively encourages Competing device manufacturers quickly e-Dialog. But don’t be too quick to dismissdevelopers to make their apps freely pumped up their pixel counts, too. This those meek American numbers—we’reavailable for download, rather than charging is particularly important for luxury brands, catching up fast. Shopping app adoption inup-front fees from consumers. That means which have been reluctant to design or the U.S. rose over 90% in 2010, and theredevelopers will increasingly (and, perhaps, deliver mobile brand messages that were was a 50% jump in browser-based mobilemore profitably) derive revenues from ad anything less than beautiful. Finally, they retail. Many shoppers now use mobile assales. To boost ad sales, they’ll need to grow have a mobile showcase suitable for the a price-comparison tool, but their usagetheir audience as big as possible, beginning crown jewels. will become increasingly transactional withwith free distribution of content. Brands and gradual uptake of location-based marketingconsumers both stand to benefit from the The Mobile Retail Revolution and direct-to-mobile offers.new arrangement, but the biggest winnerwill be Apple. For hosting and selling the As the technology of handheld devices grows People tend to be highly targeted in theirads, Apple takes a 40% cut of developers’ ad more sophisticated along with their potential mobile activities. Marketers should respectrevenue. That’s a big bite. as marketing platforms, many brands have the constraints on their time, attention and
  • 92.7M Americans used mobileshopping apps last year.screen size and make every effort to serve and The Gristle Missile, who snort and stalling at the starting line while theyuser-relevant content. stomp and promote a steady diet of chicken debate about what “mobile” actually sandwiches. At-home entertainment for iPad- means. Though SMS still dominates mobileThe best mobile campaigns begin with a equipped preteens, the comics have proven messaging—6 trillion text messages werefirm grasp of the cultural and technological to be smart, funny and engaging. sent in 2010, according to the Internationaldemographics of the customer base. Telecommunications Union—mobileEngauge client Ruth’s Chris Steak House, for Yet many companies still seem frozen in place marketing is no longer limited to text, searchexample, understood that a big portion of when it comes to mobile marketing. They and display.its clientele were executives who wanted a can’t figure out how to approach the space.way to book lunch meetings and after-hours What’s preventing them from overcoming What passes for “mobile” today maydinners with ease and absolute assurance. their inertia? Why aren’t they already moving actually be an amalgam of multipleThe restaurant chain responded with a ahead with mobile? platforms—online, social, video, music,custom-tailored app that facilitates mobile- gaming, payments, retail transactions,made reservations. Businesspeople booking Partially, it’s because marketers are stuck in a location-based services and augmentedtables with their iPhones and BlackBerrys traditional mindset that prevents quick-and- reality. Social networking, in fact, is now thereceive automatic confirmation and the dirty field testing of new technology. The fastest-growing mobile activity, accordingassurance that they won’t be left waiting for a barriers have a number of different names to comScore. Accordingly, a big part of thetable when taking an important client (or the like “demographics,” “reach,” “projections,” problem for marketers is figuring out whichCEO) out to lunch. “plans,” etc. Major mindshifts in marketing foot to put forward first. rarely happen overnight, of course,Catering to a much different demographic particularly when the profession is faced Those decisions depend on a carefulin the restaurant business, Chick-fil-A with a new, transformative medium. But with calibration of brand, base and message, but,developed a series of comic books that mobile, in particular, the excuses have been generally, the best strategies emerge fromproved popular with kids. The quick-serve egregious. continual testing and fine-tuning, becausechain is expanding the concept by publishing when it comes to mobile, what’s neededthe series as an iPad app featuring cow After waiting years for mobile to become now is a little less conversation and a littlesuperheroes named Cold Cuts, The Swatter legitimatized, some companies are now more action.
  • Going Mobile and a Fast Start 10 Getting a Firm GraspMarketers should be actively experimenting with new apps and technologies to determine their potential value and how best to use them.Here’s our perspective on how companies can start embracing mobile: IT’S OK TO FAIL, JUST FAIL FAST. FIGHT ANALYSIS PARALYSIS. GET IT IN YOUR CUSTOMERS’ In the start-up world, the only way you We are all for making sure you have a HANDS. Today, successful start-upsget better is to try, fail, learn and retry. The plan in place, and having research to support work hard to get their product in front of cus-key with being good at failure is failing fast. that plan is great. But if that plan is being tomers as soon as possible. This allows themDon’t stall at every setback. Instead, be ready used as a crutch to avoid getting started in to get immediate feedback and fine-tune un-to adjust as you go. mobile, then you need to find a way to move til they’ve developed a product that people through it. Which brings us to the third point. will use. With mobile, testing campaigns or apps in specific markets—and rolling out REMEMBER HENRY FORD. functionality as you go—is a great way to get Mr. Ford is often quoted as saying, “If invaluable and timely input from customers. U.S. Mobile Ad Spending 2009-2014 I had asked my customers what they wanted, millions and % change they would have asked for a faster horse.” And, lastly, ask yourself:‘09 $416 30% Visionaries like Steve Jobs often use this DO YOU REALLY WANT TO BE quote to emphasize why they do things that AN IMMOBILE BRAND?‘10 $743 79% are contrary to what research might indicate Do you want to be a brand that is severely is the right path. Sometimes your customers limited in where and how you interact with‘11 $1,102 48% don’t know what they want until you give it customers? If you’re continuing to find rea-‘12 $1,501 36% to them. sons why your company isn’t ready to start testing mobile, you’ll just keep standing still.‘13 $2,036 36% Nobody wants to be an immobile brand.‘14 $2,549 25% Source: eMarketer
  • 11Getting a Fix On Location-Based Mobile Marketing80% Last year was the ignition phase for location- dramatically, adding new users at an expo- based mobile marketing with the launch of nential pace. Meanwhile, Facebook, which Facebook Places and the upward trajectory of recently debuted Places after being rebuffed Currently, location-based social networks are primarily other check-in services like Foursquare, Gowalla, in its bid to buy Foursquare, clearly intends a hit with young, geeky guys: SCVNGR, Loopt and Twitter Places. to win the geolocation space race. nearly 80% of users are male, and the vast majority are Will we see a liftoff in 2011? Foursquare and Facebook Places attracted several million between the ages of 19-35. Google-funded SCVNGR have been rising users within its first few months and gained
  • 12the support of major brands like Gap Who’s Got the Holy Grail of Location-Based Engagement?and The North Face for its test run ofFacebook Deals. Check-in promotions have appealed to a achievements, like run time and total vertical wide range of consumer-oriented companies, descent. Like those Disney guests waitingHowever, fewer than 5% of Americans were including Whole Foods, Starbucks and outside Epcot Center, Vail visitors spend muchusing these location-based mobile services McDonald’s, but certain brands are of their days in line, while queuing and ridingas of August 2010, and only 1% do so on a particularly suited to location-based ski lifts. With EpicMix, the resort discovered adaily basis. Geolocation services will require marketing. way to turn the downtime of a lift-ascent intobrand support before moving beyond early an opportunity for deeper brand engagement.adopters to reach the mainstream. Forward- Disney Parks, for example, teamed up with There’s also an EpicMix kid site for skiers underthinking innovators are already in action. Gowalla to create virtual stamps and special age 13, with special privacy controls, whichThe trend-aware followers are getting in line. trips for participants at over 100 top theme should appeal to parents intent on keepingAnd the laggards are, as always, in danger of park locations, including Epcot Center, Space their children under supervision. By monitoringbeing left behind. Mountain and Pirates of the Caribbean. real-time updates, parents can keep constant Presumably, they’re not trying to drive more track of their children’s whereabouts, even ifBacked by creative campaigns, appropriate visitors to these rides and destinations—they’re their 12-year-old speed demon leaves themprivacy policies and added functionality, already popular. Rather, Gowalla provides stranded at the top of a black diamond.location-based mobile marketing could easily visitors something to do while waiting in longgain enough momentum to go stratospheric lines, which creates additional experiential In 2011, expect more brands to pursuewithin the next two years. layers for guests. It’s a brilliant application of partnerships with location-based service the technology. providers. The sheer volume of start-ups inAt the moment, location-based social this category, however, inevitably adds a greatnetworks are primarily a hit with young, Vail Resorts just launched EpicMix, a deal of time and complexity for marketersgeeky guys: nearly 80% of users are male, location-based app that’s linked to the bar trying to choose applications. Among theand the vast majority between the ages of codes on lift passes that are scanned by many competing services, each with a slightly19-35 (70%) with college degrees (70%), resort personnel every time a skier heads different story and spin, who will ultimatelyaccording to Forrester Research. This is the up the mountain. The application provides win this market?same crowd that was using Twitter three maps, messaging, weather forecasts andyears ago. Draw your own conclusions. snow reports. It also calculates stats and
  • 13Who’s Got the Grail? location-based platforms
  • 14Marketers seeking greatest reach and recognition will probably favor the largest contender, Facebook Places, but start-ups like SCVNGR andCheckpoints have introduced valuable innovations that can offset their smaller profiles.Facebook Places Foursquare Yelp Check-In OffersScoop: Launched in August 2010 with Scoop: Generally given the most credit for Scoop: The popular Yelp website added functionality that’s instantly familiar popularizing the concept of mobile check-ins, check-in service in January 2010 where to users—finding nearby friends and, Foursquare was founded in 2009 and recently consumers review and rate local busi- if you’re traveling together, tagging passed up a $100 million buyout offer from nesses. But it wasn’t until November companions. Yahoo!. that Yelp finally introduced Check-InSize: Facebook claims Places is more Size: 5 million members. This represents a nearly Offers to allow brands to reward their popular than any other location-based 1,000% increase since March 2010. loyal checked-in customers. service. Significance: People are getting tired of Size: Not reported. Founded by membersSignificance: In combination with Facebook gimmicky badges and mayors and will need of the so-called “PayPal mafia” in 2004, Deals, the check-in service attracts more functional offerings before the site Yelp is supported by ad revenue and mobile shoppers with local incentives and loses relevance. But don’t call it a comeback. has a strong following with 38 million delivers strong tie-ins to brand pages. Foursquare remains quite healthy in terms of users monthly, making it a natural fit for new members. The site added 1 million new location-based services. users within two months after the launch of Significance: Given Yelp’s status as aSCVNGR arch-rival Facebook Places, then registered the trusted source of consumer reviews, next million in under six weeks. this emerging check-in channel will beScoop: A game-based approach with worth watching in 2011. Unfortunately, check-in challenges and shared photo Yelp may have copied the wrong pages snaps, SCVNGR puts a welcome spin on Gowalla from the Foursquare playbook when it the location craze. It’s tightly integrated Scoop: The latest version of Gowalla’s location- added “Yelp Badges” and “Yelp Roy- with Facebook Places. sharing app allows users to check in to other alty” like Dukes, Duchesses, Kings andSize: 800,000. location networks. Barons into its check-in app.Significance: The game-based approach Size: 1 million members. creates a deeper level of consumer Significance: The cross-platform play was a engagement within location-based smart move, removing the pressure of an services—way better than badges. all-or-nothing decision for marketers who’ve been struggling (or stalling) to pick the perfect location-based platform.
  • 15Loopt WeReward MyTownScoop: Since 2006, Loopt has let users see Scoop: WeReward allows consumers to Scoop: A mash-up of Monopoly and Second where their friends are and what they’re accrue, exchange and cash out points via Life, this addictive GPS-enabled app is doing, incorporating local content from PayPal, earning $10 for every 1,000 points. built around the idea of buying and owning Citysearch, Metromix, Bing and Zagat. It’s also the first location-based service your favorite real-world hangouts. Consum-Size: 4 million users on Sprint, AT&T, Verizon, to integrate check-ins, product sales and ers check in to unlock rewards, accruing iPhone, Android and BlackBerry devices. reward-app downloads with CRM function- points that can be used to buy virtual realSignificance: Loopt offers ad services for ality from Salesforce. estate based on actual locations, and then brands across a suite of products including Size: Not reported. charge other players “rent” for future Loopt, Loopt Star, Loopt Mix and Loopt Significance: While attempting to fine-tune visits to that venue. Released by Booyah Pulse for the iPad. Despite the impressive its closed-loop CRM functionality, WeRe- in 2009, it’s become the most popular membership numbers, they lack the buzz ward has been offering the service for free location-based social game. of Foursquare and Facebook Places and to large clients like Domino’s Pizza. They’ve Size: 3.3 million players. face stiff competition from similar services also rolled out a double opt-in feature that Significance: Several pioneering brands have like whrrl, buzzd and brightkite. allows advertisers to continue communica- set up shop in MyTown. Volvo presented tion with consumers after the initial deal branded virtual goods to players checking is done. into locations like garages or auto dealer-Twitter Places ships. H&M showcased its Blues collectionScoop: Highlighting tweets at any given of denim garments on MyTown, report- location, Twitter finally launched the edly drawing interest from around 700,000 service in June 2010 after several months players. of rumors.Size: Not reported.Significance: Stay tuned. Currently, brands aren’t allowed to “claim” their own Twitter Places, but a company spokesman told Mashable: “We’re experimenting with a variety of features. Allowing businesses to claim a Place is a natural thing to consider for the future.”
  • 16 16CheckpointsScoop: This iPhone app launched in Septem- ber 2010 and gives rewards for scanning bar codes of participating products. Check- points advertisers, in turn, can deliver coupons, recipes, games or other digital content to the consumer’s iPhone once the item is scanned.Size: 100,000 downloads of the iPhone app occurred within the first month.Significance: Checkpoints deserves credit for recognizing how packaged-goods brands can benefit from location-based services. For brand partners such as Tyson, Belkin and Seventh Generation, the real value of product check-ins will be measured by what happens in the checkout lane. 4% of online adults in the U.S. use geolocation services like Gowalla and Foursquare.
  • 17 1717|17| This year, Groupon, a digital coupon company that taps the buying power of the crowd, may become the fastest-growing, billion-dollar business in history.>60% of consumers now search for deals digitally before shopping. Loyalty and Action
  • 18Digital Deals Retail Experience Change theThe new technology of thrift comes with a very More and more, online and mobile offerings oriented spending would increase at leastretro twist—we’ve devolved into a society of are being used to supplement traditional 5% annually.hunters and gatherers. Shoppers are scouring shopper channels like in-store displays andonline reviews, checking price-comparison sites circulars. Today’s brands are using new The primary push has been economic. Nielsenon their smartphones and signing up for digital technology and data-driven insights to create reports that one in four North Americansdeals before hitting the stores. Long gone are increasingly customized reward programs. The have no discretionary income. But this shiftthe gilded days of carefree consumption. digital menu includes search, social media, is also being driven by a broad range of new online coupons, daily deals, thematic content, online and mobile options. For marketers, theThis year, a digital coupon company may relationship marketing and apps. challenge is in selecting the most effective mixbecome the fastest-growing, billion-dollar of platforms, messaging and incentives. There’sbusiness in history. The success of Groupon A recent report from Booz Allen for the Grocery no one-shot solution. Brands need to reviewoffers a lesson for brands: The convergence Manufacturers of America found that over 60% all their options, honing reward programs andof shopping and digital marketing offers of consumers now search for deals digitally shopper-oriented strategies to drive consumeropportunities for innovative brands to surge before shopping. Not coincidentally, over action.forward, leaping over the economic slump if 80% of packaged goods executives in thethey can deliver campaigns that add some zing survey said their companies would be boosting The goal is frictionless engagement, a stateto the zeitgeist while coordinating tactics across shopper marketing budgets over the next three of brand nirvana we define as the removal ofemerging technology platforms. years. The majority indicated that shopper- barriers that inhibit consumer decision making.
  • 19Futurecast: from A Fictional Scene the Year AheadAfter traveling to Zurich on business over Reading her email over coffee the next morning,Valentine’s Day, Cissy Halstead wanted to Cissy found a new Groupon offering a half-pricedo something special for her fiancé, Trevor, pedicure at a nail salon that recently openedwhen she returned home that weekend. downtown. The promotion required a minimum of 25 paying participants by a one o’clockWhile waiting for her return flight, she deadline, otherwise, the deal would disappear.found a seat in the airport lounge andchecked her iPhone. She’d received a tweet She quickly posted a note—part appeal, partfrom a friend and fellow foodie. “Can’t wait lark—on Facebook: “Spa day? Who’s up for ato use my @MediciRestaurant Groupon pedi?” By noon, she’d received 11 responses:tonight! The tiramisu is amazing!” Cissy two yesses, one maybe and eight wish-we-clicked the link, filled out the form with coulds. She went ahead and registered and soher credit card information and ended up did three of her friends, pushing the number ofsaving 50% off a romantic dinner for two. participants past the necessary 25 people. ByThat night, Trevor was surprised—and two p.m., all four friends were seated side-by-impressed. He relented, with a smile, when side at the busy salon, enjoying their impromptushe reached for the check. mini-makeovers.
  • 201%Only 1% of coupons forconsumer packaged goods aredistributed online, but thosecoupons account for nearly 5%of all CPG coupons redeemedby consumers and 20% of theirtotal value.
  • 21The New Cool: Direct Action Digital Coupons DriveBy matching deal-seeking shoppers with and subsequently spurned a $6 billion Game Over for Groupon?local promotions, Groupon, Facebook takeover deal by Google.Deals, LivingSocial, Tippr and other sites Not so fast. In many ways, the mobilityhave collectively pulled off a major coup in Facebook introduced Facebook Deals and instant gratification of Facebook Dealsmarketing—making coupons cool. with a breakout debut in November and represents a significant improvement over quickly attracted many major brands, the Groupon model of daily deal emails.Daily coupon sites tap the purchasing power including Gap (three months after Yet consumers make an estimated 80% ofof the consumer collective by encouraging its much-touted deal with Groupon), purchases, on average, within ten miles ofshoppers to share offers with their friends McDonald’s, Starbucks and Chipotle. It their homes. Groupon may survive (and thrive)on Twitter, Facebook and Yelp, leveraging links to location-based Facebook Places if it can capture the local markets.social networks—and a sense of deadline- and offers mobile functionality that allowsinduced urgency—to make sure that deals smartphone users to browse deals on- The benefits are quite clear for marketers—notpass the “tipping point.” the-fly from nearby restaurants, stores only attracting new customers, but convincing and other venues. Consult the map-based those customers to participate and spendDaily deals have proven ideal for businesses app, pick a deal and check in. money within a specific timeframe. Grouponoffering services that today’s penny-pinchers claims its consumer customers spend 60%might have trouble justifying without a Facebook, in total, has over 20 times more above the value of the coupon, on average,deep discount—an hour-long massage at members than Groupon and can provide and 95% of its business customers say they’dthe day spa, a holiday travel package or an more detailed consumer demographics use the service again. Even so, the promotionsafternoon at the driving range. for brand clients. So it’s not surprising that may not be immediate moneymakers for some industry analysts immediately hailed participating vendors. In fact, companies likeThe initial frontrunner, Groupon, Facebook Deals as the “Groupon Killer.” Groupon generally split the resulting revenuewent mainstream with an $11 million with their clients—revenue that alreadynationwide promotion for Gap in August reflects a steep discount of around 50%—so incremental sales can be negligible.
  • 22Retailers Look Past Competitors To Create Their Own OfferingsFor brands, online coupons have emerged by allowing customers to receive their offer their own Facebook-based deals. Butas a compelling tool for engaging early for free if they convince three friends to some brands may be better off pursuingadopters and spreading the word in participate. partnerships with better-known providers likeextended social networks. Walmart Groupon and LivingSocial, which can helpintroduced its own group-shopping app, ConAgra took a similar approach to spread the word. Boulder-based businessCrowdsaver, on its Facebook page in incentivizing participation by offering Giant Nerd, for example, used the WildfireOctober. The first deal—an 18% discount a coupon on its Facebook page that tool but couldn’t find five people willing toon a $500 plasma TV—passed the minimum progressively increased in value as more buy a $1,000 bike for $450, according tothreshold of 5,000 “likes” within 24 hours. people “liked” it. Ad Age.Similar location-based services are offered Newcomers include Tippr, DealBug, The W Hotel in Scottsdale recently launchedby companies like ScoutMob and Placecast, GroupSwoop, Homerun and Zozi. They’ve its own group deal in an app on its Facebookwhich target shoppers when they’re inside all tweaked the Groupon model in hopes of page, offering rooms at nearly 50% off itsor near a participating store. In some differentiating themselves in a crowded field. $295 rack rate if at least ten people signedcategories, these new technologies claim DealBug, for example, donates a percentage up. But how many people looking for hotelredemption rates of over 60%, compared to of proceeds to charity. Other sites tailor their reservations are going to already be “fans”2% for traditional clip-and-save coupons. pitches for foodies, fashionistas, social gamers of the hotel in the city where they’re headed? or outdoor adventurers. Evidently, there were several locals inPrior to the launch of Facebook Deals, Scottsdale who didn’t want to sleep at homethe second-biggest daily deal site was For brands with sufficient scale and scope, that weekend, because 28 people signedLivingSocial, which now serves nearly 100 like Walmart, launching their own Facebook up, according to Ad Age. But, in general,local markets and has raised $50 million app makes perfect sense. Several developers, certain types of brands may be better servedin venture capital. LivingSocial has upped including Palo Alto-based Wildfire, have through deal-linking services with searchthe ante (and the social networking payoff) designed apps that allow marketers to design capabilities and similar functions.
  • 23The Coupon User Wealthy, Well-Educated and Influential twice as likely to use online coupons thanCoupon usage demographics are probably • 61% of adults with household incomes adults with household incomes undernot what you’d expect. Contrary to stereotype, over $100,000 redeemed a coupon within $35,000 (39% vs. 21%), according towealthy and well-educated Americans account the last six months, according to a recent the poll.for a significant portion of coupon clippers. Harris Interactive survey. • Groupon provides a very clear picture ofThese trends are even more pronounced when • Adults with college degrees are reportedly its customers: they tend to be womenit comes to online coupons. Moreover, online twice as likely to have recently used (77%), young (68% aged 18-34), college-coupon users tend to be more discriminating coupons. educated (80%), employed full-time (75%),and more open to new experiences and single (49%) and with money to spendproducts. They see themselves as influential. • People in upper-income brackets with (29% with $100,000+ household income).And they’re really into shopping. $100,000+ household incomes were nearlyThe Online Deal Bug Living SocialCoupon Offers: Donates a percentage of every deal to a charity of the customer’s choice. Provides free daily deals for users who con- vince three friends to participate.Facebook Deals Groupon RedPlumLinked to location-based Facebook Places, Requires a minimum number of paying Redplum.com provides consumers with localit offers four types of deals for consumers: customers before deals reach the “tipping and national offerings across a multi-mediaindividual, friend, loyalty and charity. point” and become active. platform on brands they want most.
  • 24The Stats on Coupons Confluence of Economic and Tech TrendsThe uptick in coupon clipping began, in consumer spending have increasingly • 81% of U.S. consumers find it “fun” to seenot surprisingly, amid the market crash in converged with new technologies and more how much they can save, according to the2008. That year marked the first increase tactical marketing. 2010 American Pantry Study from Deloitte.in total coupon usage in nearly 20 years.During our present state of slow economic • Consumers saved an estimated $2 billion • The Internet accounts for less than 5%recovery, marked by high unemployment with coupons during the first half of 2010, of total coupon redemption and 1% ofand middle-class wage stagnation, financial according to the coupon company Inmar. distribution, but the online segmentconsiderations continue to motivate many The annual total for 2009 was $3.5 billion, has gained significant ground againstconsumers to search longer and harder up from $2.7 billion in 2008. traditional clip-and-save.for the best values. Changing patternsTippr Zozi Coupons.comSends out three local deals a day, which pro- Caters to an active crowd with deals on travel Pushes online coupons through affiliate market-gressively increase in value as more people and outdoor adventures. ers that publish the offers on their own sites andparticipate. Tippr acquired several patents re- receive a small payout for every coupon printed.lated to online group-buying from Paul Allen, Homerunco-founder of Mercata, a similar service that Oriented toward social gamers, provides Scoutmobwent bankrupt in 2001 after blowing through credits and points that users can put toward Offers free deals when people check in with their$90 million. deals or cash-back offers. mobile phones at participating businesses.
  • 25 Full Tilt: Foward-Leaning Brands Marketing forGaming In the massively multiplayer environment of ignored, but we see a growing segment that digital marketing, first-time players enter an merits serious and sustained attention. exciting new world that’s constantly evolving. They often spend the opening rounds just Video games are now bigger and more figuring out what buttons to push. lucrative than the recorded music industry. At least 65% of American households play Take a cue from video games. The winners computer or video games, according to93% are the ones who rapidly adapt and refine the Entertainment Software Association. their tactics, they’re the ones who refuse to be Contrary to common stereotypes, the game- intimidated. playing population includes significantly of tween girls in more women over the age of 18 (33%) than America play Among the many emerging brand platforms, boys under the age of 18 (20%). Gaming has online games. gaming and games marketing have perhaps the become a legitimate mass media that brands greatest capacity to daunt the uninitiated. Why can’t afford to overlook. is this? If 93% of tween girls aged eight to ten in America are playing online games, according Capitalizing on these trends, major brands to M2 Research, what prevents marketers from have sponsored ads and product placement plugging in? in big-name games. Gatorade, for example, sponsored a series of ads in sports games Today, only a small fraction of most brand like NHL 10 and NBA Street Homecourt from and agency budgets is allocated to games Electronic Arts. The campaign essentially marketing. That may seem like a tiny sliver easily mimicked what Gatorade does for ordinary
  • 2665% At least 65% of American households play computer or video games.
  • 27 Online game revenues are expected to rise at an 27 18% compound annual growth rate to 2013. televised sporting events—plastering its logo Online and mobile games are particularly mass downloads of popular games, minting across signs, water bottles, score updates and attractive to casual gamers, people who overnight successes. An impressive 20% of on-screen callouts. A recent study by Nielsen might not otherwise invest in sophisticated the U.S. population aged 6+ have recently found that spending on Gatorade products at-home console systems like Sony played a social network game, according to increased by 24% in households that owned PlayStation 3 or Nintendo Wii. By capturing an August 2010 report from The NPD Group. at least one of those games. a broadening spectrum of consumers, online Today, over 60% of social network users games have become increasingly viable and also play social games, according to the The global game software market grew more valuable as a marketing medium. most recent National Gamers Survey from than 50% from 2006 to 2009, according to Newzoo. Strategy Analytics, reaching record-setting revenues of $46.5 billion. In November, Social Gaming: Smart marketers have found creative ways Microsoft managed to sell 1 million Kinect Betting Big in 2011 to tap into this trend. Southern Comfort motion-sensing peripheral systems for its has launched a “Beat the Bartender” game Xbox 360 console within the first ten days of The social game Farmville, supported by on Facebook that challenges adult fans to its launch, proving, once again, that gamer Zynga’s five-year strategic partnership make a SoCo lime cocktail faster than their enthusiasm runs extraordinarily high. with Facebook, proliferated across social virtual bartender. CBS Consumer Products profiles in 2010 like bioengineered weeds, partnered with Ubisoft to develop “CSI: In the years ahead, gamers will increasingly consuming free time, productivity and Crime City,” where characters from the hit migrate into online, social and mobile. These attention spans. The game that encourages TV series enter a world strikingly similar to platforms will capture millions of new players you to “farm with your friends” now claims Zynga’s Mafia Wars, minus the annoying who are non-gamers today. Online game 80 million players. menus. Purina teamed up with Playdom to revenues are expected to rise at an 18% create Pet Resort, playable on Facebook. compound annual growth rate to 2013, at In the year ahead, we’ll see a big push of which point they’ll account for nearly 40% new social titles from game developers of total video game revenues, according to and publishers who recognize that positive industry forecasts. word of mouth on social sites can drive
  • 28>70% Currently, 70% to 80% of all app store downloads are games and roughly 60% to 70% of those games are free.
  • 2920% of the U.S. population aged 6+ have recently played a social network game.
  • 64 million Americans play mobile 30games at least monthly.But haven’t we been here before with soon as a strategic counterpunch to the Though ad-supported mobile games haveSecond Life? Indeed, around five years ago, social dominance of Facebook. Social game a marginal presence in North America,many marketers enthusiastically set up shop developer Playdom was acquired by Disney, countries like Japan and Korea have provenin the virtual metaverse of Second Life from and Intel’s venture arm, Intel Capital, took more receptive to advergaming, and thoseLinden Lab, only to quickly lose interest an ownership stake in OpenFeint, a tech business models may eventually signal theas consumers (and their freaky-looking platform that allows game developers to add way forward for the U.S. market. Indeed,avatars) failed to show up. Yet marketers mobile and social features to their apps, like the overwhelming public embrace of, andwho are reluctant to take a similar gamble live chat. These deals signal a shared belief heightened expectation for, free mobile appson social gaming should keep in mind that social gaming is a cultural phenomenon will force game developers to reconsiderseveral important distinctions. Second Life with long-term prospects. their options and eventually widen theiris more of an experiential environment than revenue sources.a game. And it never really transcended itsniche status. After five years and 20 million Mobile Gaming: Forecasts from eMarketer indicate that adregistered users, fewer than 1 million are The Go-Slow Zone funding will account for only 12% of mobileregularly active. Moreover, Second Life gaming revenues in the U.S. by 2014. That’sis a relatively complex and sophisticated Mobile gaming has surged amid concurrent $180 million of marketing dollars. Not much,endeavor. Newer social games that have waves of smartphone uptake and the rising really. And not surprising, given how reluctantbecome huge hits are, by comparison, much popularity of apps. Currently, 70 to 80% of all marketers have been to embrace mobileless of a strain on the cerebral cortex. app store downloads are games, according advertising in general. But for the right brand to Gartner, and roughly 60 to 70% of those with the right strategy, getting a jump onIt’s also telling that the social gaming sector games are free. mobile games may be a smart move in 2011.has recently seen major investments fromtechnology, media and entertainment Overall, 64 million Americans play mobilegiants. Last year, Google quietly invested games at least monthly, according toupwards of $100 million in Zynga amid eMarketer, and that number is anticipated torumors that “Google Games” is coming exceed 90 million by 2014.
  • 31Geolocation Gaming: Finally Moving Past FoursquareA hybrid of mobile and social gaming, concept of check-ins, will enter 2011 with Coca-Cola, for example, recently got the ballgeolocation games have transcended the over 5 million users and is adding 25,000 rolling in the right direction with a nationwideboundaries and emerged as an important new users daily and logging 2 million game campaign aimed at teens called Cokecategory of their own. check-ins a day. The company has focused Secret Formula, which mixes consumer almost exclusively on growing their user rewards with location-based service fromThough Foursquare and its badge-wearing base in hopes of crushing Gowalla and SCVNGR. Debuting on Black Friday, themayors have hogged most of the hype in gaining enough scale to thwart (or at least busiest shopping day of the year, Cokegeogaming, the spotlight will shift in the year withstand) incursions into its home turf by created challenges at Simon Malls across theahead to other location-based social games Facebook Places and Twitter Places. The country consisting of check-ins and photos,like MyTown, a virtual version of Monopoly folks at Foursquare have belatedly begun to rewarding participants with $10,000 in totalthat attracted over 3 million users within 12 pursue ways to make money from merchants gift card rewards. Coke gave the campaignmonths of its launch. and will move more aggressively to recruit an extra boost with online and print ads, as more brand partners in 2011. What’s missing, well as playful in-store signage that read:MyTown appeals to consumers because it’s a though, are incentives to keep people “This Mall has Secrets. Unlock Them. Playreal game, not a gimmick. And by expanding playing—the thrill of real entertainment. SCVNGR. Get Rewarded.” Part of the brand’stheir “check-in” functionality to include Badges get boring. Mayorships are pointless. initiative involved familiarizing uninitiatedproducts and bar code scans rather than Really good games require much more than consumers to SCVNGR. Though the location-just locations, the game developer Booyah just showing up. based service lags Foursquare and Facebookproved it was thinking strategically on behalf Places with around 1 million members, it’sof marketers too. In recent months, Booyah The next generation of geogames will given a welcome spin to the location craze byhas reportedly inked deals with H&M, HP, employ better game mechanics and provide using a game-based approach to give addedMicrosoft, Pantene, Oil of Olay, Disney compelling content that use check-ins to meaning—and a lot more fun—to the act ofand MTV. enhance playability, dimensionality and checking in. participation. In the process, they’ll becomeFoursquare, which helped popularize the increasingly attractive to marketers.
  • More than 90 million Americans will 32 play mobile games by 2014. Retooling Brands with Game Mechanics U.S. Mobile Ad Spending The most important long-term takeaway noted that the rewards of playing games2009–2014 millions and % change from the gaming industry may, ultimately, appeal to two distinct drives within ourselves: $2,549 25% be a greater understanding of game the wanting and the liking. Participating in $2,036 36% mechanics—what motivates people to play, games activates our ambition and sense of to spend money and commit tremendous craving. But on the other side of the brain, $1,501 36% amounts of time for very arbitrary rewards. games also satisfy our need for delight. $1,102 48% The Coke Secret Formula campaign, for Brand experiments with online, social and $743 79% example, features a number of critical factors location-based games—or partnerships beyond the cash-back gift cards—astute with game developers—may help marketers $416 30% understanding of social dynamics, points and gauge what kind of incentives keep people progress tracking, deadline-induced urgency engaged, as well as their optimal rate and and intimations of exclusivity. intensity. Chatfield refers to the “reward schedule” and the concept has clear Tom Chatfield, author of Fun Inc., contends implications for brands seeking ways to keep ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 that gaming can provide a set of very useful their customers coming back. Source: eMarketer optics for examining consumers and our contemporary culture at large. Addressing the TEDGlobal 2010 conference, Chatfield
  • 33Getting a on Virtual Goods GripWhen American gamer Jon Jacobs bought Soon after acquiring the virtual resort, Jacobs Dogg—are expected to generate revenuesthe Asteroid Space Resort for $100,000 in rechristened it “Club Neverdie” and turned of $41 million in 2011, which is three times2005, he paid real money for an imaginary it into a premier in-game destination that the size of the market in 2010. Overall, thebuilding in an online role-playing game, included a nightclub, stadium and shopping entire virtual goods market could easilyPlanet Calypso, the oldest planet of mall where players spent real cash. His exceed $2 billion in 2011, according tothe Entropia Universe. He’d reportedly personal income from the game exceeded published estimates.remortgaged his house to buy the make- $200,000 per year, according to Forbes.believe asteroid. Clearly this was an act of These kinds of anecdotes and figures tendinsanity. Right? In November 2010, Jacobs resold his Planet to flummox those who’ve assumed that Calypso virtual properties for $635,000. virtual goods are, and would remain, a nichePlanet Calypso is available as a free That’s a return of over 500% in five years. market. A few years ago, frankly, you couldn’tdownload, but its 900,000 registered users are Baffling, but true. even call it a market. It was a blip. A curiosity.encouraged to deposit real-world dollars tofund their adventures. A share of the resulting Nearly 30% of Internet users in North But consider this: When General Millsrevenue stream goes to the developer—First America have purchased virtual goods in a promoted its Cascadian Farm OrganicPlanet Company, a subsidiary of Swedish social networking game, according to a May Blueberries on Farmville, players plantedgroup MindArk—but players also buy in-game 2010 study in eMarketer. Branded virtual over 300 million of the virtual berries at aservices and virtual goods from third-party goods—offering innovative tie-ins for a cost of 20 coins each, creating a bumperentrepreneurs like Jacobs. range of brands from Green Giant to Snoop crop of innovative marketing. Green Giant
  • 34 34 The virtual goods market could easily exceed $2 billion in 2011.turned this strategy on its head, putting Branded Virtual Goods Revenue WorldwideFarmville coupon stickers on select producein 4,000 stores nationwide, redeemable forin-game Farm Cash. 2010–2015 millions and % change $318 41%Improved mechanisms for converting real $226 51%cash into virtual currency are building moremomentum. Facebook Credits is now the $150 71%exclusive payment method for a numberof popular social games, and PayPal is apreferred provider for Facebook Credits. $88 115%As these systems mature, micropayments Source: eMarketer $41 156%will become increasingly feasible alternativesfor marketers to offer in lieu of traditionalcoupons or discounts. Already, developers $16like Ifeelgoods of Menlo Park, California, have started helping brands buildapp-based bridges from virtual currency toreal commerce. 2010 2011 2012 2013 2014 2015
  • 35 35 35| One-third of all U.S. households will have Internet-connected TVs by 2015. Interactive TV
  • 36 The Two-Way Tube Battle RoyaleReportedly dissing Google TV because its were neither compelling nor memorable, but“footprint was too small,” News Corp.-owned a lot has changed in the last ten years. Don’tFox closed ranks with the other broadcast expect Google TV to fade into obscurity.networks—ABC, NBC and CBS—in blockingaccess to its programs from the new web- Despite the past failures and the fierceenabled platform. The implication was that the resistance from broadcast networks, Forresternewcomer wasn’t popular enough to earn their Research recently predicted a third of allrespect and cooperation. But instead of simply U.S. households would have Internet-ignoring Google TV, the broadcast bullies tried connected TVs by 2015. The anticipatedto kick the new kid out of their schoolyard. uptake can be attributed, in part, to a retailer cabal: Best Buy announced it would onlyBut connected TV isn’t a sandbox. It’s sell connected TVs in 2011, and WalmartMadison Square Garden. It’s the big ring indicated it will follow suit in 2012. In awhere the heavyweights are contending for related move, Walmart also expanded$180 billion in ad revenue. It’s the title match into digital content distribution, acquiringbetween digital and traditional media. And streaming high-def video company Vudu,smart marketers have booked ringside seats and inking an interactive deal with Disneyfor 2011. for Toy Story 3. Meanwhile, manufacturers like Toshiba, Samsung and Sony are rampingTrue, earlier versions of interactive TV lost the up production and rolling out new modelsfight before it really began. This is a category of interactive TVs. Across the technologyhaunted by the wreckage of has-beens and and retail spectrums, leading companieswannabes with a decade-long history of hype are pursuing parallel agendas that will driveand misplaced hopes. Remember WebTV and adoption of connected TVs and reconfigureAOL TV? Nope, neither do we. Those products that ungainly box in your living room.
  • 37Open Eyes and Active Hands Brand Experimentation RequiredInteractive TV builds on the promise of digital as the technology evolves. The integration of and consumers are growing more accustomedmarketing—engagement, measurement and television and digital ads onto a single platform to viewing video ads online, further blurringtargeting—and brings it to a bigger screen. will very likely be a catalyst that integrates, and the experiential boundaries between digitalAddressable ads could be a serious boon to rationalizes, the respective marketing budgets. and TV. By late 2010, online video contentbrands with clear segmentation strategies was being viewed by 178 million Americansand a willingness to experiment. The Meanwhile, Walt Disney Co., Mattel Inc. and monthly, according to comScore. On average,interactive content, of course, needs to be the U.S. Navy have been experimenting with those viewers consumed 14.3 hours of onlinesufficiently compelling to lure viewers away interactive channels on cable, according to video per month.from their show. The Wall Street Journal. Cablevision created interactive channels for the brands that can be Most households with interactive televisions,On the other hand, mass brands accustomed navigated by a standard TV remote, providing however, have not been taking advantage ofto connecting in a predictable manner with videos, coupons and callback requests for the heightened connectivity. Back in August,the largest possible audience may initially customer service. Casual games, pre-roll spots Forrester Research reported some dauntingexperience confusion as the traditional TV and pop-up banners are now in the mix as well. numbers:format fragments into a dizzying menu of • 61% of consumers hadn’t even heard ofprogramming choices and heterogeneous Though the pricing for TV ads has been connected TVs.micro-communities. traditionally pegged to an estimated audience • 27% said they couldn’t imagine why they’d size, the new wave of interactive ads often want a TV that connects to the Internet.Brands currently shell out three times utilizes a performance-based model similar to • 26% of people who owned connected TVas much for TV ads than they spend on online pay-per-click. This pricing model should said they don’t often take advantage ofonline marketing, even though the media effectively lower barriers to entry by marketers the Internet connectivity.consumption of today’s consumers is evenly looking to take the new technology for a • 20% of owners were very happy withsplit between the two mediums. Interactive TV test run. their connected TVs, but only 12% wouldad spending is barely a blip in today’s market. recommend them to friends.Google TV, in fact, had no ads at launch time, In a related trend, online video ad-servingbut more marketing dollars will be allocated platforms like adap.tv continue to gain traction, We can sympathize with the disappointed
  • 38first-generation users. Surfing specialty promochannels on cable with your old-school TVremote really does not sound like a ton offun. But major developments have occurredsince the Forrester survey—the Septembersecond-generation release of Apple TV,the October debut of Google TV and theNovember launch of Microsoft Kinect. Kinect,the flagship peripheral suite for Xbox 360, istechnically an add-on for a gaming console.But the hands-free, motion-sensing, face-recognition technology has serious potential tofundamentally change how we view television.Microsoft sold over 2.5 million Kinect units inthe first month. Around the same time, wordleaked that Microsoft had been talking to TVprogramming providers about launching apaid-subscription TV channel via the Xbox360 console, which could create a new super-competitor in connected TV.As these technologies grow along withconsumer expectations, we’re going to seesome compelling new developments ininteractive television. The tube is about to 178M By late 2010, online video content was being viewed by 178 millionbe reborn. Americans monthly.
  • 3960% Nearly 60% of TV viewers use the Internet while watching TV at least once a month.The Promise of Apps: “The coolest thing about Google TV is we don’t the coolest thing about Google TV and its even know what the coolest thing about it will competitors will be? Apps. Apps have the be,” came the pitch for the new service, now potential to truly revolutionize television,Third-Party Apps available on Google TV Logitech set-top boxes, the same way they changed everything Sony Internet TVs and Blu-ray players from brick- in mobile—setting higher consumerAnticipated for and-mortar stores like Best Buy. expectations, changing behaviors and mediaGoogle TV, but Apple All due respect to the geniuses in Mountain consumption patterns, accelerating uptake of new technology and creating unprecedentedTV Slow on Uptake View, but doesn’t everybody already know what sales growth.
  • 40Nearly 60% of TV viewers use the Internet while Apple, surprisingly, has proven slow to TV shows individually for 99 cents an episodewatching TV at least once a month, according embrace the full possibilities of its Apple and thereby jeopardize the sale of the sameto Nielsen. This implies that our culture, in TV set-top box, which seemingly remains a shows to branded networks that pay hundredsmany ways, has already moved ahead of the side project for the company, described as of millions of dollars?” Bewkes said.technology. We’re using the Internet and a “hobby” by Steve Jobs, after four yearsTV together. Why not do so on the same on the market. Apple TV2, unveiled in Television industry incumbents should bedevice? And, while we’re at it, why not use the 2010, allows users to watch iTunes content expected to be wary about these disruptivetouchpads on our smartphones to change the on their televisions, rent shows for 99¢ from innovations. For audiences, though, it’s allchannel and search for content? ABC and Fox and access Netflix, YouTube upside. Consumers will be able to custom- and Flickr, but it does not yet function as tailor their viewing choices and activities,Google TV ships pre-loaded with apps for a wide-open platform for third-party app updating their Facebook profile, for example,Netflix, CNBC, Twitter, Pandora, Napster and developers. We’re encouraged by the then changing “channels” to watch Grey’sNBA Game Time. Other Google TV media rumors, however, that the next-gen release Anatomy while tweets from their friends’partners, such as HBO, NBA and Turner of Apple TV may offer app support—the stream in a news crawl at the bottom ofBroadcasting, have developed dedicated online sooner, the better. In the meantime, hackers the screen.platforms for interactive TV programming. The are already touting their own custom appsopening of a Google TV app marketplace is for jailbroken Apple TVs. Given how much we now use web-based appsanticipated for 2011. on the 3.5-inch screens on our smartphones, Clearly, not everybody’s on board. Though why should we accept that the 36-inch screenAdmittedly, first-generation Google TV lacks a he gushed that television was entering a on the wall would remain technologically inertcertain artistry and ease of use with its interface. second golden age, Jeff Bewkes, CEO of and app-free?The search function does not always quickly Time Warner, nevertheless warned mediaor accurately return the right TV program execs at a London conference in September The connected TV is a portal into newwhen searching for a show, and the keyboard that lower-cost digital competitors like possibilities, placed at the most importantcontrollers are clunky. People expecting an Apple and Amazon could erode the long- social locations in the home. The mostelegant TV equivalent of an iPhone, or even an standing value of television programming. thrilling aspects of interactive TV extend farAndroid, have been disappointed. The design According to Hollywood Reporter, Bewkes beyond finding new ways to watch televisionand functionality should progressively improve railed against the Apple pricing model in programs. TV apps have the potential toin future releases, but there seems to be a big particular. integrate TV, web, search, video, social andopening here for competitors, say, a well-timed shopping. They’re going to rip the lid off thefollow-up act from Apple TV. “How can you justify renting your first-run old paradigm.
  • 4156% Of the one-third of Americans who own a DVR, 56% fast-forward through commercials.
  • 42Socializing the TV Set Turning On and Tuning InSocial TV companies are promoting mobile Aiming squarely at the mainstream, TVGuide Television is indisputably a social medium.applications that add social functionality to launched new check-in features in October It’s the focal point of the “family room” inTV watching. They’re targeting the 200 mil- with simple buttons on its website that read modern households. And for decades, work-lion people who already use mobile for social “I’ll watch” for particular shows. The feature ers have gathered around the water cooler tocommunication like tweeting and Facebook is integrated with Facebook, allowing users discuss their favorite shows.status updates. The future of social TV will be to divulge their guilty pleasures or try toapps that bring social alongside the set-top impress each other by pretending to watch To help quantify the buzzing sociality of TV,box and display controls of interactive TV, but only high-brow PBS documentaries. Within consider these Twitter stats compiled by Fastfor now, these sites primarily cater to audi- the first month, the site was receiving 10,000 Company:ences of traditional TV. check-ins per day. • There were 2.3 million tweets during theSocial TV sites like Miso, Tunerfish, Philo and Still, some people insist TV audiences prefer East and West Coast broadcasts of theStarling give a hint of the possibilities. These to be passive. They don’t want to lean for- 2010 MTV Video Music Awards.sites appeal to “superfans” and are generally ward or, for that matter, strain their forebrain. • Glee, the most popular primetime seriesat their best when facilitating communication Instead, they simply want to sit back, relax on Twitter, was mentioned in 285,800between friends viewing the same program and be entertained. But until quite recently, tweets on the day its Britney Spears epi-at the same time. By placing a premium on audiences have never been given an authen- sode aired.“live” experiences, connected viewing may tic opportunity to truly interact through their • In the immediate lead-up to the seriesoffer clues on how advertisers can finally televisions. It’s always been a one-way me- finale of Lost, and the letdown that fol-overcome the audience attrition from DVR. dium. The theories of audience passivity are lowed afterward, there were over 400,000Of the one-third of Americans who own a accepted only because they remain untested. Lost-related tweets over a 24-hour period.DVR, according to Nielsen, 56% fast-forward That doesn’t mean they’re true.through commercials.
  • 43Why the TV Networks Are Nervous Disruptive InnovationClay Christensen, the Harvard Business disrupter. The company succeeded by taking incumbents. The new offering isn’t competingSchool professor who wrote the classic book an innovative approach in the declining against better-known alternatives in the sameon disruptive innovation, has observed segment of tight-margin video rentals. Netflix category because the category itself is brandthat up-and-coming attackers can prevail launched its subscription service in 1999, new. The only competition is non-consumption.against industry incumbents with two posted its first profit in 2003 and mailed In other words, the new technology is eithercentral strategies—low-end disruption its two-billionth DVD in 2009. By 2010, adopted or it dies.and new-market disruption. Interactive TV the number one incumbent, Blockbuster,has elements of both, which is why the TV had declared bankruptcy and number two, Interactive TV is a new-market disruption,networks are nervous. Hollywood Video, was being liquidated. particularly when one considers the full search Recently, Netflix introduced a cheaper, functionality and web-browsing capabilityIn the low-end scenario, large incumbents pure-streaming video service for consumers of Google TV. For all the talk about “cord-basically fall asleep at the switch, blithely who don’t want to receive any DVDs in cutting,” this technology isn’t a viableignoring new entrants in the bottom segment the mail. In the process, they’re moving replacement for cable or network. It’s aof their core markets where returns, quality upstream into the profitable headwaters of new category.and demand are relatively minimal. What’s video on-demand, traditionally controlledthe problem with mocking a competitor by cable networks. But instead of charging The zillion-dollar question facing Google TVfor having a teeny-weeny footprint? If the inflated cable-industry prices, they’re offering isn’t whether people will ditch their current TVlow-end offering improves and innovates unlimited streaming videos to consumers for service, it’s whether they really want to webat a fast-enough rate, it will gradually claim only $7.99 per month. access via their TV. If not, chalk one up for non-customers in the middle tiers of performance consumption. But if people want full interactivityand profitability, carving out the incumbents’ New-market disruption involves the from the biggest screen in their house, and wemarket from the bottom up. introduction of an innovative product or certainly believe they will, then interactive TV service into a new segment or emerging will gradually gain ground against the broadcastNetflix is a prime example of a low-end market that is not traditionally served by networks, particularly if they balk now.
  • 44 44Google TV could be the kind of parasitictechnology that benignly feeds offtraditional TV for a few years, then graduallygrows big enough to swallow its host.Related hardware and services from Apple,Netflix and Roku are poised to join thatfeeding frenzy.The major networks seem to think they caninoculate themselves by blocking access, butas soon as Fox and colleagues quarantinedtheir sites from Google TV, online tips forworkarounds and “unblocks” were instantlycirculated online by white-hat hackers.Limiting access isn’t the solution. If anything,networks will only hurt their cause by $120Bdisenfranchising consumers with annoyingbarricades to online content that’s freelyviewable from any laptop. And if they really Brands are spending $120think it’s a good idea to get into a shoving billion more annually on TVmatch with game-changers like Google, they ads than Internet ads, evenshould consult their media colleagues in the though consumers evenlymagazine, newspaper, publishing and music split their time between tubeindustries. Immediately. and web.
  • 45Looking ahead to 2011,we’ll see some excitingdevelopments in ARmarketing as the technologymoves from the desktop tosmartphones.Augmented Reality
  • 46The Digital Enhancement Spaces of PublicAugmented reality, enhancing our natural intersections as you virtually cruise the consumers find their nearest sandwich shopview of the world with overlays of digital photo-documented downtowns of online while adding whimsical touches to the localinformation, sounds like a scenario from a cities. More recently, Microsoft unveiled eye- landscape, including 3D animations insidesci-fi film where the ultracool anti-hero wears popping new AR features for Bing that turn Yankee Stadium.neural chip implants and hi-def eyeglasses online maps into truly interactive 3D worldswhile speeding through the cybersprawl. featuring live video feeds, indoor views taken These developments lead us to considerBut you don’t need to wait for the straight- with a backpack camera and overlays of some provocative questions about theto-DVD release. Although it might sound georegistered images from Flickr. Users can monetization of public space. What if Quiznoslike a fantasy from the far-off future, the era dramatically swoop from street view to aerial, superimposed its AR ads over nearby Subwayof augmented reality has already, in fact, flying like a disembodied avatar over a Sim shops? What if the Yankees plastered virtualbegun. And it’s finding resonance, as well as City-like landscape. billboards across the left-field wall at Fenwaysome interesting applications, with marketers Park in Boston? Building virtual perimeters,hunting the next new trend. Looking ahead to 2011, we’ll see some known as geofences, has been suggested exciting developments in AR marketing as as one possible solution, which, incidentally,You’ve seen first-generation augmented the technology moves from the desktop could also be used to automate check-insreality (AR) in televised football games— to smartphones with applications such for location-based apps. Although, who willthat yellow first-down line isn’t actually as Tagwhat and Layar. Tagwhat allows decide the size and orientation of your digitalon the field, glowing in the grass, it’s a users to create and share location-based fence’s footprint? What kind of surveyordigital overlay to enhance the live viewing messages by “tagging” physical buildings do you hire? And what’s the penalty forexperience. Similar applications have been like a GPS-enabled graffiti artist. Layar is trespassing across virtual borders? Anticipatingpopping up on the web. Two years ago, an augmented reality browser that allows that these kinds of questions will eventuallyfor example, Google introduced interactive iPhone and Android users to stream multiple land litigious competitors into real-worldlinks with ad-functionality for retail stores, layers of localized digital information onto courts, Pillsbury Law Firm recently establishedrestaurants, museums and other venues their touchscreens while their phones are a specialized “virtual worlds” practice towithin its panoramic street-view maps, in camera mode. Quiznos teamed up with provide legal counsel on AR issues. So far, fewhighlighting local businesses and labeling Layar last year to develop an app that helps precedents have been established.
  • 47Ditch the Desktop with AR Show the Way Early ExperimentsEcomagination, the green technology unit AR promo for its show with street magician That’s why as AR converges with mobileof GE, was the first to really get the main- Criss Angel, which presented 3D mazes and we’ll see category leaders keep a concertedstream buzzing about AR with its web-based puzzles for fans to solve with their webcams. focus on utility. U.K.-based grocer Tesco, forSmart Grid Augmented Reality, built with Papa John’s used pre-printed pizza boxes example, developed an app that transformsopen-source FLARToolKit, which merged live as markers for a “virtual drive” tie-in to its iPhone owners into instant wine buffs. Shop-video with Flash and 3D animation. At-home multi-channel Road Trip campaign. Esquire pers simply use their phones to photographusers printed a sheet of paper, known as a magazine produced an AR issue in which a bottle of wine and submit it electronically,“marker,” held it up in front of their webcam Robert Downey Jr. jumped off the cover onto then they receive details on taste, vintage,and when they looked on screen, they saw your computer screen. varietal and food pairings. Technically, you’rean animated 3D hologram landscape with GE right, that’s not AR, but it intimates thewind turbines rotating between their hands. Though mobile and location-based apps extraordinary possibilities of what’s to come.Geeky, but quite engaging. have a promising future, particularly for If the Tesco wine app incorporated live-video fashion, entertainment, education and AR functionality, it could potentially cut outOther brands subsequently took the tech- food, the buzz has already cooled for many the time-consuming middle steps (shoot-nology in different directions. Wise Foods desktop-based AR marketing applications. ing and submitting photos) and create anpursued the social networking possibilities The print-and-wave markers proved to be automatic point-and-tell information service.of AR with a web-based contest for Cheez too much work—with too little reward—for And for marketers, that kind of functionalityDoodles that awarded prizes for the most most consumers. Desk-based AR experiences would open the door to a whole new dimen-popular user-generated music videos featur- rarely offer a tangible value beyond the fleet- sion—an augmented world of everywhereing animated “Cheez Dudes.” A&E Television ing thrill of a slick new gimmick. engagement.Network took a game-based approach in an
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  • Photography 49Online content-sharing communities inspired the design of this book, in particularthe photo-sharing site Flickr, where millions of photographers exhibit their work.Much of the imagery in this report is licensed under Creative Commons, a non-profitorganization with a mission of broadening the range of creative works available forsharing and collaboration. To learn more, visit creativecommons.org.Featured photographer Thomas van de Weerd blends the use of traditional and newmedia. He has been an Internet professional for over ten years and loves to buildonline audiences. He lives in Utrecht, The Netherlands and likes to take photos ofeveryday things. View van de Weerd’s photostream at www.flickr.com/thmsor his website www.thms.nl.01: Marcus Kwan: http://flic.kr/p/7QBsAh 26: Thomas van de Weerd07: Ed Yourdon: http://flic.kr/p/5FVE8U 29: Johan Larsson: http://flic.kr/p/8xPkPq11: Robert Scoble: http://flic.kr/p/7JLjsj 35: Thomas van de Weerd13: Thomas van de Weerd 39: Bruce Clay, Inc.: http://flic.kr/p/8LVR9X16: Thomas van de Weerd 44: Orijinal/Jaysin: http://flic.kr/p/82KsbQ17: http://flic.kr/p/8ZoBu8 45: Randy Pertiet: http://flic.kr/p/8SmNui20: Thomassin Mickaël: http://flic.kr/ 48: Emily Walker: http://flic.kr/p/6i8gbh p/8mqipz 49: Thomas van de Weerd
  • © 2011 Engauge. All rights reserved. 52About EngaugeOne of the nation’s largest independent agencies, Engauge leveragescreativity and technology to develop transformational ideas that connectbrands and people. Engauge guides a growing roster of clients on the pathto realizing the power of digital channels by focusing on driving results andsustainable growth for brands. The agency’s client roster includes NationwideInsurance, DAD’S Pet Care, The Home Depot, Best Buy For Business, Chick-fil-A, Brown-Forman, Food Lion, Van Gogh Vodka, NGK Spark Plugs, Perkins,IHG, UPS, Logitech and more. Engauge, which has offices in Atlanta, Austin,Columbus, Orlando and Pittsburgh, is a portfolio company of Halyard Capital.Steve CoverDirector of Business Development614.573.1010 office614.354.0163 mobilescover@engauge.comEngauge375 North Front Street This report is an excerpt fromSuite 400 The Engauge 2011 Digital Outlook.Columbus OH 43215 Download the full report atengauge.com www.engauge.com/2011-digital-outlook.