Final Digital Ad Brochure


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Digital Video Effectiveness Study IAB Internet Advertising
Revenue Report Social Media Metrics Definitions
Tony Anderson, Online Media Sales
Gen-Y Media Inc.
Online Ad Sales
Ad Serving, DoubleClick, DART DFP, adapt

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Final Digital Ad Brochure

  1. 1. Accenture Media and Entertainment The Capabilities to Drive High Performance in the Digital Advertising Industry Results from the 2008 Accenture Global Digital Advertising Study
  2. 2. Overview Digital Advertising: Explosive Growth, High Potential Last year's inaugural Global Digital Advertising a percentage increase over the previous year that Study conducted by Accenture focused on puts digital advertising on a trajectory to reach the implications of the digital transformation 21 percent of the market by 2012.1 underway in the advertising industry. Analysis of the survey results led to a series of strong recom- Last year also saw a frenzy of acquisitions and mendations about how to advance toward high investments as companies jockeyed for leadership performance in this challenging environment, positions and competitive advantage. During including investments in technologies and capa- one six-week period in April and May 2007, for bilities that offer advanced customer interactivity, example, $12 billion in acquisitions took place, targeting and analytics. involving some of the biggest names in the business, both traditional and digital. Since last year's study, the digital advertising industry has experienced a year of impressive Partnerships and alliances are also an influential growth. Internet advertising revenues around the phenomenon, leading to an aggregation of world now exceed $45 billion. That represents audiences and advertising inventory, and creating about 7 to 9 percent of the total advertising mar- economies of scale that will become the founda- ketplace (depending on which analysis one uses), tion of future growth. 1 Kelsey Group, “The Kelsey Group’s Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising,” See also ZenithOptimedia, quot;Western ad markets continue to slow, but surging developing markets propel healthy world growth in ad expenditure,quot; press release, June 30, 2008.
  3. 3. Accenture Global Digital Advertising Study 1
  4. 4. As confidence increases, so does the prevalence of innovation. Increasingly sophisticated analytic capabilities are being pursued by major digital advertising players. Such capabilities can enable more effective ad targeting, better ad performance and a higher return on advertising investment. New ad formats are emerging, as well, and investment. Companies are inter- The future looks very bright for digital, with the goal of better engaging the ested in mobile advertising for several a technology that can deliver advertis- consumer and improving the effective- reasons. One has to do with respon- ing that is: ness of brand advertising. For example, siveness. Advertising campaigns using • Results-based and measurable banner ads targeted to certain profiles text messaging, for example, have are not effective on social networking achieved up to a 70 percent response • Richer, more varied and interactive sites such as Facebook and MySpace, rate. Another attraction is the ability • Targeted effectively at desired so new formats have emerged. to target mobile users and personalize consumer segments Advertisers are turning to so-called messages down to an individual profile • Attuned to consumers' desires to widgets, clusters of software in the based on a mobile ID number. Finally, control their media experiences form of games, quizzes, videos or the inherently interactive nature of other tools that users can download, mobile means that companies can If the technology is adequately sup- customize and forward. track, measure and build relationships ported by new business models that between the audience and the subsidize content, the value and For example, “Parking Wars” is a game advertiser. demand for digital advertising will created by the A&E Television Network continue to skyrocket. to promote a new reality show about In short, digital advertising is doing parking-meter readers in the US city more than simply quot;shaking upquot; the of Philadelphia. Within eight weeks industry; it has ushered in a period of Charting new territory: of its introduction, Parking Wars was revolutionary change. No wonder that Standards, guidance and installed by more than 150,000 the CEO of a traditional advertising keys to success Facebook users.2 and communications company noted recently that all the changes and posi- At the same time, because digital Mobile advertising has also become a tioning by powerful new competitors advertising is a relative newcomer on hot topic for discussion, exploration had “unnerved” him. the scene, many companies are 2 “Building a Brand with Widgets,” by Rachael King, BusinessWeek, March 3, 2008. 2 Accenture Global Digital Advertising Study
  5. 5. struggling to understand how to assess Answering some of these critically executives have about who the indus- value, how to measure progress and important questions about perfor- try leaders are and what gives them an how to benchmark performance. If a mance, standards, return on invest- edge in terms of sustained excellence. start-up looks to be acquired for two ment and keys to success was the It is not yet possible to know who the or three times its annual revenue is goal of this year's Global Digital high-performance businesses in digital that a fair price or not? What is the Advertising Study conducted by advertising will be over time, but we potential return on investment? For a Accenture. In general, the quest for can certainly probe various perceptions company with $15 billion in overall high performance frames this year's of what high performance means revenue, is $50 million in annual rev- study. Accenture's ongoing High today and sketch out who the digital enue from an interactive advertising Performance Business research initia- leaders are and what has made them division good performance or average? tive continues to shine light on a so, at least in the eyes of their peers. range of industries today, detailing What are the characteristics of a high- what it takes to be a high performer: The 2008 Accenture Global Digital performance business in the digital a company that outperforms its peers Advertising Study surveyed executives advertising arena when it comes to over extended economic cycles and of start-up and acquired digital media sales, costs, operations, talent man- changes in executive leadership. organizations, digital media divisions agement, organizational structures and of traditional firms and digital media leadership? What can be learned, both Although it is too early in the maturity services companies. We asked execu- from the new up-and-comers in the curve of digital advertising to conduct tives to think about keys to achieving industry, as well as the traditional, the kinds of rigorous financial analyses high performance in digital advertising, well-established firms? What are the that would provide information about phrased in terms of 14 attributes barriers to growth and what are some keys to success over an extended time related to strategy, technology, busi- companies doing to overcome those period, it is not too soon to ask about ness performance and culture. What challenges? what is working today for leading are the attributes most important to companies, and about the perceptions success? Which of these attributes do Accenture Global Digital Advertising Study 3
  6. 6. they feel is most in need of upgrading website traffic analytics and using it The digital leaders at their companies if they are to to target messages to a consumer. compete effectively? When respondents were asked to name Investments and business the digital leaders in terms of the These two questions led to the development media attributes and capabilities need- emergence of three attributes that Creating more extensive and robust ed to achieve high performance in dig- are seen both as most important to investment and business development ital advertising, one name rose most overall success in digital advertising plans that can meet the needs of a consistently to the top: Google. Other and simultaneously in most need more dynamic environment, one in companies mentioned most frequently of attention: which alliances and partnerships in included Microsoft, WPP and Apple. particular are critical to success. Workforce talent Why is Google so dominant across all Attracting and retaining top talent, Although each of these attributes is attributes? “I think they are constantly so that a company has the right skills important, the executives' self- in sync with what their customers and experience to be innovative and assessed gap between their existing want and have the data to support to define the right operating models, and desired capabilities in these areas that,” one executive noted. “Google's technologies and business partnerships creates an uneven sense of urgency. culture is very creative and open, so necessary to drive high performance. For example, although the develop- there is no fear of failure there,“ said Improving sales force performance is ment of workforce talent was named another. One respondent summarized: especially important. as the most critical attribute, the “Because they have creative know- greatest self-perceived weaknesses how and strong management, they Applied business analytics came in the area of applied business are a flexible and forward-looking Developing more effective information analytics. These findings should sound organization capable of recognizing technology and process capabilities several alarms, because developing the new trends.” that support the timely application of people and technologies needed to analytic insight to business problems execute strategy and grow market In other words, Google occupies a top and offerings—for example, taking share is on the critical path to high position in the minds of this executive performance. survey group precisely for showing 4 Accenture Global Digital Advertising Study
  7. 7. Digital advertising at Accenture The global advertising practice at Accenture helps Accenture has worked with more than two dozen drive high performance for clients with significant companies, from digital media and traditional potential for revenue growth from advertising. media firms to cable and telecommunications companies, in areas ranging from business Accenture's focus in particular is on: strategy definition to management of a client's migration to a new ad-serving platform. • Strategy formulation (e.g., from improving go- to-market strategies to developing a new digital With a focus on developing research-based advertising business strategy and capability) insights, and on helping clients leverage innova- • Yield management (with the goal of increasing tion for profitable growth, Accenture has exten- average revenue per user) sive experience driving high performance for • Ad operations outsourcing (working to help clients in the exciting area of digital advertising. streamline processes and operational visibility) excellence across all the key attributes Accenture believes that capitalizing on opment to newer workers—who might of high performance in digital the opportunities of digital advertising simply take the training and then advertising. is, in large measure, a cultural issue. leave for another company—Google Indeed, this year's survey underscored approaches the situation differently. Imperatives for action a similar finding from last year: that They put their most promising recruits the cultural and people challenges for into management positions quickly The need to adapt quickly to the world an established business facing rapid, and provide two years of hands-on being shaped by digital advertising is disruptive change are profound. training. It's been a successful way to critical to media services companies attract top talent.3 as well as traditional companies with The answer is, in part, strong leader- interactive departments. Talent man- ship, but also attention to the details We also believe that the digital adver- agement presents one important set of managing change and putting new tising winners in the coming years will of challenges. For example, if the performance measures in place. A be those companies capable of com- newer, digitally-savvy entrants to the different approach to recruiting and bining leading practices both from the advertising industry become a more hiring is also important. All companies new and from the old: for example, attractive destination for top talent, need to actively recruit net-savvy from traditional publishers that have that reality will shift the balance of people who are well versed in critical learned how to develop and sustain power away from traditional firms for aspects of the digital advertising effective relationships, and from many years. world, including Web 2.0 principles newer entrants who are developing such as social networking. successful ways to target relevant Technology developments are also messages to key consumer segments, important to bear in mind. For exam- Different tactics are necessary to methods of tracking and measuring ple, if faster-moving competitors recruit, develop and retain the results, and more effective tactics to develop superior technology-based younger workers often referred to as attract and retain workforce talent. analytics, traditional advertising agen- “millennials.” For example, while many cies may lose their client relationships traditional companies are hesitant to companies that know their client to offer too much training and devel- base better than they do. 3 “Recruiting Gen Y: Four Killer Tactics,” by Andrew Tilin, BNET Business Network, Accenture Global Digital Advertising Study 5
  8. 8. 6 Accenture Global Digital Advertising Study
  9. 9. Detailed Findings Figure 1: 2007 share of various media in the $479 billion global advertising business Source: ZenithOptimedia 5 TV Newspaper Magazines Internet Radio Outdoor Cinema 37% 27% 12% 9% 8% 6% 1% Figure 2: Percentages of respondents answering the question, “Have overall company revenues grown at a faster or slower pace than your company’s total digital advertising revenues?” Faster The same Slower 56% 35% 9% A changing advertising available, and as technology has digital advertising. (See Figure 2.) landscape enabled consumers to skip or speed More than half (56 percent) of our through commercials, the advertising- survey respondents noted that the Any analysis of digital advertising based revenue model for media such pace of revenue growth is faster than must begin with a foundational as television is changing. that of traditional advertising growth. understanding that traditional televi- sion and newspaper advertising still Although global revenues for newspa- What’s behind such shifting revenue dominates the marketplace. Globally, per advertising have stayed strong, patterns? In part, it’s the fact that estimates about annual spending on most of that strength is in emerging companies are being drawn to a num- television advertising range from $170 markets. Some of the numbers ber of extremely attractive capabilities billion to $200 billion, more than in mature markets, however, are of digital advertising. The digital three times the market for online troubling. Print advertising sales for environment enables richer media advertising.4 Of the $479 billion spent US newspapers, for example, were forms, and provides interactive func- globally on advertising in 2007, 37 projected to fall $2 billion in 2007. tionality that engages customers more percent was on television advertising. Year-on-year comparisons across effectively. Digital advertising also Newspapers constitute the second- major US newspapers are indicative of offers real-time measurement and largest advertising medium at 27 the industry as a whole: The New York consumer-targeting capabilities, which percent. (See Figure 1.) Times, down 7.5 percent; The Wall help companies reach the consumer Street Journal, down 10 percent; USA segments they want. It also helps them Yet several vulnerabilities in tradition- Today, down 14 percent.6 determine what effects their advertis- al advertising models, lurking in the ing is having on buyer behavior—and, shadows for years, have now emerged Respondents to the 2008 Accenture therefore, what return companies are into broad daylight. With so many Global Digital Advertising Study also getting on their investments. alternative forms of entertainment strongly affirm the growth trend of 4 Kelsey Group, “The Kelsey Group’s Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising,” 5 ZenithOptimedia, quot;Western ad markets continue to slow, but surging developing markets propel healthy world growth in ad expenditure,” press release, June 30, 2008. 6 quot;Drop in Ad Revenue Raises Tough Question for Newspapers,quot; by Katharine Q. Seelye, New York Times, March 26, 2007. Accenture Global Digital Advertising Study 7
  10. 10. Figure 3: Analysis of current market leaders and digital share leaders show four primary groupings of players US$20B #15* #5 #9 #1 #12 Total Advertising Revenue #4 #8 #17 #2 #13 #7 #6 #10 #3 #11 #14 #15* Industry Average (7% to 9%) US$0 * Designates tie 0% Digital Share of Advertising Revenue 100% Numbers indicate ranking by survey respondents of who future high performers Traditional Player New Entrant Emerging Digital Converging Digital in advertising are likely to be What does high performance digital media divisions and digital the heart of the Accenture Global mean for digital advertising? media services companies to ask them Digital Advertising Study was to several basic questions: assess the impressions of experienced What are the attributes and capabili- executives regarding high performance ties—the business strategies, technolo- 1. What are the attributes and in the advertising industry. Details of gies, processes, talents and skills— capabilities you believe are this part of the research follow later needed to achieve high performance essential to achieving high in this report. in digital advertising? Here, arriving at performance in the future answers requires thinking creatively in through digital advertising? First, however, Accenture researchers terms of research methods. Accenture looked at the financial and market 2. How does your company stack up defines a high-performance business performance of 17 different players in against a perceived ideal when it as one that outperforms its competi- the advertising industry, both tradi- comes to such attributes? tors over extended global economic tional and new-media companies. cycles and through multiple changes 3. Who among today's companies Plotted against both total advertising of executive leadership. To date, digital would you classify as a digital revenue and digital share of advertis- advertising is at too young a stage on leader within the relevant ing revenue (see Figure 3), the compa- the maturity curve to have produced attributes? nies naturally form groupings accord- companies that can, technically, be ing to four categories: termed high performers. Four types of players 1. Traditional players still generate The key to an assessment of the digi- the majority of their revenues from Yet asking the question about high tal advertising industry at this stage in non-digital advertising activities. performance now is essential. That was its evolution is a healthy mix of the Their share of total advertising the driving purpose behind this year's subjective with the objective. Lacking revenue is high, but their digital Accenture Global Digital Advertising longitudinal data at this point—perfor- share is low. Study. We sought out more than 80 mance numbers over an extended senior executives of digital media period—the research methodology at organizations, traditional firms with 8 Accenture Global Digital Advertising Study
  11. 11. Market ranking Executive perception Market ranking Executive perception according to total of who the potential according to total of who the potential advertising revenues high performers are advertising revenues high performers are 1 4 1 4 2 9 2 9 3 16 3 16 4 6 4 6 5 2 5 2 6 12 6 12 7 11 7 11 8 8 8 8 9 3 9 3 10 13 Figure 4 (left): Many of today's 10 13 11 14 advertising leaders are perceived to be 11 14 less viable as high performers in the 12 5 12 5 digital era of the advertising industry. 13 10 (Source: Accenture analysis) 13 10 14 15 14 15 Figure 5 (right): Many of the compa- 15 1* nies that currently lead in terms of 15 1* 16 17* share of the digital advertising mar- 16 17* ketplace are perceived by their peers 17 7 to be more viable as high performers in 17 7 Digital share leader * Designates tie the future. (Source: Accenture analysis) Digital share leader * Designates tie 2. New entrants are those only get- be heard based on a comparison of On the other hand, Figure 5 demon- ting into the advertising business, current industry performance with strates that today's executives believe but who show promise of being perceptions of executives about who the future lies with the kinds of com- significant players in the future. will dominate in the long term. panies who are already dominating in terms of digital market share. These 3. Emerging digital companies are As part of our analysis, we created a companies (marked in blue) are focused mostly on a limited number ranked ordering of advertising compa- perceived by their executive peers to of channels but who are leveraging nies according to total advertising be better equipped to achieve high those channels to be serious con- revenues (see left side of Figure 4). performance as the advertising indus- tenders in the future. We then compared that evaluation to try evolves in a digital age. Several 4. Converging digital companies how executives in our survey ranked companies rise in ranking based on are trying to do more than just these same players according to the perceptions of their potential to be compete in the online world. They perception of the companies' ability to high performers in the future. are working to push the envelope in achieve high performance in the future all dimensions, both traditional and (right side of Figure 4). The importance of this disparity— digital, and in fact are working to between current performance and create a converged advertising This analysis shows that many tradi- perception of performance potential— presence across all dimensions. tional advertising companies drop pre- is clear: executives realize that dra- cipitously in ranking, meaning that matic change is at hand. The attributes Evidence of dramatic change executive peers are less than confident and capabilities needed to drive high ahead in the advertising in the ability of traditional advertising performance in a digitally driven media industry companies to meet the challenges of age are not the same as those that the digital advertising age. have produced success to this point. One major headline from our research is that the rumblings of major change in the advertising industry can already Accenture Global Digital Advertising Study 9
  12. 12. Figure 6: The relative importance, according to survey respondents, of a range of attributes for achieving high performance in digital advertising Not Extremely Important Important 1 2 3 4 5 Workforce Talent 4.54 Applied Business Analytics 4.30 Investments and Business Development 4.28 Business Intelligence 4.25 Sales Force Performance 4.24 Long-Term Business Strategy 4.14 Planning and Forecasting 4.14 Advertising Product Performance 4.09 Advertising Management Technology 4.00 Advertiser / Agency Service Level 3.95 Operating Model 3.91 Advertising Yield Management 3.84 Advertising Operations 3.82 Impact on Average Revenue per User 3.79 Ranking the attributes of Figure 6 ranks the averaged responses Further clarification about the most high performance in the survey. critical attributes needed at this point in the digital advertising maturity We asked our survey respondents to The results reveal an interesting mix curve was reached in our study by rate the importance of 14 attributes of strategy, technology and workforce asking an important follow-up ques- and capabilities, on a five-point scale performance concerns. From a strate- tion: For each of these attributes, (1 = Not important; 5 = Extremely gic point of view, concern about how do you rank your own company's important) that must be mastered, if investments and business development current capabilities on that same five- a company is to achieve long-term rose to the top. From a technological point scale? success and high performance in perspective, capabilities such as digital advertising. The attributes analytics, business intelligence, adver- This question enabled us to narrow considered included: tising management and planning the list of critical digital advertising • Advertiser/Agency service level and forecasting all scored above an attributes even further, to three capa- • Advertising management technology average of “4.” From a workforce per- bilities that ranked high both in terms • Advertising operations spective, general talent management of overall perceived value and in terms • Advertising product performance capabilities were a concern, as were of the differential between companies' • Advertising yield management the specific skills and capabilities of current status and where they would • Applied business analytics the sales force. like to be. These three capabilities as • Business intelligence shown in Figure 8 are: • Impact on average revenue per user In terms of perceptions of digital lead- • Investments and business ership, Figure 7 shows that Google • Workforce talent leads all others in terms of being • Applied business analytics development ranked best-in-class in at least one of • Investments and business • Long-term business strategy the 14 digital media attributes development • Operating model explored in our study. • Planning and forecasting • Sales force performance • Workforce talent 10 Accenture Global Digital Advertising Study
  13. 13. Figure 7: Companies mentioned as best-in-class in at least one of the essential digital media attributes (percentage of respondents) Google 93% Microsoft 53% WPP 42% Apple 42% Figure 8: Top priorities in digital advertising capability development: Combined analysis based on perceived importance and on gap between self-assessed and ideal attributes Gap between the importance ranking of the attribute Not Extremely and the company's Important Important self-assessment 1 2 3 4 5 Workforce Talent 4.54 -0.73 Applied Business Analytics 4.30 -0.98 Investments & Business Development 4.28 -0.65 New digital advertising capabilities for a major sporting league Accenture recently worked with a major sporting The site’s advanced digital advertising capabilities league to enhance the capabilities of its website now enable targeted advertising across the site and to better leverage its content assets by that has achieved high sell-through rates at high- providing such things as video game highlights, er than average cost-per-thousand impressions real-time game statistics, photo galleries and (CPM) and cost-per-click (CPC) rates. With peak player details. Given the popularity of the sport weekends seeing more than one million videos and its website, and a need for the website to be viewed, video advertising has been a huge success self-funding, online advertising was a core part for the league. In addition, the ad operations team of the strategy. Accenture worked closely with is able to effectively track, monitor and optimize the client's chosen ad server supplier to enable advertising campaigns to ensure successful delivery. targeted advertising—specifically, IAB7-standard banners, AJAX-based photo galleries and Adobe® Flash®-based) video advertising. 7 The Interactive Advertising Bureau (IAB) works with publishers, marketers, agencies and other industry associations to formulate and develop interactive advertising standards and guidelines. These standards and guidelines play a vital role in creating efficiency in the interactive marketplace. Accenture Global Digital Advertising Study 11
  14. 14. 12 Accenture Global Digital Advertising Study
  15. 15. Workforce Talent Leaders raise the bar on recruiting and culture The task of finding and managing tal- attitudes to work across the scales. This problem should become ent has become more complex, turbu- generations. less of an issue over time, as more lent and challenging than ever before. efficient tools and processes are Once-familiar talent pools are drying • Steady change in the nature of brought online. For now, however, work—from a product orientation up as new ones are rapidly opening— the challenge is particularly intense. to one based more on a deep creating significant challenges for understanding of a customer's needs managers and leaders of advertising Third, companies are witnessing a and desires. companies and digital media services battle for top talent and an increase companies: • Employee turnover rates that can in movement as employees move more exceed 18 percent annually, costing fluidly from one company and oppor- • A demand for digital experience some companies as much as 40 tunity to another. Statistics from the that is outpacing the supply of skilled percent of earnings.8 US Department of Labor, for example, resources. show that workers aged 25 to 34 have • An aging workforce, with many In the digital marketplace, the talent an average tenure with their compa- workers headed toward retirement challenge is especially severe, for nies of only 2.9 years, compared with and not enough younger workers to several reasons. First, it’s a new area 9.3 years for workers aged 55 to 64.9 replace them. that is growing at a double-digit rate, leading to a shortage of available tal- One executive in our survey noted an • Rising demand for new skills aggra- employee who had worked for a med- ent. Second, the work is still very labor vated by educational shortcomings. ical information website, left to join a intensive. So when one considers digi- • New methods of working and new tal advertising growth targets set at major portal company, returned briefly relationships between users and 20 percent or 30 percent, one must to the medical website company and suppliers of talent. remember that such growth must be then immediately left to join an online supported by a comparable increase in lifestyles website—of course receiving • More diverse and remote or even hiring talent. One has to be able to a salary increase with each move. virtual workforces with different scale the organization as revenue 8 quot;Driving the bottom line: Improving retention,quot; Saratoga, © 2006 PricewaterhouseCoopers LLP. 9 United States Department of Labor, Bureau of Labor Statistics, Accenture Global Digital Advertising Study 13
  16. 16. Figure 9: Perceptions of which industry players excel at attracting, developing and retaining top workforce talent (percentages of respondents) Google 43% Apple 15% Microsoft 14% The importance of sales talent Perceptions of digital leaders Talent imperatives The sales organization is critical to the Asked to name the digital leaders in From Accenture's perspective, digital pursuit of high performance in digital the area of attracting, developing and leaders need to be thinking about advertising. Sales force performance retaining top talent, Google was the several things when it comes to is also an area where the executives overwhelming choice, followed by developing and managing talent. in our study perceived a wide gap Apple and Microsoft. (See Figure 9.) between the importance of the Respondents cited both quot;softquot; and Consider core vs. non-core skills attribute and their own capabilities. quot;hardquot; factors in ranking Google tops and capabilities and expand the when it comes to talent. That is, exec- scope of outsourcing. Other Accenture research10 has shown utives noted cultural strengths at Carefully consider the company's core that corporate executives in a majority Google—an open and creative culture focus: which strategic capabilities are of companies believe their sales force where failure is not punished. At the essential to develop internally and performance is no better than aver- same time, the company's rigorous which are better sourced elsewhere? age—and sometimes actually worse or recruiting process was also men- In our experience, traditional compa- much worse than average. Even more tioned: the willingness to invest nies are often superior when it comes troubling is the fact that most of considerable time and resources in to understanding within their organi- these executives do not point the fin- screening employees for the attributes zation what capabilities they need to ger at tough economic conditions as Google believes are critical to their own within their own workforce and the cause. Rather, they are more apt success. what capabilities they can outsource. to find fault with the performance of Fifty-seven percent of executives in their salespeople, or with how those our survey believe that ad sellers will people are managed and measured, outsource their high-volume but low- than with customers’ tight budgets or value advertising operations tasks increased competition. (e.g., trafficking, invoice reconciliation) 10 quot;Changing Sales Force Behavior to Achieve High Performance,quot; Accenture, <>. 14 Accenture Global Digital Advertising Study
  17. 17. Many younger employees are not taking the traditional route to a job: looking for job postings and then trying to fit into the mold of a job description. Instead, they are going to an employer saying, “Here's what I can do; let's try to create a job for me.” to third parties so they can focus The newer companies are, at least for advertising for the past 10 years can- on higher-value business needs. now, enjoying more success when it not, overnight, sell online advertising Outsourcing can be an important comes to using an innovative culture at the same volume levels and effec- means to help increase profits and to attract and retain top talent. All tiveness. That capability will require improve efficiency; it can also provide companies must think in new ways. retraining and the implementation of important flexibility and fixed costs For example, many younger employees different incentive programs. for capabilities that may be needed are not taking the traditional route to only seasonally or during certain a job: looking for job postings and Although knowledge of products and points in the economic cycle. Many of then trying to fit into the mold of a services is obviously important to a the newer media companies are just job description. Instead, they are going salesperson's success, the greater beginning to sort out their sourcing to a potential employer saying, quot;Here's value comes in the relationship the strategies. For example, one of the what I can do; let's try to create a job person has established with clients. major portals has just recently begun for me.quot; That kind of model is difficult The traditional direct sales force considering outsourcing its ad opera- for traditional companies that have a has built those relationships and no tions for their small- and medium- much more regimented hiring process. company on the quest for high perfor- business group. Given there’s a war mance should ignore them. This means for talent, outsourcing is a critical Analyze the current workforce based significant retooling is necessary to mechanism for optimizing talent. on capacity for repurposing. leverage relationships while also giv- Workforce analyses must consider the ing salespeople the knowledge, skills Focus on developing the right extent to which workers currently and tools needed to succeed in a culture for success. focused on traditional aspects of the digital environment. On the other hand, traditional compa- business can be retrained for the digi- nies have something to learn from tal age. A sales force for a newspaper new media when it comes to culture. that has sold only offline newspaper Accenture Global Digital Advertising Study 15
  18. 18. 16 Accenture Global Digital Advertising Study
  19. 19. Applied Business Analytics Leaders refuse to live without it Figure 10: Percentage of respondents agreeing or disagreeing with the statement, quot;There will be a vast proliferation of digital ad formats with an associated increase in the complexity of accurate measurement.quot; (Note: Data includes a 2 percent rounding allowance.) Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree 17% 47% 21% 12% 1% This year's Accenture Global Digital mary value point of digital advertising develop deeper business intelligence Advertising Study affirmed last year's (see Figure 10). Respondents over- and analytics capabilities. The compa- findings that more sophisticated, tech- whelmingly agreed or strongly agreed ny is looking to use the data that it nology-based analytics capabilities are with the statement, quot;There will be a gathers from its traditional wireless essential to achieving high perfor- vast proliferation of digital ad formats and wireline communications and mance in digital advertising. As one of with an associated increase in the apply it in a way to do targeted online this year's survey respondents put it, complexity of accurate measurement.quot; and mobile advertising, given the con- quot;Leaders refuse to live without deep sumer overlap among its businesses. and extensive analytics capabilities.quot; Companies are now awash in a flood This is a good example of taking data of data about customers. (Consider that already exists and using it in a There's good reason to care about this that Wal-Mart's legendary data ware- different way. attribute in particular. Accenture's house of sales and inventory data was research finds that high-performance assessed two years ago at 583 ter- All companies, therefore—not just businesses are twice as likely to abytes; by comparison, the United those in the advertising industry use analytics strategically compared States Library of Congress's entire print itself—need to determine whether or with the average company, and five collection takes up only 20 terabytes.)12 not they have the requisite informa- times more likely to do so than low The data is there; the big question is tion technology capabilities related to performers.11 whether companies can become more business intelligence and customer nimble at manipulating that data. analytics to react to data quickly as it Our digital advertising study found comes in and use it to target cus- that executives clearly believe that the For example, Accenture has been tomers more effectively. increased capability to make more working with a large communications sophisticated measurements is a pri- provider in Asia to help the company 11 Competing on Analytics: The New Science of Winning, by Thomas H. Davenport and Jeanne G. Harris (Harvard Business School Press, 2007). 12 Ibid., p. 98. Accenture Global Digital Advertising Study 17
  20. 20. Figure 11: Percentage of respondents agreeing or disagreeing with the statement, quot;Consumer privacy fears will significantly limit the growth of targeted advertising capabilities.quot; (Note: Data includes a 1 percent rounding allowance.) Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree 17% 33% 21% 26% 2% The sophisticated analytics possible in Data privacy issues are a concern for Nevertheless, half the respondents digital advertising will drive a decline many when it comes to targeting also feel that there are opportunities in the use of many traditional success customers based on better analytics. for more targeted mobile advertising measures in advertising, such as cost That's one reason why many are mov- that will not necessarily be limited by per thousand impressions (CPM). At ing fairly cautiously when it comes to consumer's privacy concerns. (See the same time, analytics will enable mobile advertising, for example. The Figure 11.) advertisers to realize a better return potential backlash could be huge for on investment through more accurate companies perceived to be engaging Perceptions of digital leaders targeting of audiences. in mobile spamming. Digital leaders in the analytics area, according to survey participants, Analytics becomes even more impor- This year's Accenture survey showed included Google, Microsoft, WPP, tant in a down economy, in which that executives are certainly aware of Apple and BT. (See Figure 12.) chief marketing officers need to do the potential pitfalls presented by Executives noted, in particular, the more with less. Some recent survey mobile advertising. For example, 64 analytical tools that come with data suggests that chief marketing percent of respondents agreed or Google's advertising system. Google officers have had budgets reduced strongly agreed that mobile carriers quot;pretty much invented analytics for this year as much as 25 percent.13 will not begin to enable any unsolicit- digital media,quot; one participant noted, So more sophisticated targeting can ed, commercial mobile advertising quot;and they understand all this better help companies get more impact for until consumers give their permission than anyone else.quot; quot;Google is proac- a lower advertising spend. through an opt-in capability. tive,quot; said another, quot;while everyone else is reactive.quot; 13 quot;Advertising Analytics: Doing More with Less,quot; 18 Accenture Global Digital Advertising Study
  21. 21. Figure 12: Perceptions of which industry players excel at applied business analytics (percentages of respondents) Google 30% Microsoft 6% WPP 4% Apple 4% BT 4% Analytics imperatives People who love numbers. If compa- The good news for those who want to nies are going to excel at analytics, become analytical aces is that they As the digital leaders in digital they need employees who are data already have much of the data they advertising embrace more powerful, savvy or who can quickly become so. need. Knowing what to do with it is forward-looking techniques such as Clearly, this calls for hiring, training another thing entirely. But the effort predictive modeling, forecasting and and rewarding for analytical skills. must start now. Experience suggests optimization, they are relying on that at least 18 months of data is nec- sophisticated IT tools, of course. But Processes that revolve around facts. essary before one can begin deriving they are also making sure they abide High performers when it comes to meaningful insights. That's a year and by four fundamental factors: analytics work toward a quot;single ver- a half in which your competitors may sion of the truthquot;—not the clashing already be well down the same road. Leaders who quot;get it.quot; Taking a broad views of the same metrics that bog analytical approach to business calls down other companies. Newer for big changes in culture, process, processes take an integrated, cross- behavior and skills. One CEO of a enterprise view of the data. major entertainment company regu- larly asks employees, quot;Do we think this Technology to capture, sort and is true, or do we know?quot; Effective make sense of the data. There is executive leadership when it comes no shortage of processing power to to analytics pushes to create a fact- support analytics efforts. New tech- based culture that extends even to nologies are available that can plow suppliers and other business partners. through enormous databases at speed. Much of the necessary analytical soft- ware is available, too. Accenture Global Digital Advertising Study 19
  22. 22. Investments and Business Development Leaders are bold and selective This year's Global Digital Advertising These consequences will, in turn, What kind of company owns the Study both confirms and strengthens create a wave of change in advertising household? This question is important Accenture’s view that the encroach- models. Yet our research and experi- because the providers who, in essence, ment of digitization of content and ence suggest that the future high per- own the bulk of a household's activity Internet-originated business models formers will be those who are both can earn a premium from marketers to into other forms of media such as bold and selective in their acquisitions those households. We asked survey television will cause an even greater and in the development of new busi- participants whether cable and shake-up than the online revolution. ness and operating models needed to telecommunications companies are There will be two particular conse- succeed in a digital environment. best positioned to own the household quences for participants: News Corporation, for example, was because of access they provide into prescient in acquiring MySpace a few the home. Only 38 percent agreed or years ago, anticipating the rising strongly agreed; 32 percent disagreed; • A threat to the survival of incum- importance of social networking web- and more than a quarter of them (28 bents—primarily traditional media sites to the advertising industry. And percent) were not sure or had no companies and advertising the $22 billion in acquisitions made opinion. Clearly the competitive land- agencies—that do not embrace new industry-wide during 2007 suggest scape is uncertain at this time. technologies and business models. that these kinds of approaches to • Huge new opportunities in the business expansion will be a perma- The role of new trends such as digital advertising sector for service nent part of the landscape. social networking sites is uncertain. and media providers with experience Executives in our survey were divided in delivering digital content and A number of questions and concerns over the ease with which money can access to deep customer insights. dominate the discussion of invest- be made through advertising associat- ments, development, competition and ed with social networking sites. Only business models, based on our survey just over half (54 percent) agreed or findings. strongly agreed with the statement 20 Accenture Global Digital Advertising Study
  23. 23. Accenture Global Digital Advertising Study 21
  24. 24. Figure 13: Perceptions of which industry players are strongest at the business development and investments necessary to achieve high performance in digital advertising (percentages of respondents) Microsoft 28% Google 23% News Corporation 9% that, quot;Over the next five years, social budget, and a track record in effective customer insight data from multiple network revenues will continue to trail research. quot;Microsoft is playing catch- partners, or by investing in sophisti- that of content owners because social up,quot; one executive noted, quot;but they cated customer data analytic solu- network site traffic is less easy to have a ready pool of investment tions. These capabilities can enable monetize than content owners' site money that will continue to position companies to use dynamic, behavioral traffic.quot; Nevertheless, executives are them as a strong player.quot; differences in customer segmentation clearly drawn to the possibilities of to target and drive response rates on social networking. As one respondent Business development advertising. put it, quot;Once a social network site imperatives becomes popular and continues to Effectively manage the transition to Accenture believes several imperatives grow and gain new readers, the possi- a performance-based environment. are foremost when it comes to the bilities for advertising opportunities One of the biggest shifts in the adver- investments and developments needed are endless.quot; tising industry today is toward perfor- to achieve and sustain high perfor- mance-based advertising. This means mance in digital advertising. that customers want to do more than Perceptions of digital leaders quot;establish brand valuequot; in some gener- Invest in more sophisticated cus- Asked to name the digital leaders in al way; they want to understand tomer segmentation capabilities. The the area of business development and exactly how consumers are interacting most important areas for focus today investments, Microsoft, Google and with their brands. This is focusing are in customer understanding and in News Corporation rose to the top. (See industry players to look specifically at developing sophisticated, appropriate Figure 13.) Survey participants how their advertising offerings drive customer segments to target advertis- referred to Microsoft strengths such conversion with their partners—how a ing. This can be done by aggregating as its large research and development company can provide more assurance 22 Accenture Global Digital Advertising Study
  25. 25. The most important areas for focus today are in customer understanding and in developing sophisticated, appropriate customer segments to target advertising. that customers driven toward one of Carefully analyze the buy-vs.-build Consolidation is key to achieving their advertisements will be a quality question. Because of the speed marketplace dominance. Aggregation lead. Providing that kind of assurance necessary to get out in front of the is an important development in this can increase the value of a company's marketplace in critical areas of digital field and it has really changed the advertising compared to competitors. advertising—areas such as social net- game. The four major portals (Google, working or mobile—companies must Yahoo!, MSN and AOL) have been Think mobile gaming. Gaming, and engage in detailed analysis of what moving aggressively to make acquisi- especially mobile gaming, are the capabilities they can realistically tions so that they can create the quot;next big thingsquot; in advertising. develop internally and which they dominant platforms on which everyone Because of the traffic driven to these need to create through outsourcing, else will run. Business developments game sites, companies have the acquisition or other means. that can raise the bar for entry quite opportunity to sell advertising by high can extend a company’s ongoing working brands into these digital share of the market. infrastructures. WiFi-enabled mobile devices mean that such games are available to users anytime, anywhere. To date, mobile gaming has not been targeted by advertisers with the same level of sophistication as online, PC- based gaming. This will change in the very near term, and companies must be ready to compete in this new arena. Accenture Global Digital Advertising Study 23
  26. 26. 24 Accenture Global Digital Advertising Study
  27. 27. The path to high performance in digital advertising The 2008 Accenture Global Digital Advertising Study creates a new set of imperatives for different kinds of companies when it comes to developing and sustaining the capabilities discussed here—the capabilities that can drive high performance. Total Advertising Revenue Traditional Player Converging Digital New Entrant Emerging Digital Figure 14: The move to convergence Digital Share of Advertising Revenue in the advertising industry Accenture believes that, over time, all If you are a new media company: If you are a device manufacturer: types of companies in the advertising • Build and integrate systems for sales, • Focus on developing features and marketplace must be moving toward reporting, delivery, etc. to support functions that enable data collection the converging digital space. (See products across multiple channels for targeting and advertising. These Figure 14.) All players must be think- and delivery systems or devices. kinds of devices will be most highly ing about comprehensive ways to prized by service providers and integrate their advertising capabilities • Equally important, develop processes and knowledge transfer capabilities consumers alike. across all major channels, traditional and digital, while bearing in mind that to create new, needed skills in the workforce. The advertising industry—and, indeed, the future clearly belongs to digital any company that purchases advertis- high performers. If you are a telecommunications, ing—is currently experiencing one of cable or satellite company: the most disruptive periods in the In terms of specific recommendations: history of any large business sector. • Increase the potential for revenue growth by building enhanced, But companies that get it right— If you are a traditional media through the mastery of technology differentiated and complementary company: trends, the adoption of more sophisti- services to your core business that • Exploit all digital content and can be monetized through new cated analytics, the ability to develop advertising, and repurpose where advertising inventory. more nimble and collaborative busi- necessary to fit the changing needs ness and operating models, and the of consumers across different com- If you are a technology development capability to attract, develop and munication mechanisms. company: retain top talent—will have an edge in • Target segments more effectively • Focus on creating extensible systems attaining and then sustaining high so that content and advertising are that have application programming performance in the years ahead. appropriate to consumer interests interfaces that can reuse widgets and to different ways of consuming and capabilities built by the information. developer community as well as open-source programmers. Accenture Global Digital Advertising Study 25
  28. 28. Contact us heads from agencies, media, technolo- About Accenture gy providers and major advertisers. For more information on the 2008 Quantitative outputs from the inter- Accenture is a global management Accenture Global Digital Advertising views were analyzed by Accenture and consulting, technology services and Study and what Accenture can do to combined with our industry insights to outsourcing company. Combining help you become a high-performance develop the points of view expressed unparalleled experience, comprehen- business, please contact: in this paper. sive capabilities across all industries Emily O'Halloran, Accenture Senior and business functions, and extensive Executive Digital Advertising Lead at About the Accenture Media & research on the world’s most success- Entertainment Industry Group ful companies, Accenture collaborates and in the subject line write with clients to help them become Accenture helps entertainment, broad- high-performance businesses and gov- ”DigitalAdStudy2008”. cast, publishing, printing and portal ernments. With more than 180,000 companies adapt to the realities of people in 49 countries, the company About the research the digital evolution and capitalize on generated net revenues of US$19.70 The research that forms the basis of new opportunities to improve business billion for the fiscal year ended the 2008 Accenture Global Digital performance. Its dedicated profession- August 31, 2007. Its home page is Advertising Study was conducted by als provide media and entertainment Accenture in association with The companies with a distinctive combina- BPRI Group. Research was based on tion of business and technology face-to-face and telephone interviews consulting, systems integration and from January to March 2008 with 81 outsourcing capabilities. Accenture advertising industry leaders in North has worked with 19 of the 20 largest America, Europe and Asia. The survey media and entertainment companies participants include CEOs, chief strat- in the world. egy officers and key business unit Copyright © 2008 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.