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Breaking Down the Barriers

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iMedia Executive Editor Brad Berens leads a discussion at iMedia Summit on top ten reasons to invest in interactive.

iMedia Executive Editor Brad Berens leads a discussion at iMedia Summit on top ten reasons to invest in interactive.

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  • 1. Breaking Down the Resistance: Getting Your Organization To Invest (More) Dollars Online iMedia Brand Summit Las Vegas, NV September 12, 2006 Geoff Brad Tony
  • 2. Challenge I: “ Why Rock the Boat?”
  • 3. Whether we like it or not, the media landscape is changing…
    • We can no longer rely solely on the traditional approach
      • TV effectiveness is waning, and yet costs continue to rise
      • With fragmentation, TV doesn’t have the reach it once had and has become far less cost-effective
      • Plus, all media are going digital anyway (i.e., digital TV, digital radio, digital billboards, etc)
    “ Why rock the boat?”
  • 4. % of adult evening viewers who can name a brand advertised in a TV show watched last night Sources: NAB (1965-1986); Nielsen (2000)
  • 5.
    • The State of Television Today:
    • While the average US household has 96.4 TV channel choices, the average viewer watches only 15.4 *
    • Ad clutter has increased
    • Ratings have dropped
    • Fewer than 10% of consumers say that television ads influence their purchase decisions**
    Source: *Nielsen Media Research, 2006 **Forrester Research, 2006 Jim Stengel, CMO, P&G: “ In 1965, 80% of 18-49 year-olds in the US could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to do the same.”
  • 6. Television costs and viewers over the past 10 years + 0 - +40% increase in ad spending 50% decrease in # of viewers
  • 7. The average costs of advertising on TV continue to go up…
    • Over the past 10 years, ad spending on broadcast TV has risen 40% , while the number of viewers has dropped by almost 50% *
    • Upfront CPMs for TV broadcast spots increased 7.3% in 2004/2005 and 2.6% in the 2005/2006 season
    • The cost of a Super Bowl ad has increased 14% between 2003 – 2006, yet the audience shrank
      • John Hayes,
      • CMO:
    “ Where else in the world can you be convinced to pay more for a commodity that’s experiencing diminishing returns?!” Source: McKinsey & Co., 2006
  • 8. 78% of leading advertisers agree that the effectiveness of their TV advertising has diminished in the last 2 years. Source: ANA and Forrester Research, March 2006 (n = 133) McKinsey: By 2010, traditional TV advertising will be 1/3 as effective as it was in 1990!
  • 9. The ANA study also found:
    • 70% of (ANA) advertisers feel that DVRs and VOD will “reduce or destroy” the effectiveness of :30 spots
    • When DVRs enter 30 million HHs, 60% of advertisers said they would cut back on TV, with one quarter slashing their spending by 25%
      • 80% claimed they would reallocate these dollars to the Web
    • According to eMarketer, the 30-million mark for DVR penetration occurs in late 2008
    Source: ANA and Forrester Research, March 2006 (n = 133)
  • 10. Digital Video Recorder (DVR) household penetration in the US Source: eMarketer, 2006: *Nielsen Media Reearch, 2005 Forrester Research…. 10% Magna Global…..... 10% Nielsen Media….… 10% eMarketer…….….….. 10% Magna Global…….…. 14% Forrester Research… 14% eMarketer…….…….. 15% DIMA Group………… 16% Nielsen Media………. 18% JupiterResearch…… 44% eMarketer…….……. 41% Forrester Research.. 40% PwC………………… 31% Magna Global……… 27%
  • 11. In contrast to traditional media, online tools will get even more effective over the next three years
  • 12. Challenge II: “ Haven’t I Heard This Before?” Bubble?
  • 13. The Internet has become an integral part of every day life for Americans…
    • Internet penetration, among all Americans, is at 63% of homes, but over 70% have access overall
    • People are spending more time online, about 65 minutes per day on average (and some groups spend far more time)
    • People are highly dependent upon the Internet, both for pivotal points in their lives and for daily activities
    “ Haven’t I heard this before?”
  • 14. Nearly 70% of all Americans have some kind of access to the Internet, with upwards of 63% having access directly from the home Source: eMarketer, 2006; *Access at home; **Among adults 18+; ***American Consumer Institute
  • 15. On average, American Internet users spend about 65 minutes per day online Source: eMarketer, 2006; *Among adults 18+
  • 16. While the average American spends 65 mins/day online, many key demographic groups spend far more time… Mins/day
    • Teens Spend Much More Time Online:
    • JupiterResearch ……………… 86 mins/day
    • CBS News survey …………… 174 mins/day
    • Grunwald Associates ………… 210 mins/day
    Forrester Research: In addition to teens, people aged 18 – 26 also spend more time online than they do watching television 120 Jupiter Research, 2005 25 – 44-year-olds 137 GartnerG2, Mar 2005 C-level Execs 86 Jupiter Research 18 – 24-year olds 144 Harris Interactive Teenagers 113 C&R Research/Disney Mothers
  • 17. Time spent with the Internet comes at the expense of TV, newspapers and magazines
  • 18. Among online users, the Internet has become an essential medium, more important than television “ For marketers, particularly those looking to reach consumers at pivotal points in their lives, such as planning a marriage, buying a home, or having a baby, few media can match the Web’s ability to facilitate communications keyed to an individual’s specific needs.” --Peter Daboll, CEO, comScore Media Metrix
  • 19. Challenge III: “ But My Brand Is Different” A) I need to engage, to connect emotionally with my consumer
  • 20. Particularly with broadband, the Internet allows you to brand in new and highly engaging ways…
    • 38% of all online advertising dollars today go towards branding efforts
    • 67% of all US households will be on broadband by year-end 2006, and over one-fifth of Internet users regularly watch video content online today
    • Broadband video allows us to reach our audience with the sight, sound, motion and emotion of television, but with better measurement , more granular targeting and opportunities for interaction and viral sharing
    “ My brand is different – I need to engage. ”
  • 21. Two-thirds (67%) of online US households are on high-speed broadband connections Source: eMarketer, 2005; OECD (baseline years of 2001-2003) *Leichtman figure reflects 1Q 2006, not end-of-year = 52.2 million households Magna Global….…. 56.8 Deutsche Bank….. 55.2 eMarketer………… 52.2 Forrester Research.. 52.0 Strategy Analytics… 50.2 Yankee Group.……. 49.7 Leichtman…………. 46.0*
  • 22. The Internet beats magazines, newspapers and radio in terms of capturing attention
  • 23. % of marketers ranking the Internet as equal to or better than traditional media for creating brand awareness Source: Forrester Research, May, 2005 40% of B2B marketers consider online marketing to be very/extremely effective for building a brand image --Forrester Research/ABM, 2005
  • 24. Reasons that Search advertisers are using Search engine marketing (SEM), 2005* Source: SEMPO, December, 2005 *among large firms with 500+ employees Outsell: 69% of US advertisers use search for branding, and 58% rate it “extremely/somewhat effective”
  • 25. Branding as an online objective is increasing relative to direct response
  • 26. 79% of US Internet users now access the Web for entertainment (comScore Media Metrix, 2005): Sources: *eMarketer, for year-end 2006; Forrester, 2006; OPA, 2006; Solutions Research Group, 2005; Nielsen//NetRatings, 2006; Ipsos Insight, May 2006 InsightExpress/Universal McCann Among heavy Internet users, those regularly watching online video…….. 54%
  • 27.  
  • 28.  
  • 29. B) I have a small budget, so I can’t afford to add online to the mix
  • 30.  
  • 31. To get more granular, many marketers are using behavioral targeting :
    • Allows you to deliver relevant messages to those who, by their past surfing behavior, have demonstrated an interest in your product/service category
    • This not only reduces waste , it can create a deeper “engagement” with the target you’re trying to reach
    • MarketingSherpa : 22% of marketers said they planned substantial budget increases for behavioral targeting, and 36% said they got “great results”
    • Ponemon Institute: 84% of marketers say they’re “satisfied” or “very satisfied” with behavioral targeting
    • US Advertising Agencies that are Satisfied with their Marketing Efforts:
      • Among those using behavioral targeting, 88%
      • Among those not using BT, 56% --JupiterResearch, June, 2006
  • 32. Challenge IV: “ Can It Really Make a Difference?”
  • 33. The Internet can deliver more reach than you might expect… “ Can it really make a difference?”…
    • Top Web sites garner audiences of 100 million or more
    • The Web has become the 2 nd leading medium for most age/gender groups reached in the home , and is the #1 medium for reaching people at work
    • The Internet can add significant reach to traditional media campaigns, such as television and magazines
    • The Internet is quickly becoming the central hub for integrated media plans
  • 34. Top Internet sites deliver large audiences for advertisers needing “reach” Source: comScore Media Metrix, August, 2006
  • 35. Millions of weekly visitors to Television and online news channels Source: Nielsen Media Research, 2006 (television news channels for week of August 7, 2006); comScore Media Metrix, 2006 (online news sites for week of July 30, 2006) Television Internet
  • 36. The Web is the now the 2nd leading medium for most of the age/gender groups reached at home #1 at home #2 at home #5 at home #4 at home #3 at home Source: Ball State University and OPA, 2006
  • 37. But the Web is the leading medium for all age/gender groups reached at work #2 at work #3 at work #1 at work #5 at work #4 at work Source: Ball State University and OPA, 2006 Over 50 million Americans are regularly online at work --comScore, 2006
  • 38. While television campaigns reach the law of diminishing returns Branding Effect Frequency of ad exposures Television reaches ~75% of HHs The Internet can provide incremental reach (at a lower cost)
  • 39. The Internet can extend the reach of TV, especially during the day time
  • 40. 39% 7% 44% 12% 46% 11% 31% 72% The Web also adds to magazines’ reach in all major dayparts Reach for Magazines + Web vs. Magazines alone Source: Ball State University and OPA, 2006
  • 41. Global Survey: Over 70% of global marketing executives believe online will determine how major campaigns are planned and executed by 2008
  • 42. Challenge V: “ Specifically, Can You Drive Sales?”
  • 43. The Web is exceptional at driving sales, whether the actual purchase happens online or off…
    • Americans depend heavily on the Web to find information about products and services
    • Over three-fourths ( 78% ) of those online use the Web to shop for products and services before buying, and two-thirds ( 66% ) make purchases directly online
    • 80% of Americans online use search engines, and they frequently use them to research products they’re intending to purchase
      • Using search, marketers can reach highly interested prospects (“hand raisers”) with great efficiency
    “ Can the Internet drive sales?”
  • 44. 242 M Aged 14+ in US Population 156.8 M Online Aged 14+ Source: eMarketer, 2006 122.2 M Shoppers (78% of users) Online shopping & buying model for U.S. (2006) 102.8 M Online Buyers (66% of Net users) Jupiter……….. 65% Burst Media…. 77% eMarketer ……. 78% Pew………….. 78% Retail Forward.. 87% eMarketer ……. 66% Pew………….. 67% Forrester…….... 68% Retail Forward… 79%
  • 45. Over 80% of broadband users buy products online
  • 46. Expected use of information sources for buying a new car, according to consumers Source: Capgemini, June, 2005 N = 2,700 in-market consumers across five countries 89% of new-vehicle buyers use a search engine or portal at some point in their research, and 94% of used-vehicle buyers do so --J.D. Power & Associates, 2005
  • 47. “ When you’re ready to make a grocery purchase, which media do you turn to first?” Source: Vertis Customer Focus Retail, 2004 Harris Interactive : 58% of Internet users say they have responded to a promotion or coupon received via e-mail
  • 48. Plus, 80% of Internet users use search engines, often for product research* 25% went on to make a purchase (on or offline)** Source: *eMarketer, 2006; comScore Networks, 2006 During 2005 holiday shopping season, among consumers searching for various products**…
  • 49. 80% of Internet users regularly use search engines, and frequently for product research 25% went on to make a purchase (on or offline)** During 2005 holiday shopping season, among consumers searching for various products**… 37% bought online 63% bought offline Source: *eMarketer, 2006; comScore Networks, 2006
  • 50. IAB’s XMOS studies show consistent link of online ads to offline sales
    • 4 consumer packaged goods brands
    • Ford F-150
    +7 – 12.5% lift in sales from Web +6% lift tied to online Source: IAB/Marketing Evolution, 2004
  • 51. Challenge VI: “ Let’s Just Watch and Wait”
  • 52. We’re wasting valuable time not moving forward quickly with interactive…
    • Success in interactive requires moving along a learning curve
    • Those who move quickly will have a competitive advantage
    • Plus, our competitors are moving to interactive, and that’s where the money is shifting – FAST!
    “ Let’s just watch and wait”…
  • 53. Total media in the US is growing at ~5% for 2006 Myers Group 6.1% Citigroup 5.9% Zenith 5.2% Merrill Lynch 5.3% TNS 4.9% S&P 5.0% eMarketer 4.2% McCann 5.6% TNS First Half ’06 4.1%
  • 54. But online advertising spending is now growing at over 30% (dollars in billions) Source: eMarketer, 2006 Growth = 30% Growth = 33.6%
  • 55. US online ad spending growth in 2006 No Search! Source: eMarketer, 2006
  • 56.
    • BtoB*: 72% of marketing execs worldwide plan to increase their spending online in 2006
    • ANA**: 80% of advertisers say they will spend more of their budgets on Web ads
    • TNS***: 49% of CMOs at Fortune 500 firms plan to increase their online ad spending by 30%
    Source: * BtoB Magazine Survey, Dec. 2005; **Assoc. of National Advertisers and Forrester Research, March 2006 (n = 133); ***TNS Survey, 2005; Many surveys support the trend towards increased spending online…
  • 57. Online’s share of total media dollars will fly pass 5.0% this year, and reach over 10% by 2010 Source: eMarketer, March, 2006 “ We are at the tipping point of dollars sailing out of traditional media and into Internet or emerging media.” --Mark Rosenthal, CEO, Interpublic Media
  • 58. Consider the growth rates for online advertising spending among major product categories, 2006 versus 2004 Source: eMarketer, 2006, with baseline 2004 and 2005 figures from the IAB
  • 59. Challenge VII: “ Do We Really Have the Resources and Know-How To Make This New Media Work?”
  • 60. We’re spending inefficiently now and with little understanding of effectiveness…
    • We need to learn about interactive, and there is plenty of data, outside support and expertise that we can tap into
    • Plus, the Internet, because of it’s measurability, allows you to quickly and cheaply test what works (and what doesn’t)
    • We need to get on the learning curve now
    “ Do we have the resources and know how?”
  • 61. Marketers today rank the Internet highly for its measurability and accountability:
    • ARF : 73% of advertising leaders think digital delivers higher ROI than traditional media
    • Millward Brown : 61% of marketers say online does a better job at providing measurable ROI than does television, magazines or radio
    • We’ve learned that some online techniques – e.g., large display ads, rich media, video ads, behavioral targeting, integrated sponsorships and search marketing – work better than others
    “ Measurements are extremely important…In the online world, you can have a direct answer. You have a click and you know where it came from.” --Matthias Lilja, Marketing Manager
  • 62. You’ve invested in me and my team. Here’s my plan: It covers
    • Internal Capabilities
    • Partners
    • Learning by Example
    • Education and Training
    • Industry data and case studies available
  • 63. Next steps: Give us your feedback Adapt it for your needs, and present it to your boss or upper management Get a copy of this presentation If you need more supporting data, especially for a particular industry category, contact me at: [email_address] 212-763-6042