Marketing
         & Media
         Ecosystem 2010

Christopher Vollmer                    February 25, 2008
Leader, US Me...
Online Advertising Has Been On A Tear
       Years to Reach $20B in Ad Revenue
100
130     127        (US Only)           ...
But The Industry Is At An Inflection Point

  Online Is No Longer Experimental –
  It’s Part Of The Media Mix

  Massive A...
Marketers Get It: They Need to Catch Up
 To Where The Consumer Is
                              Decrease Spending         ...
Marketers Taking Many of the
Necessary Steps
  Consumer Insights and Behavioral Targeting top
  their list of “must have” ...
They Do However Need Help to Move Faster
                                     Marketer View of the Ecosystem
             ...
So, what do media companies need
to do to accelerate this transition…

                               FASTER
         HARD...
Five Themes Emerged From Our Media Study

  Digital Media DNA

     The Education & Metrics Imperative
       Managing Dig...
Digital Redefining Media Company “DNA”
                                       Media Services Offered Today
               ...
Many Priorities for Capability Building
     Key Changes to the Media Sales Organization in the Past 3 Years

       Incre...
Big Focus On Growth Via Existing Clients
                                   Drivers of Online Growth

Existing online adve...
More Headroom in Top 50 and Local
                           Online Advertising Revenue is Generated From …
              ...
More Education, Better Metrics Required
                          Perceived Barriers to Online Spending
       Lack of exp...
Marketer Education Is Critical
      Need for the Ad Sales Team to Educate Marketers and Agencies
                        ...
Greater Clarity Needed Around Metrics
                          Media Company Perspective on Metrics
       Lack of standa...
Media Co’s Moving Beyond Reach
                                    Metrics Currently Tracked

       Reach                ...
More Ecosystem Complexity Expected
                           Impact of the Changing Media Landscape

  Dramatically chang...
Issues Go Beyond Inventory Supply
                                        Complexity Challenges:
                         ...
Confident Online Can Drive Price
                     Importance of Targeting and                                         ...
Marketer Expectations Are Changing
  Marketers Believe the Following Capabilities                                         ...
Media’s Response: More Agency-like Services
                          Media Perspectives Vis-à-vis Agencies

      Our com...
Media Offering Broader Range of Services
                   Media Ad Sales Team Provides the Following Services:

Campaign...
Media Do See a Key Role for Agencies
                           Responsibility For Each Of These Functions Lies With…
    ...
Media Strengthening Consumer Insights
                          Media Companies Will Deliver                              ...
Using Insights To Create Differentiation
                                           Respondents Agree…

      Providing st...
An Emerging Agenda for Digital Leadership
     1     Emphasize On-going Marketer Education

     2     Focus on the Metric...
Digital Leaders…

       Invest to help marketers “get it”

       Link metrics to marketer brand/business objectives

   ...
Marketing
& Media
Ecosystem 2010


                 MME
                 2010
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Marketing & Media Ecosystem 2010 Survey

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Marketing & Media Ecosystem 2010 survey and Booz & Company analysis (February 2008)

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Marketing & Media Ecosystem 2010 Survey

  1. 1. Marketing & Media Ecosystem 2010 Christopher Vollmer February 25, 2008 Leader, US Media and Entertainment IAB Annual Meeting Booz & Company Phoenix MME 2010
  2. 2. Online Advertising Has Been On A Tear Years to Reach $20B in Ad Revenue 100 130 127 (US Only) More Consumer Time 90 80 75 Addressing Marketers’ 70 desire for: 60 – Accountability 50 – Interactivity 40 37 – Relevance 30 25 20 Growing even faster 13 10 outside the US (e.g., UK) 0 Newspaper Radio Broadcast Cable TV Online TV MME Source: Universal McCann, IAB Internet Advertising Report, Booz & Company Analysis 2010
  3. 3. But The Industry Is At An Inflection Point Online Is No Longer Experimental – It’s Part Of The Media Mix Massive Audience Fragmentation: More Choices than Ever for Consumers and Advertisers Search and Ad Networks Have Been Key Growth Drivers Video and Social Networks Undermonetized Most Major Marketers Have Not Shifted “Significant” Dollars MME 2010
  4. 4. Marketers Get It: They Need to Catch Up To Where The Consumer Is Decrease Spending Increase Spending Digital Mobile Two-way PR Events Direct Mail TV One-way Print Out of Home Radio -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  5. 5. Marketers Taking Many of the Necessary Steps Consumer Insights and Behavioral Targeting top their list of “must have” capabilities They want to understand how consumers use digital for information, entertainment and community The importance of media is being elevated – “it’s the new creative” “Leaders” are moving to put in place: – Metrics, capabilities to assess the impact of digital media – Dashboards to measure ROI – New positions to interface with media partners MME 2010
  6. 6. They Do However Need Help to Move Faster Marketer View of the Ecosystem 70% 62% 60% 57% 52% 50% % of Responses 40% 30% 26% 20% 10% 0% Inability to measure Creative, strategic Partnerships with Marketers believe the effectiveness is and media buying Media companies their organizations a barrier capabilities should are important are digital savvy be rebundled MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  7. 7. So, what do media companies need to do to accelerate this transition… FASTER HARDER STRONGER BETTER MME 2010
  8. 8. Five Themes Emerged From Our Media Study Digital Media DNA The Education & Metrics Imperative Managing Digital Complexity The Ecosystem Redefined Value Through Consumer Insight MME 2010
  9. 9. Digital Redefining Media Company “DNA” Media Services Offered Today 100% 90% 84% 80% 70% 70% % of Respondents 60% 56% 50% 45% 40% 40% 30% 20% 10% 0% Contextual Behavioral Performance E-mail Lead Targeting Targeting Marketing Marketing Generation MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  10. 10. Many Priorities for Capability Building Key Changes to the Media Sales Organization in the Past 3 Years Increasing focus on talent, 90% recruiting, and training Restructuring our advertising 82% sales team Developing more sophisticated 79% technical capabilities Understanding what marketers 78% want to measure Changing the way we 66% work with marketers 40% 50% 60% 70% 80% 90% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  11. 11. Big Focus On Growth Via Existing Clients Drivers of Online Growth Existing online advertisers shifting more of 73% their overall ad budgets online Existing online advertisers spending more online because they are spending more 45% overall New national advertisers entering the 40% online ad marketer Price increases for online inventory 38% New smaller or local advertisers entering 36% the online ad market 0% 20% 40% 60% 80% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  12. 12. More Headroom in Top 50 and Local Online Advertising Revenue is Generated From … 100% 90% 86% 80% % of Respondents 70% 60% 50% 39% 38% 40% 30% 20% 10% 0% Top 200 Top 50 Local National Advertisers National Advertisers Advertisers MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  13. 13. More Education, Better Metrics Required Perceived Barriers to Online Spending Lack of experience/education 59% with new media platforms 81% Lack of senior organizational support 51% at the advertisers and agencies 79% Metrics are not comparable to 44% traditional media 74% Insufficient ability to 62% measure effectiveness 59% Perceived risk associated with 45% consumer generated media 49% Marketers Complexity and cost of 44% Media Co’s creating online campaigns 48% 0% 20% 40% 60% 80% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  14. 14. Marketer Education Is Critical Need for the Ad Sales Team to Educate Marketers and Agencies 100% 87% 80% % of Respondents 60% 40% 20% 13% 0% Very Important/ Not Important Important 70 % of Media Co’s Will Expand Their Co’s Education Capabilities By 2010 MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  15. 15. Greater Clarity Needed Around Metrics Media Company Perspective on Metrics Lack of standardization inhibits 98% spending Need to understand what 78% marketers want to measure Relevant metrics vary by 75% industry Measurement/analytics are very 73% important for an ad sales department Marketers are unfamiliar with 68% digital metrics Lack of single metric is a 61% major barrier 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  16. 16. Media Co’s Moving Beyond Reach Metrics Currently Tracked Reach 94% Engagement 62% Action 57% ROI 54% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  17. 17. More Ecosystem Complexity Expected Impact of the Changing Media Landscape Dramatically changes inventory availability and inventory management 67% Increases the need for supply chain management capabilities in media companies 67% Increases the need for new partnerships 66% across the value chain Significantly complicates the supply chain 63% Concentration of online ad spending in the 47% top few sites will decrease by 2010 0% 20% 40% 60% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  18. 18. Issues Go Beyond Inventory Supply Complexity Challenges: Today and Tomorrow Inventory management is a problem for your sites 73% currently Inventory management challenges will get worse 66% as ad spend and demand increases Labor spent on integrated solutions takes up a 50% disproportionate amount of sales staff time 0% 50% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  19. 19. Confident Online Can Drive Price Importance of Targeting and Increased Prices Expected Quality of Environment For All Online Inventory 100% 100% 80% 75% 80% 76% 70% 67% 61% % of Respondents % of Respondents 60% 60% 55% 40% 40% 20% 20% 0% 0% Behavioral targeting Quality of Rich Video Display Search will gain significant environment Media importance to is as high as marketers other media MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  20. 20. Marketer Expectations Are Changing Marketers Believe the Following Capabilities Which Direct Partnerships Will Be Will Become More Important by 2010 More Important in the Future? 100% Consumer Insights 82% 53% of media respondents 90% expect to do more business 80% directly with marketers Behavioral Targeting 80% 70% % of Respondents Brand Strategy 71% 60% 52% 52% 52% 66% 50% Customer Marketing 40% Partnerships 60% 27% 30% 59% 20% PR 10% 49% 0% In-house digital production Media Media Comm. Agency 0% 50% 100% Companies Planners Planners of Record % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  21. 21. Media’s Response: More Agency-like Services Media Perspectives Vis-à-vis Agencies Our company provides agency like 91% services to clients today We are rethinking relationships we have 65% with the advertising agencies The development of agency-like services by media companies is causing 63% friction with agencies 0% 20% 40% 60% 80% 100% MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  22. 22. Media Offering Broader Range of Services Media Ad Sales Team Provides the Following Services: Campaign development and Idea generation 88% Target creative to the right audience 88% Creative development 79% Custom content 76% Cross platform integration and execution 72% Exclusive content 70% Consumer insights 66% ROI Tracking 64% 0% 20% 40% 60% 80% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  23. 23. Media Do See a Key Role for Agencies Responsibility For Each Of These Functions Lies With… 80% 76% 72% 69% 70% 60% 56% 52% % of Respondents 50% 40% 32% 33% 30% 25% 25% 20% 16% 17% 12% 10% 0% Creative Creative Communications Media Behavioral Consumer Production Development Planning Planning Targeting Insight Research Agency of Record Media Company MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  24. 24. Media Strengthening Consumer Insights Media Companies Will Deliver Cutting Edge Consumer Consumer Insights by 2010 Insights Require… 100% 90% Ability to track 78% 77% behavioral patterns 80% 70% % of Respondents Ability to tie media 76% 60% behaviors to sales 50% 40% Open channels for listening to customer 72% 30% 23% needs 20% Incorporating consumer 10% insights into predictive 71% models 0% Yes No 0% 50% 100% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  25. 25. Using Insights To Create Differentiation Respondents Agree… Providing strong consumer insights to 87% marketers creates a competitive advantage Media companies need to have more granular data on their consumers to avoid 77% commoditization of their ad inventory Providing aggregated consumer data to 62% advertisers is a major priority for my company Media companies use their research function 56% to customize studies for advertisers 40% 50% 60% 70% 80% 90% % of Respondents MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  26. 26. An Emerging Agenda for Digital Leadership 1 Emphasize On-going Marketer Education 2 Focus on the Metrics that Matter the Most 3 Provide Consultative Services for Key Clients 4 Translate Media Value into Marketer ROI 5 Know What Drives Consumer Behavior MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  27. 27. Digital Leaders… Invest to help marketers “get it” Link metrics to marketer brand/business objectives Don’t just sell ad space – they sell solutions Prove It -- more likely to measure ROI and link media behavior to sales Can Turn Consumer Insight into Marketer Foresight MME Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis 2010
  28. 28. Marketing & Media Ecosystem 2010 MME 2010
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