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Long and Winding Road - Gamesmanship of Shopping Study

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  • In 2005, Yahoo! came out with a great study that spoke to the changes of the purchase process. We recognized there are four basic types of paths to the cash register that express consumers’ attempts to fulfill their needs by combining their own tools with those provided by merchants.Quick paths are characterized by a short time frame, fast decision-making, little or no research prior to purchase, and immediate gratification. This type of purchase path is most common for routine and impulse purchases, and when people are distracted or under time pressure.Winding paths involve movement between different shopping channels and information sources on the road to discovery of the right item. Purchases made this way are facilitated by a strong comfort with technology, and take place within a relatively short time frame (a few hours to a week). Winding paths result from consumers trying to make the best purchase decision among many options, price comparison shopping, coupon use, and/or advice from friends or family.Long paths are characterized by lengthier windows between the start of the product search and actually obtaining the item (weeks to sometimes months). This type of path emerges when consumers have a clear idea of the desired object and are determined to get it. Shopping typically takes place through only one channel, and eventual purchase is very likely. Long paths often result from waiting for the price on a specific product to drop, waiting for something (such as a new style) to become available, and/or waiting for delivery of an item.Similar to long paths, long and winding paths take weeks or months to complete, and are often used for high-ticket and/or technology-related items. This type of shopping process involves product research, learning and comparison shopping, as well as professional and user reviews. On a long and winding path, eventual purchase is not definite, and could go either way. This path often results from having no fixed purchase deadline, unexpected complications in the shopping process, and/or uncertainty regarding the exact desired outcome.
  • In the past, the purchase process was simple one…you became aware of brands, gathered some information to make your decision, and made your choice.
  • A lot has changed – today, consumers communicate about brands and distribute product information and opinions to their networks on a much larger scale and more frequent basis than ever before.They have gone from passive recipients of information – merely taking in communication from marketers – to creating communication about brands and disseminating it to their vast networks via their online social networks, posting opinions on websites, using their mobile phones to email or texting friends/family while shopping, etc. OPTIONAL SPEAKER NOTE:We’re not saying that no conversations took place before. WOM was always important. The difference is now that instead of having to talk to someone you know, you get to hear and communicate with people you don’t know – which provides you with (1) much greater sample sizes (wisdom of crowds) and (2) more informed opinion (subject matter experts)
  • In contrast to the simple loop of the old purchase process, we’re now on a much more intricate, complicated course, where the best informed consumers have an advantage in navigating the course to the optimal purchase.In a sense, the purchase process is going through it's own "gamification" of sorts.Gamification is the use of game play mechanics[1] for non-game applications, particularly consumer-oriented web and mobile sites, in order to encourage users to engage in desired behaviors in connection with an application or website.[3] Gamification works by making technology more engaging,[4] and by encouraging desired behaviors, taking advantage of humans' psychological predisposition to engage in gaming. The technique can encourage people to perform chores that they ordinarily consider boring, such as completing surveys, shopping, or reading web sites.
  • With that said, we went into the research wanting to understand the following larger questions.
  • We also used a robust methodology, by starting with marketers. What are they saying about their consumers:All of our marketers were senior brand managers of seasoned brands. They admitted the following:“Online is the future, but everything is an educated guess”“In the future, success is about getting the consumer to talk for you, but it’s unpredictable”In this ever-evolving category of shopping, that dual perspective (qualitative and quant perspective) is important. Marketer phone interviews: w/o 5/31, 2010 (specifically 6/1-6/7)Consumer - online boards: w/o 6/21, 2010 Consumer - ethnographies: w/o 7/19, 2010Quant field dates were Sept 10-24, 2010
  • Just like any game, we started our game selecting some pretty powerful characters: U.S. adults with the nominal consumption purchasing power of ~$400 Billion Dollars - as according to Deustche Bank.They range in demographics for best representation and all were purchase decision makers of the categories we spoke to them about.
  • Here's what we are going to cover!SETTING UP THE GAME – WHO ARE THE PLAYERS? HOW TO PLAY THE GAME – WHAT TOOLS DO THE PLAYERS USE? WHAT IT MEANS FOR MARKETERS - WHAT ARE WE RACING TOWARD? – WHAT DOES IT ALL MEAN TODAY AND WHAT ARE THE IMPLICATIONS FOR MARKETERS?
  • Introducing the players to the game is step 1. Prior to "olden days" when this was a marketer led race, today's new purchase process has created parity between the 2 main players in the game: consumers and brands. Consumers start very “open” to brands (82% of automotive consumers are open to switching brands, etc.)All players start on a level playing field, and strive to gain an advantage. A consumer gains an advantage when they find exactly the kind of information they seek to help them feel confident in their decision, and in the price paid. A manufacturer or brand gains an advantage when a consumer sees their information as valuable, and their price as fair. Note: not every consumer plays the same way – there’s a spectrum of people and skills involvedTech savvy people at the top level of the game, accessing information and sites that are not widely known, doing more to advance than others.Others are just coming into it and learning how to play – which sites to access, which “filters” to apply when searching, etc.Also, there are nuances as to how the game is played across categories. Automotive and electronics are played at the height of “gamesmanship,” where there are vast resources and routes to decisions. Often the goal is to “outwit” others - in particular, outwit the manufacturer by finding better more experiential information about product performance, and finding a better price than widely advertised. It’s likely been “a game” for awhile – but today there is more information, that flows faster, and is more readily accessed. At the other end of the spectrum is OTC and Finance, possibly even some personal care products. Here, the “game” is newer so there is less information available, and winning is more about reducing risk than outwitting manufacturers.
  • There's a reason parity has been formed. Consumers think about the shopping process in a more evolved state. As Seth Preibatsch states that the last decade was the decade of social and the social graph: “This will be the decade of building out the game layer unlike the social layer which traffics in connection, the game layer will traffic in influence. Rather than add social context.. the game layer seems to act on individual motivation, where we go and why we do it." The consumer has gotten a lot smarter about shopping and like a game, shopping involves these elements: Consumers form STRATEGIES – planning how to get what they want, in terms of what resources they’ll employ and whenThey form ALLIANCES – collaborating and competing over the internet with other players (consumers and brands)But like a game, there is RISK – making the wrong move can be costly, so they need to figure out which internet resources to trust – who is trustworthy online, as well as what information is trustworthyOne larger themed change is that they consider all these variables FUN – the internet has made shopping more fun and engaging by enabling them to pull in their friends, family, and even strangers into their process. This applies to big and small ticket items. For example, a young man we spoke with told us how he recently used his social network to decide between 2 colognes. He told us how fun it was to pose the question to his FaceBook friends “which one should I buy…” and get their responses – far more fun than ‘the old days’ of simply making the choice himself. Shopping is also made more fun by collecting ‘rewards’ along the way (e.g., inside track on a product or a great deal). In effect, the fun, the ‘thrill of the hunt,’ is heightened with today’s digital resources. As Charlie Sheen might say....today, shopping isn’t just about buying, it’s about ‘WINNING’ - the elation of feeling smart. We promise this study was not inspired him.
  • As a result to new access to deals, vast networks of people, and greater transparency into product performance and pricing has brought a heightened sense of ‘gamesmanship’ to shopping.The latest digital content makes this behavior more accessible – bringing more people into it – raises the game for those who’ve been shopping this way.This gamesmanship has infused a new energy into shopping.More socialMore engagingMore funMore exciting
  • Alliances & Fun: Collaboration and competition are key parts of the game.Consumers collaboratewith other consumers by writing and reading reviews, asking their social networks for advice and posting their opinions for all to see, discussing in blogs, and signing up for Groupon style deals. Sites like slickdeals.net are a great example of collaboration – in a nutshell, it’s community-based bargain hunting. It describes itself as user-driven deal sharing site with a mission to provide consumers an avenue to collaborate and share information in order to make the best shopping decisions. Consumers also collaborate with brands by becoming fans online, signing up for email newsletters, or joining loyalty clubs. Competition happens between consumers when they feel they have found a better price, a hidden deal that not everyone knows about, or getting in on a limited time or limited quantity deal. Consumers also compete with brands – via trying to find more experiential information about product performance, or getting the product at a lower price.Importantly, all this collaboration and competition adds to the fun!
  • Trust: Shoppers are wary of which sources to trustAs part of their strategy of playing the shopping game, consumers’ trust or wariness of various sources is critical. Online, shoppers tend to shy away from unfamiliar sites or search results for unfamiliar brands, so it’s critical to continue to build awareness in trusted environments both on and offline. Advertising remains a trusted source, as long as the claims can be verified with other consumers.Ultimately, consumers most trust each other, since there’s no reason for lies.
  • In our qualitative sessions, we foundthey trust opinion of friends/family and advertisingREAD SELECTED QUOTES.
  • Strategy: The internet makes it possible to obtain more perspectives on performance and price, which enables consumers to get a better sense for the product and not overpay. 2 in 3 people say they trust the internet the most for researching their purchases. Some of the tools they are using include shopping comparison sites, consumer reviews, coupon sites, and social networking sites. 
  • Multiple Sources: Consumers use multiple sources to build a more complete picture of the product/service, so they can feel more confident in what they are buying.There are also various digital sources which generate trust in a brand. Reading reviews, both expert and consumer, generates the most trust, followed by reading blogs. This type of information is seen as unbiased, so people are most likely to take it at face value.A manufacturer’s website, while widely sought, isn’t as strong at generating trust in the brand.Q: You mentioned you did the following things to research your purchase in the columns below. What was the impact of each of these things?: It made me trust a brand
  • Because of the abundance of sources available to consumers today, most are less impulsive in their shopping, taking the time to research various sources before making a decision.Research doesn’t have to be lengthy. Sometimes it only takes a minute…but it’s worth it. One man told us a story about how, even though his child was miserable and coughing, he did a quick check for a coupon online before he went to the store. It only took a minute… Others told us how they quickly check for consumer reviews before making a final decision – and smartphones, of course, make this checking possible in the store. OPTIONAL SPEAKER NOTE: We did not see any major differences by age group.
  • Playing into the strategy behind the game, shoppers who do more research feel that they lower their risk, and are therefore more likely to feel they have an advantage over the manufacturer. This is most apparent in categories that invite online research, including consumer electronics and automotive.
  • Finding a great deal is the most common way that shoppers feel the satisfaction of winning. Sensing that they have paid a lower price than other consumers, a competitive aspect of the shopping game, is another way they feel they’ve gotten a deal. This way of winning appeals more to younger women.But price isn’t the only way to define a ‘win.’ There are other, non-price related reasons why shoppers feel they’ve won, including finding a unique item or a great new product. These findings are consistent with our study last year "Seeing the Patterns." Howard Shultz, CEO of Starbucks, even stated that there has been a fundamental sea change because of the last economic crisis where price is just the beginning but intrinsic value and emotional wins will be fundamental for all products in the future.
  • You can see why, there are a variety of tools that brands and consumers employ during their shopping game. Some tools are well within the brand’s control or influence, and others are not.Specifically,Tools that consumers use, which brands can control include…Tools that brands can influence include..And tools that brands cannot control include..
  • Consumer and marketer tool sets have evolvedOne of the best lines from our marketers was the following: “Online marketing is just a guessing game”But we hope this next section starts to frame the discussion of how consumers are using these "newer tools"
  • IN THE NEW PATH TO PURCHASE…. In the game of shopping, consumers have several cards to play, each of which can be played at different points along the purchase process: to Discover, Evaluate, and SOCIALIZE.
  • Tools empower users across their purchase path to discover, evaluate and socialize To better understand how consumers use these tools throughout the purchase process, we organized or bucketed the consumer toolset into three categories – Discover, Evaluate and Socialize – based on their goals during the shopping process.  The Shopper’s ToolsetDISCOVER,Goal: Learn about product and service features and find the best product that fits their needs.EVALUATE, Goal: Find the best value for the money. SOCIALIZE,Goal: Get trustworthy feedback to make smarter decisions faster.OPTIONAL NOTE: Note this wasn’t a sequential process but more of a bucketing exercise.
  • Again, our purchase path has become more complicated - we’re now on a much more intricate, complicated course, where the best informed consumers have an advantage in navigating the course to the optimal purchase. And what we found is that tools are used across the shopping process from awareness, gathering more information and narrowing down options, to making a purchase decision and finally post-purchase in varying degrees. Discovery tools are used the most throughout the shopping process and is especially important in the gathering info phase. Evaluate and Socialize tools PEAK in the gathering information and narrowing down phase. And, while discover tools are still used more in the making a decision phase, evaluate and social tools are also prominent to help close the deal. Q.Now we'd like to know which sources you relied on at each phase of the decision making process.
  • The goal of Discovering is to learn as much as possible about product features and find the one that’s best for you. Both Advertising and Digital content play a large role in Discover.Brands must feed the desire for deeper understanding – as the product expert, they are best suited to provide info on how it works, which option is right for them, etc. There’s a wide range of digital resources which come into play during research.
  • Better experiential information is the next opportunity for digital – providing a better sense of the product, especially with help of online video.Information doesn’t just satisfy rational needs (specs, price, size, color) there is also an emotional payoff.Want to feel good about their decision - speak to their values, styleAt a minimum, reduce fear – particularly for otc and financeAt best, information can engage the imaginationLearning about products is the beginning of the dream, builds anticipation – especially in electronics, automotive
  • Here are overall usage scores across the categories among the Discover Toolset. While auto and electronics shoppers use a wide variety of sources for Discovering, the most widely used digital sources across all categories include third party content (like review sites, expert reviews, consumer portals, etc.). This points to the importance of a brand actively managing its online image, particularly in the social media space.
  • For Discover, the most widely used sources are not the most influential on the purchase decision. The most influential digital sources are consumer report sites, consumer reviews, and manufacturer videos, although these videos aren’t widely watched, showing an opportunity to drive consumers to videos.
  • With Evaluate, the goal is to find the best value for your money.Using digital coupon/deal sites, subscribing to deal emails, price comparison sites, and visiting auction websites.Newest digital content has motivated shoppers to seek more deals.Opportunity for brands: provide digital promo codes, special deals, ads with deals to draw attention and build engagement.
  • Again, here are overall usage scores across the categories among the EVALUATE toolset. Because Evaluate involves price comparisons, higher ticket purchases necessarily involve more evaluating.
  • Right now, physical coupons and stores garner the lion’s share of evaluating. While digital sources, including deal collection emails, can be nearly as impactful on the purchase decision, these sources are only used by more tech-savvy consumers. Again, there’s a large opportunity to expand the use of digital Evaluate sources. In our mobile framework study, we find that location-based couponing and mobile generated coupons were things that consumers shared intense interest on wanting in the future. With the adoption of smart phone technology, the creation of applications, adoption of this technology will springboard quickly.“If our young target can’t get ‘it’ on their phone or social networking site, they won’t read it.”
  • With the advent of digital social networks, user reviews, and smartphones, people are getting and giving away more expertise and experience, instantly and for free. The goal of sharing is to get trustworthy feedback to help you make smarter decisions faster. Most consumers are seeking out other consumers’ opinions and advice, and nearly half are leaving advice for others, motivated by a collaborative feeling of solidarity with other shoppers.
  • Consumers seek deeper involvement with brands they care about:Desire to stay up to date with new products or sales of brands they likeDesire to voice support – tell company what they like, what they would like to see nextShowcase personal values/style via public show of supportBrands can foster a richer dialogue online by encouraging users to share information/opinions and responding in an authentic manner with users – ultimately, humanizing and personalizing their image.But the next few slides will counter our widely held beliefs of social networks. Most of the conversations and social sharing takes place in concentrated sites with a product or review focus. There are only a handful of brands that have the benefit of being mentioned in our personal social graphs.
  • Across all categories, consumer generated content, critical to the Socialize card, plays an equal or larger role to more traditional manufacturer generated content.
  • Again, here are overall usage scores across the categories among the SOCIALIZE Toolset. In high involvement, high ticket categories, consumers are most likely to both read and leave reviews.
  • Sharing is naturally a face to face activity, and most consumers continue to share mostly in person. There are, however, some very influential digital sharing tools, such as consumer reviews online and blogs.
  • Closing out this section, discover and evaluate tools play a greater role throughout the process, which are typically paid assets. Q16. Now we'd like to know which sources you relied on at each phase of the decision making process.
  • Now, consumers leverage what the internet has to offer before they make a decision. The internet has heightened the sense of gamesmanship in shopping in a few ways…The internet enables instant access to increasingly valuable information via easy access to user and professional reviews, and videos of product set up and usage for example. This plays into their strategizing – using resources to make a better decision.The internet also helps consumer feel they can and have found the best product for themselves.Consumers are forming ‘alliances’ via talking to other shoppers, even more today than in the past, thanks to the internet, to identify better products and help validate their decisions…reducing the risk involved in purchase. Lastly, the internet makes finding deals easier and more fun than ever via:Deal sites, social coupon sites, searchable coupon/promo codes Can be fast-paced, cooperative and competitiveUltimately, today’s digital content enables consumers to ‘win’
  • Greater access to information online & greater awareness of brands means a larger opening at the start of the purchase funnel.The funnel quickly narrows as the internet speeds shoppers through the process faster and with greater confidence.
  • BUT as the web gets more fragmented we need to think more about trusted spaces. Limited attention span to convince consumers of relevancyNavigating information to quickly find what’s most helpful, relevantFilter the web overall, by sticking with sites that provide a strong culture, that they identify with, and are proven to provide relevant recommendationsFilter reviews and search results by what looks to be most relevantFiltering online ads – consider engaging with only those that seem familiar, trustworthy, and relevant
  • Filter: Digital content is uniquely able to create a strong connection between consumers and brands. Though articles and reviews are the most widely used online sources to research a purchase, it’s actually mobile content and discussions on social networks which can create the strongest link to a brand.
  • In another study that we conducted with Innerscope called the Power of Relevancy we looked into the impact of pairing ads with related content on Yahoo!. We used eye-tracking and a biometric testing methodology to measure emotional relevance. This grid represents a summary of the results. Each of these quadrants have merit but we found that personal relevance and context matters in digital advertising where it produces even stronger emotional processing and information processing than either condition alone. OPTIONAL SPEAKER NOTESKEY FINDINGS: Evaluate importance of display ad relevancy:People fixate longer on personally relevant ads enhancing the opportunity for strong emotional processing and stronger information processing.Evaluate biological impact of contextual relevancy: People notice advertising quicker when it is paired with contextually relevant content and contextual placements elicit twice the emotional response.Context + Personal Relevancy: Leveraging both context relevancy and personal relevancy produces even stronger emotional processing and information processing than either condition alone.Measuring Emotional Relevance | BiometricsFour channels of biometric data (Skin Conductance, Heart Rate, Respiration and Movement) are combined to create the measurement of Emotional Resonance. Eye-Tracking data is used to determine when respondents are actually looking at an ad. Emotional Resonance while the respondent is looking at the ad is then measured at a deviation from their baseline emotional levels.NOTE: Fixation is how long they look at the ad. * This is a rare condition. It is unusual to have low ad relevance but context synergy. If the context is synergistic and the ad is not relevant, this suggests the article is not relevant – people do not tend to read irrelevant articles.
  • Outside of price, consumers who used digital advertising through their own actual buying process believe it plays a role as educator, connector, and brand builder.
  • Solicited communications have more influence on purchase decisions. Loyalty clubs provide a great route to influence purchase decisions.There's no doubt that traditional adshave strong reach, but seeing that digital ads have the same influence on purchase, it becomes an issue of scale and investment.
  • Moreover, on and offline ads play similar roles in the purchase process.
  • A lot has changed about how we shop, due largely to the advent of exciting digital resources…Shopping has gone from a primarily individual process to a much more social process – due to social networks and online reviews, consumers increasingly seek the advice of others before making a decision.Once a chore or routine, shopping today has become more intriguing – a much more interesting path of discovery due to the information that can be found on the internet and shared among consumers. In the past, we took time to make sure we made the right decision – today, decision-making is faster and more fun than ever.In the past, the amount of information about a product on the internet could overwhelm – today, internet resources are helping them navigate the choices more easily.In the past, ‘thrifty’ people looked for deals…clipping coupons every Sunday. And they usually kept this bargain hunting to themselves – no reason to ‘advertise their behavior.’ Today – everyone is looking for a deal because it’s smart not to pay more than you have to. But there is also a new ‘badge value’ in finding hidden deals – it shows you are technically savvy, and that makes bargain hunting cool, and worth telling others what you found.
  • Transcript

    • 1. Yahoo! Presentation, Confidential 1
    • 2. What we learned last time  Internet is much more than a point of purchase  The purchase process is more tumbler than funnel  Different purchase paths offer unique marketing opportunities  Media and in-store cues are still critical Yahoo! Presentation, Confidential 2
    • 3. The purchase process used to be simpler for bothmarketers and consumers OLD SHOPPING PROCESS AWARENESS PREFERENCE GATHER INFO = LOYALTY + PURCHASE Yahoo! Presentation, Confidential 3
    • 4. A lot has changed: Consumers communicate about brandsand distribute it to their networksTHERE’S A NEW PATH TO THINKING AND DOING WHEN MAKING PURCHASEDECISIONS 1 3 FROM PASSIVE TO DISTRUBITORS VIA RECIPIENTS OF SOCIAL NETWORKS, INFORMATION REVIEW SITES, EMAIL, TEXT, IM TO PRODUCERS 2 AND PARTICIPANTS Yahoo! Presentation, Confidential 4
    • 5. Today’s shopping landscape provides a wealth ofopportunities, but the road is more complicated NEW SHOPPING PROCESS AWARENESS GATHER INFO = PURCHASE + LOYALTY MAKING A PURCHASE DECISION Yahoo! Presentation, Confidential 5
    • 6. To understand more about the evolution of shopping,we created a new study to examine: How do consumers approach their shopping today? What does the purchase path look like now, given greater and immediate access to more information? How has the proliferation of new digital tools affected how consumers shop today? What are the implications for marketers? Yahoo! Presentation, Confidential 6
    • 7. 3 phase methodology: Qualitative + Quantitative6 CATEGORIES: ELECTRONICS AUTOMOBILE PERSONAL CARE RETAILERS FINANCE OTC MEDICINEQUALITATIVE EXPLORATION QUANTITATIVE VALIDATION We spoke to marketers in each category to 2,485 online interviews better understand their digital marketing Qualifications needs and pressing questions  Age 18+ We spoke with 45 tech-savvy consumers across the us who are using digital tools  Use the internet to shop and resources in recent purchase processes  Recently purchased or intending to  33 consumers from across the U.S. purchase an item in relevant category participated in online bulletin board  50/50 loyalists & switchers discussions Survey length: 30+minutes  12 consumers in NY and LA invited us into their homes for in-depth ethnographic interviews Yahoo! Presentation, Confidential 7
    • 8. Qualitative: We spoke to real life consumers Yahoo! Presentation, Confidential 8
    • 9. AGENDA 1 SETTING UP THE GAME 2 HOW TO PLAY THE GAME 3 WHAT IT MEANS FOR MARKETERS 4 WHAT ARE WE RACING TOWARD? Yahoo! Presentation, Confidential 9
    • 10. Chapter 1SETTING UP THE GAME Yahoo! Presentation, Confidential 10
    • 11. Introducing the players:Equal players: consumer and brands CONSUMERS BRANDS “IM OPEN TO SWITCHING BRANDS" AUTOMOTIVE 82% CONSUMER ELECTRONICS 80% RETAIL 78% PERSONAL CARE 75% OTC DRUGS 68% FINANCE 64% Yahoo! Presentation, Confidential 11
    • 12. The consumer has gotten a lot smarter about shoppingand, like a game, shopping involves these elements Planning how to get what you want - what resources to employ and when Collaborating and competing with other consumers and brands Making the wrong move can cost you, so you must figure out who and what to trust It’s social, and you can collect “rewards” along the way The elation of being a smart consumer Yahoo! Presentation, Confidential 12
    • 13. Despite being more complicated, there’s a restored energyto shopping that is good for consumers and brands MORE ENGAGING MORE EXCITING MORE SOCIAL MORE FUN Yahoo! Presentation, Confidential 13
    • 14. Consumers now collaborate and compete against eachother and brandsCOLLABORATION COMPETITION With other consumers With other consumers  Access to user opinions via user groups,  Thrill of discovering a “hidden” deal that not online social networks, and posted everyone knows about (e.g., promo codes) reviews  Take advantage of an online coupon/deal  Activate online coupon by getting enough before it sells out (e.g., Groupon) people to sign up (e.g., Groupon) With brands With brands  Trying to “outwit” brand’s overly positive  Via email newsletter and dialogue with communication by getting “experiential” brand on social networks/forums feedback from users  Search for the best price Yahoo! Presentation, Confidential 14
    • 15. Shoppers are wary of which sources to trust Trust other people most: No ulterior motive Advertising: brands Unfamiliar at their best - trust brands/sites: Extreme but verify caution! Yahoo! Presentation, Confidential 15
    • 16. But they trust opinion of friends/family and advertising“I PUT THE HIGHEST WEIGHT ON THE OPINION OF MY FRIENDS BECAUSETHEY ARE CONSUMERS LIKE ME. THEY WOULDN’T EXAGGERATE THEBENEFITS OR ATTEMPT TO COVER UP ITS FLAWS. THEY PRESENT A MOREREALISTIC PICTURE OF WHAT USING THE PRODUCT WOULD BE LIKE.” Trust other people -FEMALE, 26 Y.O. most: No ulterior motive Advertising: brands at their “I DON’T THINK THE COMPANY IS GOING TO TELL ME WHAT’S WRONG best - trust but WITH A PRODUCT. IT’S ONLY ONE SIDE OF THE STORY.” verify -FEMALE, 31 Y.O.“SOMETIMES I SEE AN ONLINE AD THAT I WANT TO CHECK OUT BUT I’M UnfamiliarALWAYS AFRAID TO CLICK, WHAT IF IT’S A VIRUS OR SOMETHING. AND brands/sites:THOSE ADS ON THE RIGHT SIDE OF SEARCH FEEL LIKE A SCAM .” Extreme caution! -FEMALE, 37 Y.O. Yahoo! Presentation, Confidential 16
    • 17. In addition to persons closest to you, trusted Internetsources inform consumersShoppers trust the Internet most for information on 69% 43% 35% INTERNET MAGAZINES TV products and services 2 in 3 people are already using new digital tools to research purchases Yahoo! Presentation, Confidential 17
    • 18. Reviews and manufacturer/retailer content generate the most trust DIGITAL SOURCES MADE ME TRUST BRAND IN THE PURCHASE PROCESS VERY 60%TRUSTWORTHY Expert Reviews Third Party Digital Content Consumer Reviews (SUBNET) 50% Manufacturer/Retailer Digital Content (SUBNET) Read Blogs Online Articles IMPACT TO TRUST 40% Expert Videos Reviews on Manufacturer Site Companys WoM Social Manufac. Site Facebook Networking Technology report site page Digital advertsing (NET) Chat room/discussion boards 30% Mobile Enthusiast website Manufacturer Video Consumer Search Engine Videos Consumer Portal Retail Website 20% Auction Website 10% Digital Coupons/Deals (SUBNET) NOT VERY 0%TRUSTWORTHY 0% 5% 10% 15% 20% 25% 30% 35% 40% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 18
    • 19. As a result of these shifts, shoppers are more in control and less impulsive Q: How has the Internet changed the way you shop? LESS IMPULSIVE 55% NO CHANGE 28%MORE IMPULSIVE 17% Yahoo! Presentation, Confidential 19
    • 20. Strategy and Risk: The more research consumers do, thegreater advantage they feel they have DO A LOTOF RESEARCH ONLINE RESEARCH DO LITTLE RESEARCH 50% 60% 70% 80% FEEL THEY HAVE AN ADVANTAGE OVER MARKET Yahoo! Presentation, Confidential 20
    • 21. While price is always a factor for the consumer, othertriggers help them feel like they’ve wonQ: what is the most important in creating a “wow experience” while shopping? 82% 60% COMPETITIVE 53% ASPECT OF THE 47% WIN APPEALS MORE TO YOUNGER FEMALES FINDING A GREAT GETTING A BETTER PRICE FINDING A RARE OR DISCOVERING A GREAT PRICE/DEAL ON A THAN OTHER PEOPLE “HARD TO FIND” ITEM NEW PRODUCT PRODUCT I WANT I REALLY WANTED Yahoo! Presentation, Confidential 21
    • 22. Chapter 2HOW TO PLAY THE GAME Yahoo! Presentation, Confidential 22
    • 23. Consumers and marketers alike have an abundance oftools to influence purchase BRANDS CAN CONTROL BRANDS CAN INFLUENCE BRANDS CANNOT CONTROL USER GROUPS SEARCH FORUMS RETAIL STORE PRICE COMPARISON SITES COUPONS/DEALS 3RD PARTY VENDORS ADVERTISING CITIZEN GENERGATED VIDEOS DIRECT MAIL SOCIAL NETWORKS BLOGS PACKAGING MICROBLOGGING EMAIL NEWSLETTER CONSUMER REVIEWS BRAND WEBSITES MOBILE SERVICES WORD OF MOUTH Yahoo! Presentation, Confidential 23
    • 24. Consumer and marketer tool sets have evolved LONG-STANDING TOOLS NEW TOOLS TV/Radio Online Videos by Consumers Print (e.g., Newspapers, Magazines, etc.) Consumer reviews Direct Mail Blogs Print Circulars/Coupons WoM via Social Networking Search Engines Company’s Facebook Page Consumer Portals Mobile Brand/Manufacturer/Retailer Sites Deal/Coupon/Flash Deal Sites Expert reviews Yahoo! Presentation, Confidential 24
    • 25. Yahoo! Presentation, Confidential 25
    • 26. Tools empower users across their purchase path todiscover, evaluate and socialize OFFLINE DIGITAL • TV/Print Stories • Search Engines • Salesperson • Consumer Portal Site • Digital Articles • Video by Manufacturer/Experts • Reviews on a Brand Site • Enthusiast/Consumer Report Site • Brand /Retailer Site • Podcasts • Print Circulars and Coupons • Mobile Coupons • Physical Store • Barcode Reader • Deal Collection emails • Digital Coupon Sites • Auction Sites • Word of Mouth – With those who • Videos generated by Consumers own or do not own product • Consumer Reviews • Used/Tested Out Product • Chat Rooms/Message Boards • Blogs • Discussed via Social Net Sites • Company’s Facebook Fan Page Yahoo! Presentation, Confidential 26
    • 27. Tools are used across shopping process in varying degreeswith discover tools used the most TOOLS USED THROUGHOUT SHOPPING PROCESS (Among Total – Net of All Categories) 31% 19% 17% AWARENESS 54% 36% 34% GATHER INFO & NARROWING DOWN 8% 4% 4% POST PURCHASE 38% 29% 19% MAKING A PURCHASE DECISION Yahoo! Presentation, Confidential 27
    • 28. Discover: Shoppers use the discover card in their tool kitto understand their options… Learn about product features and find the best product for you Advertising  Awareness and surface information Digital content  Deeper understanding THE BEST HELP WAS READING PRODUCT REVIEWS, BLOGS AND DISCUSSION BOARDS. IT MADE ME AWARE OF ANY PROS AND CONS, AND HELPED ME SELECT THE BEST MODEL FOR US, SINCE THERE WERE NUMEROUS MODELS AND CONFIGURATIONS -FEMALE, 35, BUYING A COMPUTER Yahoo! Presentation, Confidential 28
    • 29. … but those options don’t need to be purely rational, itcan and should delight emotionally Information can have an emotional payoff Match shoppers’ values, style Reduce fear for higher risk purchases Information can engage the imagination The beginning of the dream, builds anticipation “NOW, BEING SMARTER IS COOL “BUILDING MY CAR ONLINE WAS VS. BEING THE FIRST” EXCITING, THE THRILL OF ANTICIPATING IT. THE OTHER CAR -MALE, 39 SITES DIDN’T HAVE THAT FEATURE.” ON BUYING ELECTRONICS - FEMALE, 28, ON BUYING A CAR Yahoo! Presentation, Confidential 29
    • 30. Auto and electronics shoppers use a variety of touchpoints to discoverDISCOVER: What sources did you use? 100% 80% 60% 40% 20% 0% THIRD PARTY USED A SEARCH MANUFACTURER IN-STORE (NET) OFFLINE RESEARCH CONTENT (NET) ENGINE (NET) CONTENT (NET) (NET) ELECTRONICS AUTO PERSONAL CARE RETAIL FINANCE OTC HIGH TOUCHPOINTS Yahoo! Presentation, Confidential 30
    • 31. Online sources have the greatest reach and are consideredas influential as in-store sale associatesDISCOVER: Influence to Purchase by Overall Usage VERYINFLUENTIAL 100% KEY COMPARE DIGITAL OFFLINE 90% INFLUENCE ON PURCHASE 80% Salesperson Consumer Report Site Watch Video, Expert Reviews on Website Manufacturer Print Stories Brand Site 70% Read Digital Articles Watch Video, Reviews on Expert Created Brand Site Enthusiast Site 60% Podcast Retail Site TV Stories Search Engine Company’s Consumer Site Dealership Site Facebook (AOL,Yahoo!) 50% Department Store Site 40% NOT VERY 30%INFLUENTIAL 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 31
    • 32. Evaluation ensures shoppers get the best value Find the best value for your money 69% of shoppers now seek more deals & coupons online because of the Internet 49% of shoppers use more coupons now because of the Internet “YAHOO SHOPPING ENABLES ME TO QUICKLY FIND THE BEST PRICE, FROM HUNDREDS OF SITES SELLING AN ITEM. I JUST USED IT LAST WEEK TO FIND A GREAT PRICE ON HEARTWORM PILLS FOR MY DOG.” -MALE, 40 Y.O. Yahoo! Presentation, Confidential 32
    • 33. Online allows shoppers to do more evaluation for autoand electronicsEVALUATE: What sources did you use? 40% 30% 20% 10% 0% VISITED A PRODUCT VISITED AN AUCTION VISITED A DIGITAL USE LOCATION- USE A BARCODE DEAL COLLECTION COMPARISON SITE COUPON SITE BASED CHECK IN READER TO FIND E-MAIL WEBSITE SERVICES TO GET A DEALS AND OFFERS DEAL-COUPON ELECTRONICS AUTO PERSONAL CARE RETAIL FINANCE OTC HIGH TOUCHPOINTS Yahoo! Presentation, Confidential 33
    • 34. Consumer usage of digital and mobile couponing is still relatively low but fairly influential EVALUATE: Influence to Purchase by Overall Usage VERY 100% KEYINFLUENTIAL COMPARE DIGITAL OFFLINE 90% INFLUENCE ON PURCHASE 80% Mobile Physical Store Location Based Circular & Coupons 70% Coupons Deal Collection Email 60% Digital Coupon Site Mobile Barcode 50% Reader Auction Sites 40% NOT VERYINFLUENTIAL 30% 0% 5% 10% 15% 20% 25% 30% 35% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 34
    • 35. Shoppers actively seek others’ advice to help them ontheir way Get trustworthy feedback to make smarter decisions faster Opportunity for brands: leverage reviews and ratings in digital ads 59% 49% of consumers give advice – motivated by a feeling of believe they had an advantage over solidarity with other the manufacturer/retailer because consumers, and standout the Internet allows them seek performance of a brand others opinions Yahoo! Presentation, Confidential 35
    • 36. Socialization occurs because of shoppers’ deepcommitment to brands People seek deeper involvement with brands they care about Because of the Internet… 38% feel more connected to the brands they like 27% spend more time talking with others about products and brands than they used to 25% are more likely to seek others opinions now that social networking/online communities are available “I FEEL THAT A COMPANY THAT EMPLOYS SOCIAL NETWORKING IS REALLY TRYING TO CONNECT WITH THEIR CUSTOMERS BY GETTING A FEEL FOR WHAT THEY LIKE AND DISLIKE. IT MAKES THE COMPANY SEEM MORE ACCESSIBLE AND TANGIBLE TO ME.” -FEMALE, 26 Y.O. Yahoo! Presentation, Confidential 36
    • 37. Shoppers are more apt to look for consumer-generatedsources in most categories vs. manufacturersTYPE OF INFORMATION USED IN THE PURCHASE PROCESS 48% ELECTRONICS 35% 41% AUTO 46% 22%PERSONAL CARE 20% 19% FINANCE 2% 12% Consumer-generated digital content RETAIL 1% Manufacturer-generated digital content 12% OTC 1% Yahoo! Presentation, Confidential 37
    • 38. Automotive shoppers are most likely to read reviews and share their opinions SOCIALIZE: What did you use to research your purchase? 80% 60% 40% 20% 0% WORD OF CONSUMER BLOGS ANY SOCIAL DISCUSSED ON VISITED A WATCHED A VISITED A CHATMOUTH (NET) REVIEWS NETWORKING A SOCIAL COMPANY’S VIDEO MADE BY ROOM AND-OR USED NETWORK FACEBOOK A CONSUMER DISCUSSION PAGE BOARDS ELECTRONICS AUTO PERSONAL CARE RETAIL FINANCE OTC HIGH TOUCHPOINTS Yahoo! Presentation, Confidential 38
    • 39. While discussion in-person is most common, sharing isstarting to take place in many digital formatsSOCIALIZE: Influence to Purchase by Overall Usage VERYINFLUENTIAL 100% KEY COMPARE DIGITAL OFFLINE 90% Used Product At Friends/Family’s House Discussed With Friends & INFLUENCE ON PURCHASE Family Who Own Product 80% Watch Video, Consumer Generated Consumer Reviews 70% Read Blogs on Website Chat room,Consumer Boards Reviews Discussed with Family & 60% of Store Friends Who Don’t Own Company Facebook Product Discussed Page via Social 50% Network 40% NOT VERYINFLUENTIAL 30% 0% 5% 10% 15% 20% 25% 30% 35% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 39
    • 40. Discover and evaluate tools play a greater role throughoutthe processTOOLS USED THROUGHOUT PURCHASE PATH – Among Users of Those Tools90%80%70%60%50%40%30%20%10% KEY DISCOVER TOOLS EVALUATE TOOLS SOCIALIZE TOOLS 0% BECOMING AWARE GATHERING INFO MAKING FINAL POST PURCHASE DECISIONS Yahoo! Presentation, Confidential 40
    • 41. Chapter 3WHAT DOES IT MEAN FOR MARKETERS? Yahoo! Presentation, Confidential 41
    • 42. Marketers need to get in the gameEnable instant Be honest with consumers and Make it easier and more fun access to advertise in trusted digital than ever to shop and find increasingly spaces good deals valuable information (e.g., expertreviews, video s, etc.) Yahoo! Presentation, Confidential 42
    • 43. Greater access to digital information makes it easier fornew brands to break through MORE BRANDS GREAT SPEED & CONFIDENCE 68% of consumers feel 72% feel the Internet that they are aware makes it easier to of more brands than figure out which prior to the Internet brands to consider Yahoo! Presentation, Confidential 43
    • 44. And consumer filter sources to get to what’s relevantNAVIGATING INFORMATION TO QUICKLY FIND WHAT’S MOST HELPFUL, RELEVANT “OFTEN TIMES THERE ARE ADS ALONG THE SIDE OF THIS SITE, HYPEBEAST.COM, FOR CLOTHING. THERE’S A LOT OF STUFF HERE THAT I’VE NOT HEARD OF BEFORE, BUT I’M LIKELY TO LOOK AT IT BECAUSE IT’S AROUND THIS OVERALL CULTURE – SKATEBOARD, HIP HOP CULTURE, STYLE.” -MALE, 39 Y.O. Yahoo! Presentation, Confidential 44
    • 45. Brand and third-party content, reviews and digital advertising can foster greater connections Q: What digital touch points make you feel close to a brand (i.e., it fit my style/tastes, its for someone like me)? KEY VERY COMPARE DIGITAL OFFLINE 45%CLOSE TO BRAND Expert Video 40% Social Networking WoM Manufacturer/Retailer Digital Read Blogs Content (SUBNET) Manufacturer Video FEEL CLOSE TO BRAND Consumer Reviews Third Party Digital Content (NET) 35% Chat room/discussion boards Manufacturer website Company Facebook page Online Articles Digital Advertsing (NET) 30% Expert Reviews Consumer Videos Mobile Enthusiast website Reviews on Retail site 25% Manufacturer Site Search engine Visited a category report website Consumer Portal 20% Auction sites 15% NOT VERY Digital Coupons/Deals (NET)CLOSE TO BRAND 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 45
    • 46. Personal relevance and context matters in digital advertising  Positive emotional response  Draws attention very fast  Long fixation time  Long fixation timeHIGH  Solid cognitive engagement  Positive strong emotional response  Positive strong cognitive processing PERSONAL RELEVANCE OF AD But…  Slow to draw attention  Noticed  Draws attention fast  Strong emotional response But…  Negative emotional response But…  Short fixation time  Shorter fixation time  Slow to draw attention  Potential for some negative  Low cognition emotional response.LOW CONTEXT (CONTENT) NOT RELATED RELATED *SOURCE: YAHOO!/INNERSCOPE POWER OR RELEVANCE STUDY (2011) Yahoo! Presentation, Confidential 46
    • 47. Digital advertising facilitates the shopping process by spreading info on features, price and place DIGITAL ADVERTISING TAUGHT ME THE FOLLOWING 40% 36% 34% 31% 28%ND OUT ABOUT FEATURES (E.G. PRODUCT SPECS) THEMADE ME FEEL CLOSE TO A BRAND (E.G.MADE MY STYLE/TASTES, ITS FOR SOMEONE LIKE M I FOUND OUT ITI PRICE OUT HOW OR WHERE TO BUYIT IT FIT ME TRUST A BRAND/IT SHOWED A BRAND H FOUND IT Yahoo! Presentation, Confidential 47
    • 48. While the scale of digital ads is not large, its influence ison par with the likes of TV and print adsADVERTISING: Influence to Purchase by Overall Usage VERY KEY 80%INFLUENTIAL Loyalty club COMPARE DIGITAL OFFLINE 70% Digital Email/newsletter Video ad INFLUENCE ON PURCHASE 60% Clicked TV Ads Barcode Digital Ad Print Ads Reader Saw Ad on Mobile App Category Site 50% Mobile Ad Ads in theater Radio ads 40% OOH Saw Search Engine Ad Saw Ad on Non-category Site 30% NOT VERYINFLUENTIAL 20% 0% 5% 10% 15% 20% 25% OVERALL USAGE IN SHOPPING PROCESS Yahoo! Presentation, Confidential 48
    • 49. And off-line and digital advertising play similar rolesthroughout the shopping processTOOLS USED THROUGHOUT PURCHASE PATH – Among Users of Those Tools70%60%50%40%30%20%10% DIGITAL ADVERTISING (ONLINE, MOBILE, ETC) KEY TRADITIONAL ADVERTISING (TV, PRINT, ETC.) 0% BECOMING AWARE GATHERING INFO MAKING FINAL DECISION POST PURCHASE Yahoo! Presentation, Confidential 49
    • 50. Chapter 4WHAT ARE WE RACING TOWARD? Yahoo! Presentation, Confidential 50
    • 51. YESTERDAY’S THINKING TODAY’S REALITY Shoppers collaborate with other “players” Shopping is an individual process (consumers and brands) Shopping/decision-making is a chore, Consumers are intrigued by the paths they discover a mere means to an end to being smart and savvy shoppers The decision-making process is rational A vast network is employed to steer shoppers towardand takes time to make the right decision the right decision The Internet helps consumers navigate their The Internet overwhelms people choices, resulting in faster, less impulsive decision- with too much information making Everyone looks for deals because it showsOnly cost-conscious people look for deals, they are technically savvy and smart, and it’s not discussed which also becomes news worth sharing Yahoo! Presentation, Confidential 51
    • 52. ImplicationsMarketers should be contributors to the social ecosystem by identifying the mosttrusted sources for consumers and becoming part of the conversation.Create reward systems that deliver the “consumer win” by making the consumer feelspecial – such as tailoring deals to their expressed interests and encourages viralsharingMarketers don’t necessarily need to be considered a consumer’s “friend,” but shouldleverage the right media to aid consumers – like expert reviews.Online sources influence purchases just as much, if not more, as offline sources so it’simportant to make sure your brand is part of the online dialogueLeveraging brands as contributing members of 3rd party communities (e.g., fanpages, microsites, etc.) is a novel way for brands to offer a more personal andauthentic viewConsumers use discover tools most often when gathering information and narrowingdown options, but your presence doesn’t need to be purely rational. It can andshould delight emotionally. Yahoo! Presentation, Confidential 52
    • 53. YAHOO! Ashmeed Ali Ira Amilhussin Lauren Weinberg Edwin H. Wong UM Mike Haggerty Graeme Hutton Karen Ring HALL & PARTNERS Beth Wall Denise Calfo Devon Bell Kristin Kwan Suzanne Carbonell DESIGNER Diana YoungYahoo! Presentation, Confidential 53