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Advertising is Dead. Long Live Advertising.

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This was prepared for a session at Institute of Media and Entertainment Executive Education as a part of IESE School of Business in Barcelona & Madrid. More on this really great program can be found …

This was prepared for a session at Institute of Media and Entertainment Executive Education as a part of IESE School of Business in Barcelona & Madrid. More on this really great program can be found at http://www.ime.edu/ Great that someone is taking a high-level, academic view of the media and digital media sectors. This is similar to my other preso done for SB Media.

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  • 1. Advertising is Dead! Long Live Advertising! IESE / IME Advanced Digital Media Strategies May 12, 2010 New York City com greg@gregstuart.com Twitter.com/gregstuart 1
  • 2. Double-Think …the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function. F Scott Fitzgerald greg@gregstuart.com Twitter.com/gregstuart 2
  • 3. First Step: Know your Audience – Are you? Buy Side Sell Side (Ad (Ad Buyer, Marketer, Seller, Publisher, etc. etc.) ) 1 2 Enabler (Content Creator, technology, etc.) 3 Investor 4 (M&A, Venture, etc.) greg@gregstuart.com Twitter.com/gregstuart 3
  • 4. First Step: Your Reaction to Digital Media Love It Hate It • Best thing that’s • Over hyped ever happened • Who needs it • Can’t get enough • Like to turn off greg@gregstuart.com Twitter.com/gregstuart 4
  • 5. 3 Areas To Cover Today 1. Why Advertising is Failing 2. What is Advertising’s Exciting Future 3. Where to Look in the Future Items I Could Speak To: Digital Media – Sales Digital Media – Buying Advertising Social Media Mobile Media Start ups Venture Capital greg@gregstuart.com Twitter.com/gregstuart 5
  • 6. IT’S TOO BAD ADVERTISERS ARE NOT GOOD AT ADVERTISING. greg@gregstuart.com Twitter.com/gregstuart 6
  • 7. 37% of Ad Spending is slide title Wasted greg@gregstuart.com In the U.S., an estimated $112 Billion is Wasted Twitter.com/gregstuart 7
  • 8. Researched $1 Billion in Ad Spend 1.1 Million Consumers Surveyed Note: Of the 30 studies, 25 in U.S., 5 in EU greg@gregstuart.com Twitter.com/gregstuart 8
  • 9. 36% Motivations Messaging Media What Did Learn From the Research? greg@gregstuart.com Twitter.com/gregstuart 9
  • 10. ING’s 4 Year Campaign: Fresh Thinking greg@gregstuart.com Twitter.com/gregstuart 10
  • 11. Today’s Ads For ING Simplifies A Complicated Financial World greg@gregstuart.com Twitter.com/gregstuart 11
  • 12. 36% 31% Motivations Messaging Media More, What Do We Know? greg@gregstuart.com Twitter.com/gregstuart 12
  • 13. A B Source: IAB Cross Media Study How Big A Difference Can Creative Make? greg@gregstuart.com Twitter.com/gregstuart 13
  • 14. Creative Makes A BIG Difference A 20% Purchase Intent B 2% 0% 5% 10% 15% 20% 25% Source: IAB Cross Media Study greg@gregstuart.com Twitter.com/gregstuart 14
  • 15. A B Source: IAB Cross Media Study And Just to See It Again greg@gregstuart.com Twitter.com/gregstuart 15
  • 16. 36% 31% 83% Motivations Messaging Media Yes, It’s That Bad, and Worse greg@gregstuart.com Twitter.com/gregstuart 16
  • 17. The Truth Is…Marketing is Hard Suppose you have 5 options: • 5 Brand Positionings • 5 Customer Segmentations • 5 Ad Creative Approaches • 5 Magazine Schedules/Plans • 5 Online Plans 3,125 Combinations 10 to 10th = 1 billion combinations greg@gregstuart.com Twitter.com/gregstuart 17
  • 18. greg@gregstuart.com Twitter.com/gregstuart 18
  • 19. What Sticks was Written to Be… A Clarion to Call* Marketers for Change Clarion Call * A clarion call is a powerful request for action or an irresistible mandate. Frequently used in a religious context, or in a political context, in that a politician issues a challenge for action from the public. greg@gregstuart.com Twitter.com/gregstuart 19
  • 20. What If They Don’t Take slide title the Call? greg@gregstuart.com Twitter.com/gregstuart 20
  • 21. Donny Deutsch Quote “We did a wonderful spot…on the Superbowl… for Mitsubishi Gallant...that stops at the end and [says] go to “seewhathappens.com.” We got about 600,000 clicks. Was that great or that not great? We told the client it was great, so it was great.” [nervous laughter] − Donny Deutsch speaking to 500 Marketers… Deutsch is the 14 largest agency in the US greg@gregstuart.com Twitter.com/gregstuart 21
  • 22. So What Do We Do? slide title greg@gregstuart.com Twitter.com/gregstuart 22
  • 23. Focused on EFFECTIVENESS! What Did Google Do So Right $20 Billion in Revenue Right! greg@gregstuart.com Twitter.com/gregstuart 23
  • 24. Google’s Revenue Per Page $68.00 eCPM $0.54 CPC x 17% click thru x 74% sell thru What is That Worth to Google? Source: Jordan Rohan, Analyst at RBC greg@gregstuart.com Twitter.com/gregstuart 24
  • 25. How Can We Drive slide title Effectiveness? greg@gregstuart.com Twitter.com/gregstuart 25
  • 26. Respect Diminishing Returns: It’s a Law of Physics in Media 100% Awareness, Image or % of Brand Impact 80% 5 Purchase Intent 4 3 Diminishing 60% 2 Returns 1 40% 20% 0% 1 2 3 4 5 6 7 8 9 10 Frequency or Budget greg@gregstuart.com Twitter.com/gregstuart 26
  • 27. Heaviest Online Quintile Garners Half the Ad Imps 70% Percent of Total Impressions 60% 58% 50% Avg. Freq: 1.0 2.1 3.2 5.5 25.0 40% 30% 19% 20% 11% 10% 5% 6% 0% -10% Light All other Heavy Users quintiles Users greg@gregstuart.com Twitter.com/gregstuart 27
  • 28. Putting in Frequency Caps Greatly Improves Increased Performance reach by +50% to 70% 72% in Ad Effectiveness Percent of Total Impressions 70% Frequency Cap 60% of 3 implemented 50% 40% 29% 29% 30% 21% 20% 10% 12% 10% 0% -10% Light All other Heavy Users quintiles Users greg@gregstuart.com Twitter.com/gregstuart 28
  • 29. Even Bigger Came from Adjusting the Marketing Mix Introducing New Menu Item: Grilled Chicken Flatbread Sandwich 60% Reinvested Cut 13.6% 6.4% 50% in Online % Aided Awareness 40% 5pt Gain! 20% of 30% Broadcast Budget 20% Point of Diminished 10% Returns 0% -10% Ad Frequency (or Budget or Time) greg@gregstuart.com Twitter.com/gregstuart 29
  • 30. Optimizing Each Campaign Is High Value Brand Contri- Brand Contri- Imps (M) Performance bution Imps (M) Performance bution Creative 1 -- -- -- Creative 1 10.0 -15.9% (1.59) Creative 2 15.0 13.8% 2.07 Creative 2 10.0 13.8% 1.38 Creative 3 15.0 11.3% 1.70 Creative 3 10.0 11.3% 1.13 Total 30.0 3.77 Total 30.0 0.92 Source: Insight Express Same Media Budget  310% Increase greg@gregstuart.com Twitter.com/gregstuart 30
  • 31. We CAN Really Impact +0% to Ad Effectiveness INFINITY increase in Ad Insights from the What Sticks’ Research Effectiveness Low High 1. Cut out International impressions 18% to 43% 2. Manage Frequency 50% to 70% 3. Capitalize on Time of Day/DoW 10% to 15% 4. Ad Size matters 20% to 54% 5. Page Placement really matters 6% to 350% 6. Creative is “mission critical” 0% to 400% Total Gain Possible: 0% 2910% greg@gregstuart.com Twitter.com/gregstuart 31
  • 32. WHAT IF WE GOT ADVERTISING RIGHT? greg@gregstuart.com Twitter.com/gregstuart 32
  • 33. Ford F-150 Case Study slide title “Most Important Car Launch in Ford’s History.” Bill Ford greg@gregstuart.com Twitter.com/gregstuart 33
  • 34. The F-150 Online Ads greg@gregstuart.com Twitter.com/gregstuart 34
  • 35. How Big a Difference Can Little Changes Make? Demo greg@gregstuart.com Twitter.com/gregstuart 35
  • 36. Online = 10X Value Brand Metric: Purchase Consideration Relative (top 2 box) Cost Index Relative Cost TV 1104 $11.04 Magazine 456 $4.56 Roadblock 100 $1.00 Online 135 $1.35 Interpretation: If it cost Roadblock $1 (indexed at 100) to increase purchase consideration, then it cost $1.35 for Online, $4.56 for magazine and $11.04 to TV to achieve the same increase. greg@gregstuart.com Twitter.com/gregstuart 36
  • 37. Does “Getting It Right”, Impact Sales 100% Online New Mix Added + 80% Traditional Media (TV, Magazines) Online $$$ $1,350,000,000 in U.S. Truck sales 60% Before: Cost of Portal Home Page Take-Over ad in study: 40% $500,000 20% Today: Cost of Portal Home Page Take-Over ad: 0% $2,500,000 Base 2.5% 6% Plan Online Online * Approx. $200 Million Budget greg@gregstuart.com Twitter.com/gregstuart 37
  • 38. What Sticks’ Three Steps 1. Universal Agreement to Goals 2. Have a Back Up Plan (Plan B) 3. Know the Value of each Dollar greg@gregstuart.com Twitter.com/gregstuart 38
  • 39. 70-20-10 70% budget to what you know works 20% to innovating off of what works 10% to brand new ideas 1. Effectiveness 2. Efficiency greg@gregstuart.com Twitter.com/gregstuart 39
  • 40. SNEAK PEEK AT THE FUTURE greg@gregstuart.com Twitter.com/gregstuart 40
  • 41. The Changetitle slide is Seismic General “The country’s third-largest advertiser, Motors is getting ready to shift fully half of its $3 billion budgetinto digital and one-to-one marketing within the next 3 years.” Advertising Age March 17, 2008 greg@gregstuart.com Twitter.com/gregstuart 41
  • 42. But slide titleDo? What to greg@gregstuart.com Twitter.com/gregstuart 42
  • 43. And slide to Do It? How title greg@gregstuart.com Twitter.com/gregstuart 43
  • 44. slide title The State of Advertisers? greg@gregstuart.com Twitter.com/gregstuart 44
  • 45. 3 Broad Media Trends Today 1.Fragmentation 2.Frugality 3.Fast(er) greg@gregstuart.com Twitter.com/gregstuart 45
  • 46. 1966 1996 2006 1. Newspapers 1. Newspapers 1. Newspapers 2. Broadcast TV 2. Magazines 2. Magazines 3. Magazines 3. Cable TV 3. Email 4. Broadcast Radio 4. Broadcast TV 4. Broadcast TV 5. Eight Track 5. Radio 5. Radio 6. Cassette Tapes 6. CD Player 7. Walkman 7. Cable TV 8. VCR 8. Personal Computer 9. Personal Computer 9. Satellite Television 10. Console Video Games 10. Internet 11. PC Video Games 11. Cellphone 12. DVD Players 13. Satellite Radio 14. MP3 Players 15. TivoDVR 16. Slingbox 17. iPod 18. Blogs 19. Online Video 20. Mobile Internet 21. Console Video Games More Options Than Ever 22. PC Video Games 23. MMORP Games 24. Mobile Games greg@gregstuart.com 25. Text Messaging Fragmented Twitter.com/gregstuart 46 26. Mobile Video
  • 47. People Spend 9 Hours a Day with Media greg@gregstuart.com Fragmented Twitter.com/gregstuart Source: http://www.researchexcellence.com/ 47
  • 48. Most is Networked Digital Media greg@gregstuart.com Fragmented Twitter.com/gregstuart 48
  • 49. digital advertising more complex than ever and the options more diverse Outbound IM communication iPhone apps Email SMS/MMS Streaming Display marketing marketing Podcasting Online Microsite advertising development Website Development Influentials Viral INTERACTIVE AD Seeding CHANNEL Online WOM Blogs Branded entertainment Microblogging Search engine App CRM Video - YouTube mktg Development application RSS SEO Widgets greg@gregstuart.com Fragmented Twitter.com/gregstuart 49
  • 50. Intense Focus on Adding slide title New Value greg@gregstuart.com Frugal Twitter.com/gregstuart 50
  • 51. And the Adoption is Faster than Ever Years to Reach 50 Million Users Radio 38 TV 13 Internet 4 Ipod 3 60 million new Facebook user in Facebook 1 the last two months of 2009 0 10 20 30 40 Source: United Nations Cyber Document, Apple, Facebook greg@gregstuart.com Faster Twitter.com/gregstuart 51
  • 52. Mobile Internet Outpaces Computer Internet iPhone + iTouch Users = 8x AOL Users 8 Quarters After Launch 60 Mobile Internet Desktop Internet 50 iPhone + iTouch Netscape* Launched 6/07 Launched 12/94 40 Mobile Internet Subscribers (MM) NTT docomo i-mode 30 Launched 6/99 20 Desktop Internet 10 AOL* V2.0 Launched 9/94 Q1 Q3 Q5 Q7 Q9 Q11 Q13 Q15 Q17 Q19 Quarters Since Launch greg@gregstuart.com Faster Twitter.com/gregstuart 52 Source: Morgan Stanley
  • 53. The Twitter Phenomena Registered Users 106 million 100.0 • Adding 300,000 registered a day 80.0 • 180 million uniques ‘Millions 60.0 a mo. 40.0 • 55 million tweets a 20.0 day 0.0 2006 2007 2008 2009 2010 Source: Twitter April 2010 greg@gregstuart.com Faster Twitter.com/gregstuart 53
  • 54. Maybe, Someday? greg@gregstuart.com Twitter.com/gregstuart 54
  • 55. 3 Digital Trends for Tomorrow 1. Ad Avoidance 2. Social 3. Mobile greg@gregstuart.com Twitter.com/gregstuart 55
  • 56. Ad Blocking Ad Blocking estimated at 7-8%* • up from 2-3% in 2003 • eBay reports closer to 10-15%. Search is lower at 5-6% 3 of the top 10 most popular software downloads are ad blockers Source: DCLK Analysis in 2005 greg@gregstuart.com Avoidance Twitter.com/gregstuart 56
  • 57. Ad Blocking: Before and After Before After greg@gregstuart.com Avoidance Twitter.com/gregstuart 57
  • 58. Cookie Deletion Rates by (anonymous) Site Cross Site User Breakdown 100% 18% 20% 17% 13% 13% 14% 90% 20% 80% 17% 13% 18% 19% 14% 26% Percentage of Users 70% 29% 60% 50% 74% 40% 63% 66% 69% 68% 30% 57% 51% 20% 10% Rejectors Inconsistent Acceptors 0% Site A (8-27-05 Site B (11-17-05 Site C (9-1-05 Site D (2-14-06 Site E (2-22-06 Site F (2-01-06 Site G (2-01-06 thru 4-20-06) thru 4-19-06) thru 1-31-06) thru 4-20-06) thru 4-01-06) thru 4-20-06) Avoidance thru 4-20-06) greg@gregstuart.com Twitter.com/gregstuart 58
  • 59. People Want Relationships More than Content Facebook – Largest Share Gainer of Online Usage Over Past 3 Years Share of Global Online Time Spent, 6/06 – 6/09 14% 12% Facebook % Share of Global Minutes 10% 8% MSN YouTube 6% 4% 2% Yahoo! 0% 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 12/08 3/09 6/09 Yahoo.com Msn.com Google.com YouTube.com Facebook.om greg@gregstuart.com Social Twitter.com/gregstuart 59 Source: Morgan Stanley
  • 60. • 76% of consumers visit a social network in a month * • 17% of time is Social Media ** – Social now represents 22% of display impressions * Explosion of Social * comScore July 2009 ** Nielsen 2009 greg@gregstuart.com Social Twitter.com/gregstuart 60
  • 61. Social Media is Evan Overtaking Email Number of Global Users (MM) Global Minutes Spent per Month (B) 11/06 – 12/09 11/06 – 12/09 900 250 Social Networking Users 800 Surpassed Email = 7/09 200 Social Networking Usage 700 Surpassed Email = 11/07 150 600 100 500 50 400 300 0 11/06 7/07 3/08 11/08 7/09 11/06 7/07 3/08 11/08 7/09 Social Networking Email greg@gregstuart.com Social Twitter.com/gregstuart 61 Source: Morgan Stanley
  • 62. 2010 slide of Mobile Year title 4.6B Mobile Users WW 17% Smartphone's in U.S. projected @ 46% WW in 2013 greg@gregstuart.com Mobile Twitter.com/gregstuart 62
  • 63. Global Web Access is Going Mobile 2000 Mobile Web Total Internet 1500 1000 500 Total Internet 0 Mobile Web 2009 2013 Forrester 2009 greg@gregstuart.com Mobile Twitter.com/gregstuart 63
  • 64. What Does the Future Hold for Social Media? greg@gregstuart.com Twitter.com/gregstuart 64
  • 65. Welcome to Double Think In the novel 1984, doublethink is simultaneously accepting as correct, two mutually contradictory beliefs. It is related to, but distinct from, hypocrisy and neutrality. Its opposite is Cognitive Dissonance, where the two beliefs cause conflict in one's mind. greg@gregstuart.com Twitter.com/gregstuart 65
  • 66. What Will Historians Say Regarding Advertising? It was the best of the times, it was the worst of times greg@gregstuart.com Twitter.com/gregstuart 66
  • 67. What Sticks’ Three Steps 1. Universal Agreement to Goals 2. Have a Back Up Plan (Plan B) 3. Know the Value of each Dollar greg@gregstuart.com Twitter.com/gregstuart 67
  • 68. 70-20-10 70% budget to what you know works 20% to innovating off of what works 10% to brand new ideas greg@gregstuart.com Twitter.com/gregstuart 68
  • 69. Industry On Brink of Change I cannot say whether things will get better if we change; what I can say is they must change if they are to get better. − Georg Christoph Lichtenberg 18th-century German scientist, satirist and Anglophile greg@gregstuart.com Twitter.com/gregstuart 69
  • 70. com greg@gregstuart.com Website: www.gregstuart.com +1 631 702 0682 Speakersite: www.gregstuartspeaker.com Blog: Mansavesdog.wordpress.com www.slideshare.net/gregstuart www.twitter.com/gregstuart www.facebook.com/stuartnyc thank you! www.veoh.com/users/gregstuart www.linkedin.com/in/gregstuart greg@gregstuart.com Twitter.com/gregstuart 70

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