Outlook 2014: Data-Driven Marketing in an Omnichannel World


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Outlook 2014: Data-Driven Marketing in an Omnichannel World

  1. 1. Outlook 2014: Data‐Driven Marketing in an  Omnichannel World i h l ld Bruce Biegel Senior Managing Director DMA Annual Conference Chicago, IL• October 15, 2013
  2. 2. About Winterberry Group • Corporate Strategy p gy • Marketing System Engineering • M&A Due Diligence Support • Market Intelligence • Investment Banking  through Investment Banking, through
  3. 3. The Trends 2013 Primary Themes for 2013‐2014: Pi  Th  f   • Omnichannel Customer Engagement • The Rise of Programmatic Marketing Our First Look at 2014
  4. 4. Here They Go Again And It’s Bad for the U.S. Economy (and us t ) A d It’  B d f  th  U S  E  ( d  too) Sources: Business Insider
  5. 5. GDP and Traditional Media Growth Slow – No  Elections, Olympics or World Cup Soccer  Elections  Olympics or World Cup Soccer  2013E U.S. “Measured Media” Spending: $122.7BB 4.3% % Outdoor: $7.1BB Cinema: $0.6BB Radio: $16.1BB 1.5% 0.9% ‐1.9% 2.0% Magazines: $13.7BB ‐4.8% Newspapers: $18.8BB Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2012 levels Television: $66.4BB 2.8%
  6. 6. Digital Captures New Budgets, Money from  Print; Traditional Direct Slightly Down 2013E U.S. “Direct & Digital” Spending: $132.5BB 22.7% 18.9% Other  Digital: $5.4BB Insert Media: ‐5.0% $0.8BB Display: $17.6BB Other: $3.2BB $3 2BB 3.2% (Includes Mobile & Desktop) (Includes Mobile & Desktop) 4.4% 10.1% Search: $19 6BB $19.6BB Direct Mail: $44.8BB (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2012 levels; Insert Media includes FSIs and statement inserts; Display and search  reflect spending on desktop and mobile Teleservices: $41.1BB 1.0% ‐0.9%
  7. 7. Its Really, Really The Year of Mobile Devices 2013E U.S. Digital Advertising Spending: $42.7BB S i l T h l Social Technology    and Services¹: 32.1% $2.8BB Oh   Other  29.6% Mobile2 : $.35BB Email: 11.1% $2.0BB 18.9% Display: $17.6BB Lead Gen & Affiliate Services: $0.3BB 7.0% 15.6% (Includes Mobile & Desktop) Search: $19.6BB 10.1% (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2012 levels ¹Excludes social display and social search spend 2Excludes mobile display and mobile search spend
  8. 8. Direct Mail Flat: It’s About USPS; And Mobile U.S. Direct Mail Marketing Spend ($BB) • Wherefore Art Thou O Postal  Reform Act?  The PMG needs your  help – exigent rate hike requested to   “help” save the USPS $43.8 • Catalog mailers facing a 5.9%  increase – volume has to come out  to make the math (analytics) work $45.2 $45.2 2009 2010 2011 2012 2013E $44.8 $ $40.0 Credit Card mailers return, Telecoms  • Credit Card mailers return, Telecoms up as competition increases, and  standard class (ad mail) grows while  first class decline continues  $44.9 $20.0 • QR Codes and Augmented Reality  adoption and interaction accelerates  across the mobile landscape across the mobile landscape Source: Winterberry Group, Oct. 2013 $0.0 Direct Mail CAGR .57%
  9. 9. Search: Accounts for ~46% of Digital Spend;  Mobile Drives New Growth • Spending overall rises with  nearly all of the gain coming  l ll f th i i from the doubling of mobile  search • Desktop searching declines for  the first time as consumers  engage more deeply on mobile  engage more deeply on mobile devices • Tablet CTRs are rising (62% over  last year) and the cost‐per‐click  is higher than on desktops CAGR measured from 2009-2013E Source: Winterberry Group, Oct. 2013 U.S. Search Marketing Spend,  2009‐2013E ($BB) $19.6 $ $14.6 $15.6 $16.9 $17.8 $0.7 $2.2 $4.4 $14.6 $15.6 $15 6 $16.2 $16 2 $15.6 $15 6 $15.3 $ 2009 2010 2011 2012 2013E Desktop search Search S h CAGR Mobile search 7.64%
  10. 10. Display: Expected to Rise to $17.6BB, Driven  by Improved Audience (Re)Targeting U.S. Display Marketing Spend,  2009‐2013E ($BB) • Focus on audience targeting,  primarily through programmatic RTB primarily through programmatic RTB solutions with retargeting and 3rd party digital data • RTB is expected to account for  $3.34BB in spending in 2013, a  73.9% rise, reflecting 20% of all  display media transacted display media transacted • Rich media and video format  spending growing by an expected  21.7% from 2012 to 2014, banners decline by 3% $17.6 $14.8 $12.3 $12 3 $8.4 $8.4 2009 CAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013 * Includes social display, video, rich media and banner ad formats, as well as ad sponsorships Sources: IDC, eMarketer, ComScore $9.9 $9.9 2010 $1.9 $0.6 $11.8 2011 Desktop display Display CAGR $3.8 $13.0 $13.8 $13 8 2012 2013E Mobile display 20.3%
  11. 11. Social: Social Tech & Services Spend is  Expected to Reach $2.8BB in 2013 Expected to Reach $2 8BB in 2013 • 68% of CMOs say they are  underprepared to deal with the to deal with the  impact of social media—yet 82% plan  to continue increasing investment in  social media technology social media technology Spending on Social Media  Tech and Related Services ($BB) $2.8 $2.1 $2 1 • Mobile devices fast becoming the  platforms of choice for social  interaction i t ti $1.6 • Social sites focus on easing on‐ boarding of advertisers, campaign  management and measurement $0.7 • Data driven social targeting beginning g to challenge search for ROI 2009 Source: IBM CMO Survey; BIA/Kelsey; eMarketer; Nielsen Wire; Bizo, Pew Research CAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013 $0.9 2010 2011 Social Tech/Services CAGR 2012 41.4% 2013E 
  12. 12. Mobile: Total Spending to Reach $8.5BB, Up  From $4.4BB in 2012  From $4 4BB in 2012  • Fastest growing channel—spending  nearly doubles YOY—reflecting  marketing’s attempt to keep pace  with consumer engagement with  email, social and shopping • M‐Commerce is booming:  transactions on mobile devices are  expected to reach $41.6BB in 2013,  p , growing 68% over last year • Mobile targeting and measurement   handicapped by a lack of unique  handicapped by a lack of unique identifiers (UIDs), a variety of  solutions are on the horizon Mobile Marketing Spend  Breakdown, 2011‐2013E ($BB) Breakdown  2011‐2013E ($BB) $8.5 $0.4 $3.8 $4.4 $0.3 $1.9 $ $1.6 $4.4 $0.3 $0.6 $0.7 $2.2 2011 2012 Mobile search Mobile display Mobile CAGR CAGR measured from 2011-2013E, Source: Winterberry Group, Oct. 2013 Source: eMarketer 2013E Other mobile 130.5%
  13. 13. E‐mail: Steady Growth; Driven by Cost‐ Effective, Targeted Marketing Channel Effective  Targeted Marketing Channel • Mobile design is key—half of all  emails are opened on a mobile device emails are opened on a mobile device • Marketers begin to mature with  respect to audience segmentation for  email—seek more sophisticated  email seek more sophisticated analytics capabilities to improve use  of the channel U.S. Email Marketing Spend,  2009‐2013E ($BB) E ( BB) $2.0 $2.0 $1.8 $1.6 $ $1.4 $1.0 $1.2 • More robust email lists presents  opportunity to link to CRM and other  customer engagement approaches • Consolidation and new releases  provide enhanced cross‐platform  capabilities CAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013 Source: Epsilon, Return Path $0.0 $0 0 2009 2010 Email CAGR 2011 2012 13.6% 3 2013E
  14. 14. The Trends 2013 Primary Themes for 2013‐2014: Pi  Th  f   • Omnichannel Customer Engagement • The Rise of Programmatic Marketing Our First Look at 2014
  15. 15. Three Evolving Dynamics Are Changing  Marketer Thinking The fragmentation of media—making  it harder for marketers to engage  valuable audiences The growth of “customer‐centric” marketing— g f g driven by consumers who manage information,  consideration and purchasing on their own terms The challenge of retrofitting legacy  marketing infrastructures to  manage interactions driven by data  & technology rather than by media  channel
  16. 16. “Omnichannel” Originated in The Retail  Segment—To Address a Range of Challenges Segment To Address a Range of Challenges Customer Experience Merchandising Management P&L Optimization
  17. 17. “Omnichannel”  Goes Beyond Integrated Marketing, It’s  an Approach to Empower Mutual Value Between  Marketers and Consumers k d
  18. 18. But What Really Makes It Different? Driven by  Driven by enterprise  business  objectives—not tactical marketing  requirements Made possible  Made possible only by recent  advances in data,  technology and  media delivery Aimed at driving  Aimed at driving informed  customer   engagement
  19. 19. And It’s Very Much About Driving Profitable  Interactions with the Brand Which of the following do you believe are the likely benefits of  adopting an “omnichannel” customer engagement strategy?  Heightened Brand Awareness Improved Customer Response Rates Revenue Growth 70% 75% 80% 85% Percentage of panelists who agree Source: Winterberry Group, “Taking Cues From the Customer,” 2013 90% 95%
  20. 20. Not Surprisingly, Interest in Omnichannel is  Surging Across All Verticals 83% of panelists said their  company would likely invest in  “omnichannel” approaches in  the near future the near f t re 92% agree there is “real value”  to be gained from pursuing an  omnichannel approach to  customer engagement Source: IAB‐Winterberry Group White Paper, Omnichannel Audience Engagement, June 2013
  21. 21. What's Required for Successful Adoption? Customer Analytics & Multiplatform Attribution Rich Content—Optimized for Context & Strategic Intent Operational Infrastructure Geared to the Needs of  Customer Engagement Cross‐Platform, Audience‐Driven Media Placements Integration of Deeply Engaging—Yet Effectively  I t ti   f D l  E i Y t Eff ti l   “Disconnected”—Media Elevation of the  Omnichannel Strategist  as a Senior  Elevation of the “Omnichannel Strategist” as a Senior  Role
  22. 22. The Trends 2013 Primary Themes for 2013‐2014: Pi  Th  f   • Omnichannel Customer Engagement • The Rise of Programmatic Marketing Our First Look at 2014
  23. 23. Once Upon A Time, Buying and Placing  “Media”  Was a Manual  Negotiated Practice Media   Was a Manual, Negotiated Practice
  24. 24. And Then Came Search, Giving Us Auctions for  Media Inventory and Audience Impressions Behavioral Algorithms Machine driven bidding  Machine‐driven bidding & price optimization Workflow Automation
  25. 25. But When It Came to Display, The Proliferation  of Formats Made Buying More Complex
  26. 26. Complexity that the Ad Tech Market Set Out  to Solve • Massive investments in the development of media Massive investments in the development of media  and marketing automation followed • Harnessing of “Big CRM” and online behavioral  data would be deployed to identify and message  unique individuals with relevant content and offers • Decisioning engines and machine driven analytics engines and machine‐driven analytics moved beyond “trigger” marketing and into  biddable auctions and optimization models
  27. 27. And “Programmatic” Marketing Solutions  Began to Emerge Content Optimization Media Operations  Execution Audience Insight/ Segmentation Auction‐Based Auction Based Media Buying
  28. 28. To Date, the Programmatic Value Proposition  Has Been Closely Linked to  Auction   Has Been Closely Linked to “Auction”  What does “programmatic” mean to you?  Machine‐driven  Automation Real‐time Bidding  (RTB) Auction‐based approach to media buying A ti b d  h t   di  b i 0% 20% 40% 60% Percent of panelists who mentioned each in their “top 3” WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263
  29. 29. And a New Lexicon Has Emerged Around  Programmatic Media Buying
  30. 30. …Yet More Marketers Are Coming to Realize  Substantial Benefits of Driving Efficiency… Substantial Benefits of Driving Efficiency My organization is interested in programmatic  because of the ability to… f y Effi i l  V l   Efficiently Value  & Transact  Digital Media Improve Operational  Efficiency Target consumers across digital media T t     di it l  di 0% 20% 40% Percent of panelists who mentioned each in their “top 3” WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263 60%
  31. 31. So Programmatic Approaches Are Becoming  A Real Priority Has your organization pursued a programmatic approach to the  following use cases? Are you likely to do so within two years? 85% 81% 64% Audience Insight Development A dience Insight De elopment In two years Today In two years Today 58% Automation of Back‐end  Processes WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263
  32. 32. And Programmatic Solutions Are Going to  Continue to Evolve Across Channels Today Tomorrow Radio R di Search TV Display Direct mail  and e‐mail d il Print
  33. 33. Resulting in “Programmatic” as a Foundation  for Sophisticated Data‐Driven Marketing Cookies will recede as the fundamental programmatic “control  point” as the mobile device assumes a central role as the  audience touchpoint audience touchpoint The programmatic approach is growing addressable to all media  types paid, owned and earned types—paid, owned and earned Data is the “fuel” that powers audience‐centered programmatic  efforts, heightening its importance and value efforts heightening its importance and value Which will lead  to a major wave of innovation focused re‐ engineering and optimization of business processes and  engineering and optimization of business processes and organizational design And the complex ecosystem of Ad Tech vendors will evolve into a  p y set of programmatic “stacks”
  34. 34. The Trends 2013 Primary Themes for 2013‐2014: Pi  Th  f   • Omnichannel Customer Engagement • The Rise of Programmatic Marketing Our First Look at 2014
  35. 35. 2014 Will Balance Increased Activity With  Increased Scrutiny • The economy will continue to  recover— fueling higher GDP  recover fueling higher GDP growth—and as a result marketing  budgets will expand  • Increasing utilization of digital data  for customer engagement and  Washington getting to “normal”, will  combine to re‐focus attention on the  combine to re focus attention on the regulatory agenda • Scrutiny will be most acute in the  first half of the year, prior to the  midterm elections
  36. 36. More Slow Growth in Traditional Channels 2014E U.S. “Measured Media” Spending: $123.7BB 3.5% 1.7% ‐1.5% O td Outdoor: $7.3BB 2.0% Radio: $16.4BB Magazines: $13.5BB ‐8.2% Cinema: $0.6BB 0.8% Newspapers: $17.3BB Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2013E levels Television: $68.5BB 3.3%
  37. 37. Data Driven Marketing Continues To Take  Share and Growth Accelerates 2014E U.S. “Direct & Digital” Spending: $139.5BB 18.5% 17.0% Other  Digital: $6.4BB $6 4BB Insert Media: $0.8BB Display: $20.6BB (Includes Mobile & Desktop) 7.4% 1.0% Search: $21.6BB (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2013E levels; Insert Media includes FSIs and statement inserts 5.3% Other: $3.4BB 6.2% Direct Mail: 1.0% $45.2BB Teleservices: $ $41.5BB 1.0%
  38. 38. And Digital Spend Chases Digital Adoption 2014E U.S. Digital Advertising Spending: $48.5BB Social Technology  and Services¹: 22.5% $3.4BB 25.7% Mobile2  : bil $.44BB Email: 10.0% $2.2BB 17.0% 13.6% Display: $20.6BB (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2013E levels ¹Excludes social display and social search spend 2Excludes mobile display and mobile search spend Lead Gen & Affiliate Services: $0.3BB 7.4% Search: 10.2% $21.6BB (Includes Mobile & Desktop)
  39. 39. 7 for ‘14: Content ‐ The King of Relationships 1 60% of Corporations are doing content marketing – they will finally define it in 2014 Mobile content marketing strategies will lead the way instore to see the ROI Director of Content becomes a marketing j g job Source: Jayson DeMers, Forbes
  40. 40. 7 for ‘14: Social Everywhere 2 Social interactions on mobile devices continue to increase Social targeting on Facebook, g g Twitter, Instagram outperform branded sites - and is very measureable No one can make a decision without crowd sourcing opinions p
  41. 41. 7 for ‘14:  The Continuing Evolution of Loyalty  3 From points to engagement, loyalty programs begin to add new incentives (currencies) – whether social causes, health or lifestyle rewards Loyalty goes mobile, so you CAN take it with you–carry it or wear it! The question: When does q loyalty start?
  42. 42. 7 for ‘14: TV and Video Platforms Evolve 4 “Second screen” tablet adoption combines with “smart” smart connected TVs and game consoles—fueling cross platform video advertising id d i i Programmatic delivery and g y viewing data propels growth in this key channel for consumer engagement t TV’s connected to the Internet expected to reach 759MM by  TV’ t d t th I t t t dt h 759MM b 2018, up from 307MM for 26.4% market share (Digital TV Research)
  43. 43. 7 for ‘14: Cycle Times Shrink 5 Consumer expectation: “I want it now now” Marketer expectation: “I need to respond/react faster” Reality: Campaign and interaction cycle times from planning to execution continue to shrink – pressuring suppliers to be more agile - from development to delivery
  44. 44. 7 for ‘14: Data Utilization Accelerates 6 Programmatic display, omnichannel demand, drive demand digital data use cases Databases become more sophisticated repositories of online and offline data Technologies to activate the data mature along with the talent to use it BIG DATA STAYS BIG….
  45. 45. 7 for ‘14: Consolidation, IPOs and Digital Stacks 7 2013 has seen lower deal volume (-16% YOY) but increased value - up 36%, led by a few blockbuster deals Valuation remains high driven by IPO comps Will a return to more normal valuation bring more PE players back to a market dominated by cash heavy strategic buyers? Source: PPLLC data on enterprise software M&A transactions 2009-2013
  46. 46. Questions? Bruce Biegel g Senior Managing Director bbiegel@winterberrygroup.com www.winterberrygroup.com yg p @WinterberryGrp