Marketing Trends June 7, 2007

Marketing “… identifying and meeting human and social needs.” Philip Kotler

Agenda Myths Trends Paradigms

Myths

Trends

Paradigms

Driver The Internet The Internet continues to be the key driving force behind marketing innovation WOMM widget bliget chicklet buzztracker mashup delicious social media social bookmarking SMO trackback digg tag typelist blogroll viral marketing buzz marketing vblog podcasting contentcasting

The Internet

The Internet continues to be the key driving force behind marketing innovation

Marketing Myths The same marketing techniques work every time You need a multimillion budget to create a commercial Marketing is all about advertising Marketing is simply an operational expense A perfectly executed marketing plan will guarantee success Marketing’s goal is to increase sales Marketing starts when you’re ready to launch Marketing is a function. “Marketing owns it” Innovation comes from inside Never give the product / service away You must position and identify with an industry & competition Target the broadest customer segment

The same marketing techniques work every time

You need a multimillion budget to create a commercial

Marketing is all about advertising

Marketing is simply an operational expense

A perfectly executed marketing plan will guarantee success

Marketing’s goal is to increase sales

Marketing starts when you’re ready to launch

Marketing is a function. “Marketing owns it”

Innovation comes from inside

Never give the product / service away

You must position and identify with an industry & competition

Target the broadest customer segment

Crisis In Mass Marketing 18%: Proportion of TV advertising campaigns generating positive ROI 54 cents: Average return in sales for every $1 spent on advertising 256%: The increase in TV advertising costs (CPM) in the past decade 84%: Proportion of B2B marketing campaigns resulting in falling sales 100%: The increase needed in advertising spend to add 1-2% in sales 14%: Proportion of people who trust advertising information 90%: Proportion of people who can skip TV ads who do skip TV ads 80%: Market share of video recorders with ad skipping technology in 2008 95%: The failure rate for new product introductions 117: The number of prime time TV spots in 2002 needed to reach 80% of adult population – up from just 3 in 1965 3000: Number of advertising messages people are exposed to per day 56%: Proportion of people who avoid buying products from companies who they think advertise too much 65%: Proportion of people who believe that they are constantly bombarded with too much advertising 69%: Proportion of people interested in technology or devices that enable them to skip or block advertising Source: Justin Kirby & Paul Marsden (2006). Connected marketing . Oxford, UK: Butterworth-Heinemann. xix

18%: Proportion of TV advertising campaigns generating positive ROI

54 cents: Average return in sales for every $1 spent on advertising

256%: The increase in TV advertising costs (CPM) in the past decade

84%: Proportion of B2B marketing campaigns resulting in falling sales

100%: The increase needed in advertising spend to add 1-2% in sales

14%: Proportion of people who trust advertising information

90%: Proportion of people who can skip TV ads who do skip TV ads

80%: Market share of video recorders with ad skipping technology in 2008

95%: The failure rate for new product introductions

117: The number of prime time TV spots in 2002 needed to reach 80% of adult population – up from just 3 in 1965

3000: Number of advertising messages people are exposed to per day

56%: Proportion of people who avoid buying products from companies who they think advertise too much

65%: Proportion of people who believe that they are constantly bombarded with too much advertising

69%: Proportion of people interested in technology or devices that enable them to skip or block advertising

Status of Marketing Management “ In many organizations, the corporate marketing function has lost budget, head count, influence, and confidence, resulting in strategic consequences than run deeper than many managers may realize.” Source: The Decline and Dispersion of Marketing Competence. 2006 MIT Sloan Management Review

“ In many organizations, the corporate marketing function has lost budget, head count, influence, and confidence, resulting in strategic consequences than run deeper than many managers may realize.”

Source: The Decline and Dispersion of Marketing Competence. 2006 MIT Sloan Management Review

Green Grey Karma Capitalism Transparency Authenticity Democratized advertising WOMM Controversy Market space Social media Trusted social media advertising Online paid search ads Trends

Green

Grey

Karma Capitalism

Transparency

Authenticity

Democratized advertising

WOMM

Controversy

Market space

Social media

Trusted social media advertising

Online paid search ads

Out Traditional advertising Monologue Market place Classical 4Ps paradigm

Traditional advertising

Monologue

Market place

Classical 4Ps paradigm

70+ Million Weblogs March 07 March 03 Source:http://www.sifry.com/alerts/archives/000493.html

Websites WW Netcraft November 2006 survey In May 2007, the number reported was a little over 118 million worldwide

Source:http://www.sifry.com/alerts/archives/000493.html

Posts By Language Source:http://www.sifry.com/alerts/archives/000493.html #1 Japanese #2 English #3 Chinese

Global Online Population Currently about 1.2 billion Projected to grow to 1.8 billion by 2010

Currently about 1.2 billion

Projected to grow to 1.8 billion by 2010

Summary 70 million weblogs About 120,000 new weblogs each day, or... 1.4 new blogs every second 3000-7000 new splogs (fake, or spam blogs) created every day Peak of 11,000 splogs per day last December 1.5 million posts per day, or... 17 posts per second Growing from 35 to 75 million blogs took 320 days 22 blogs among the top 100 blogs among the top 100 sources linked to in Q4 2006 - up from 12 in the prior quarter Japanese the #1 blogging language at 37% English second at 33% Chinese third at 8% Italian fourth at 3% Farsi a newcomer in the top 10 at 1% English the most even in postings around-the-clock Tracking 230 million posts with tags or categories 35% of all February 2007 posts used tags 2.5 million blogs posted at least one tagged post in February Source: Technorati March 2007. http://www.sifry.com/alerts/archives/000493.html

70 million weblogs

About 120,000 new weblogs each day, or...

1.4 new blogs every second

3000-7000 new splogs (fake, or spam blogs) created every day

Peak of 11,000 splogs per day last December

1.5 million posts per day, or...

17 posts per second

Growing from 35 to 75 million blogs took 320 days

22 blogs among the top 100 blogs among the top 100 sources linked to in Q4 2006 - up from 12 in the prior quarter

Japanese the #1 blogging language at 37%

English second at 33%

Chinese third at 8%

Italian fourth at 3%

Farsi a newcomer in the top 10 at 1%

English the most even in postings around-the-clock

Tracking 230 million posts with tags or categories

35% of all February 2007 posts used tags

2.5 million blogs posted at least one tagged post in February

Social Media Social media describes the online technologies and practices that people use to share opinions, insights, experiences, perspectives and media itself. Social media can take many different forms, including text, images, audio, and video. These sites typically use technologies such as blogs , message boards , podcasts , wikis , and vlogs to allow users to interact. Source: Wikipedia

Word of Mouth Marketing WOMM: Umbrella term Buzz marketing Special hook, event, promotion. Aqua Teen Hunger Force Boston Bomb Scare Viral marketing Branded material, websites, widgets, bligets, videos, utilities, collaboration tools etc. that sneezers spread. ParkRidge47, Vote Different Influencer marketing Identifying and finding the influencers Evangelist marketing Turning most loyal customers into citizen marketers Street marketing Interacting at popular offline places like Buzz Oven Stealth / Undercover marketing Bree, lonelyGirl15 Source: Justin Kirby, & Paul Marsden (2006). Connected marketing . Oxford, UK: Butterworth-Heinemann. 198 YouTube Aqua Teen Buzz Oven Bree

WOMM: Umbrella term

Buzz marketing

Special hook, event, promotion. Aqua Teen Hunger Force Boston Bomb Scare

Viral marketing

Branded material, websites, widgets, bligets, videos, utilities, collaboration tools etc. that sneezers spread. ParkRidge47, Vote Different

Influencer marketing

Identifying and finding the influencers

Evangelist marketing

Turning most loyal customers into citizen marketers

Street marketing

Interacting at popular offline places like Buzz Oven

Stealth / Undercover marketing

Bree, lonelyGirl15

Widget Marketing Cool plug-n-play things for your sidebar

Mashup Example of Google Maps mashup on MySpace account.

U.S. Online Ad $16.9 billion market in 2006 5.9% of the $285 billion total U.S. advertising market in 2006 Notable M&A activity Google bought DoubleClick for $3.1 billion in 4/07 Microsoft bought aQuantive for $6 billion 5/07 WPP Group bought 24/7 Real Media for $649 million 5/07 Source: Wall Street Journal, May 25, 2007, pg. B1

$16.9 billion market in 2006

5.9% of the $285 billion total U.S. advertising market in 2006

Notable M&A activity

Google bought DoubleClick for $3.1 billion in 4/07

Microsoft bought aQuantive for $6 billion 5/07

WPP Group bought 24/7 Real Media for $649 million 5/07

U.S. Online Ad Spending Source: Wall Street Journal, May 25, 2007, pg. B1

New Paradigm Sell your idea first Find your actors (audience) first Size does not matter - PlentyOfFish Reduce risk by pushing control out Value creation increases at the edge Decentralize authority, process, and IP Transparency creates value Truth travels fast Price alone is not sustainable Reengineer your value chain Skip intermediaries wherever possible Reinvent your business models Change the status quo

Sell your idea first

Find your actors (audience) first

Size does not matter - PlentyOfFish

Reduce risk by pushing control out

Value creation increases at the edge

Decentralize authority, process, and IP

Transparency creates value

Truth travels fast

Price alone is not sustainable

Reengineer your value chain

Skip intermediaries wherever possible

Reinvent your business models

Change the status quo

New Paradigm Democratization of 4Ps paradigm Citizen branding Collective collaboration Collective risk sharing Collective product innovation Collective IP ownership Citizen marketers will sell “remarkable” ideas Innovators should adopt the 1% rule If you don’t find the “sneezers” or connectors, the 80/20% rule won’t matter Work backwards Build your brand around your idea first. If the community you are targeting does not coalesce and rally around the idea, continuing to build the product is irrelevant Create your own “blue ocean” If you play it safe and go by the rules of your industry, value chain, and business model – you’re dead! Most industries and markets are saturated and highly concentrated.

Democratization of 4Ps paradigm

Citizen branding

Collective collaboration

Collective risk sharing

Collective product innovation

Collective IP ownership

Citizen marketers will sell “remarkable” ideas

Innovators should adopt the 1% rule

If you don’t find the “sneezers” or connectors, the 80/20% rule won’t matter

Work backwards

Build your brand around your idea first. If the community you are targeting does not coalesce and rally around the idea, continuing to build the product is irrelevant

Create your own “blue ocean”

If you play it safe and go by the rules of your industry, value chain, and business model – you’re dead!

Most industries and markets are saturated and highly concentrated.

Old 4Ps Paradigm 4Ps Value Creator Customer

New Paradigm 4Ps Value Innovator Customer Product Brand

New Value Innovation Paradigm Source: Mohanbir Sawhney, & Deval Prikh (2001). Where value lives in a networked world. Harvard Business Review , HBR #R0101E.

It’s About Social Behavior It’s not about a cheaper product or your idea. Try to change customer behavior. It’s not about better coffee – it’s about the place I am not looking for a ¼” drill bit – I need to make a hole It’s not about the hog, it’s about a lifestyle It’s not about the sound – it’s about how it makes me feel It’s not about the sound – it’s about being hip It’s about my space It’s about my video It’s about my opinion It’s about the experience It’s about your choices, places, and time Examples Apple, Starbucks, JetBlue, MySpace, Harley-Davidson, Tivo, Stew Leonard’s, Threadless

It’s not about a cheaper product or your idea. Try to change customer behavior.

It’s not about better coffee – it’s about the place

I am not looking for a ¼” drill bit – I need to make a hole

It’s not about the hog, it’s about a lifestyle

It’s not about the sound – it’s about how it makes me feel

It’s not about the sound – it’s about being hip

It’s about my space

It’s about my video

It’s about my opinion

It’s about the experience

It’s about your choices, places, and time

Examples

Apple, Starbucks, JetBlue, MySpace, Harley-Davidson, Tivo, Stew Leonard’s, Threadless

Implications Reached the tipping point The static web maturing Monologue marketing out Live Web (a/k/a Blogosphere) is making information transparent Word travels fast People are more likely to act on a peer’s recommendation by factor X Marketing is a reflection of social paradigms The new social media and networks changing customer expectation and behavior

Reached the tipping point

The static web maturing

Monologue marketing out

Live Web (a/k/a Blogosphere) is making information transparent

Word travels fast

People are more likely to act on a peer’s recommendation by factor X

Marketing is a reflection of social paradigms

The new social media and networks changing customer expectation and behavior

Napa Consulting Group Marketing & strategic planning Helping clients adapt emerging e-business models and social media in pursuit of value innovation. http://gotastrategy.typepad.com

Marketing & strategic planning

Helping clients adapt emerging e-business models and social media in pursuit of value innovation.

http://gotastrategy.typepad.com