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Broadband And Digital Media Kermode

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Presentation made at the Australian Broadband Summit April 28th 2008

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Broadband And Digital Media Kermode

  1. 1. Broadband and Digital Media Australian Broadband Conference Grace Hotel April 29th – May 1 st , 2008 Roger Kermode CTO/COO iPrime
  2. 2. Individuals’ Behaviour will drive broadband not technology
  3. 3.
  4. 4. Online Media Spending Growth Outstrips Traditional Media Spending <ul><li>Media Consumption (Net Nielsen March 2008) </li></ul><ul><li>Internet 13.7 hrs/week </li></ul><ul><li>TV 13.3 hrs/week </li></ul>Source: BRW Advertising accounts for 5% of US GDP 50% of all ICs production is used by Consumer Electronics devices
  5. 5. Targeting Increasingly Drives Advertiser Buying Behaviour
  6. 6. 3 Takeaways from this Talk <ul><li>Technology Enable & Accelerate Existing Behaviours </li></ul><ul><li>The Long Tail increasingly drives Media Innovation </li></ul><ul><li>Net Neutrality is Essential for Growth </li></ul>
  7. 7. 1) Technology Enables & Accelerates Existing Behaviours <ul><li>TQuestion: Which of these is technology? </li></ul><ul><ul><li>Refrigerator </li></ul></ul><ul><ul><li>Motor Car </li></ul></ul><ul><ul><li>Computer </li></ul></ul><ul><ul><li>Mobile Phone </li></ul></ul><ul><ul><li>iPhone </li></ul></ul><ul><li>Technology isn’t technology for those under 30 </li></ul><ul><li>Each generation adopts / exploits what is available </li></ul>
  8. 8. 2) The Long Tail Increasingly Drives Media Innovation Broadcast Mass Media Internet Me/We Media
  9. 9. 3) Net Neutrality is Essential for Growth <ul><li>Net Neutrality (def’n) </li></ul><ul><ul><li>&quot;Network neutrality is best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites, and platforms equally” – Prof Tim Wu. Columbia Law School </li></ul></ul><ul><li>In other words </li></ul><ul><ul><li>Network operators allow all comers to deliver content </li></ul></ul><ul><ul><li>Users decide which content is important </li></ul></ul><ul><ul><li>Internet returns to what it was designed to be </li></ul></ul>
  10. 10. Technologies Enable & Accelerate Existing Behaviours Ask not what things are but what they mean
  11. 11. Anyone can now be a content creator…
  12. 12. … and Media Fragmentation means consumption takes place anywhere, anytime… <ul><li>Gen X & Y spend less time with traditional media </li></ul><ul><li>Multi tasking has increased.. </li></ul><ul><ul><li>Internet & TV – 58% </li></ul></ul><ul><ul><li>Internet & Radio – 48% </li></ul></ul><ul><li>Key factor engagement </li></ul>IPTV iPods Mobile TV Digital still / video cameras Social internet sites
  13. 13. … which then changes how we navigate through the web. <ul><li>Most users (up to 75%) bypass a home page completely. </li></ul><ul><li>Means any page is a “home” page. </li></ul><ul><li>Search, social networks, blogs, and RSS driving more and more users deep into sites directly. </li></ul><ul><li>Every page accessed in any manner & conceivable order. Can’t design properties to control user flow anymore. </li></ul><ul><li>Users increasingly willing to embrace multiple devices. </li></ul><ul><li>Unwilling to make compromises with an all-in-one device. </li></ul><ul><li>Users expect seamless transitions from offline to online. </li></ul>
  14. 14. Thus, Video Releases happen faster…
  15. 15. ..and Online Video becomes about the Now
  16. 16. Social Networking is how big? <ul><li>The latest fad? </li></ul><ul><ul><li>Broad Adoption </li></ul></ul><ul><ul><li>Many Networks </li></ul></ul><ul><ul><ul><li>MySpace – Music </li></ul></ul></ul><ul><ul><ul><li>Facebook – College </li></ul></ul></ul><ul><ul><ul><li>LinkedIn – Business </li></ul></ul></ul><ul><ul><ul><li>Bebo – Social </li></ul></ul></ul><ul><ul><ul><li>Open Social…. </li></ul></ul></ul><ul><li>Perhaps not…. </li></ul><ul><li>An increasing driver of traffic </li></ul>
  17. 17. MySpace is all about ME
  18. 18. Facebook is all about “US” <ul><li>Opened its network for developers to build & sell new applications. </li></ul><ul><li>20 weeks, hundreds of developers launched more than 6,000 + new applications, 392 m installs </li></ul><ul><li>192 sponsored groups </li></ul><ul><li>Largest app = 19m users </li></ul>
  19. 19. Sportsplay is all about our local stories
  20. 20. The Long Tail increasingly Drives Media Innovation How and why data-centric online media is driving Internet usage and Media in general
  21. 21. The Conversation has Changed
  22. 22. So what does the Long Tail mean? US portals lost 5% online revenue in 2007 to narrower content sites & search engines as spending followed consumers down the tail across a more fragmented Web Business of Content Broadcast Mass Media Internet Me/We Media
  23. 23. How the Internet Enables “New” Media <ul><li>Broadcast Media </li></ul><ul><ul><li>Choices made for you by taste makers </li></ul></ul><ul><ul><li>Mass Consumption / Hits </li></ul></ul><ul><ul><li>Hundreds of markets of Millions </li></ul></ul><ul><ul><li>Concentration of smarts in the Core </li></ul></ul><ul><li>Interactive Media </li></ul><ul><ul><li>Choices made by you </li></ul></ul><ul><ul><li>Niches everywhere </li></ul></ul><ul><ul><li>Millions of markets of Hundreds </li></ul></ul><ul><ul><li>Shift of smarts to the Edge in Access Devices </li></ul></ul>
  24. 24. Why Online Ads threaten the TV Model <ul><li>Price to reach 1000 consumers </li></ul><ul><li>TV </li></ul><ul><ul><li>Highest Rate ~$30 </li></ul></ul><ul><ul><li>Lowest Rate ~$10 </li></ul></ul><ul><ul><li>Ratio ~3 times </li></ul></ul><ul><li>Online </li></ul><ul><ul><li>Highest Rate $160.00+ </li></ul></ul><ul><ul><li>Lowest Rate $0.50 </li></ul></ul><ul><ul><li>Ratio 300 times </li></ul></ul><ul><ul><li>Same inventory can be sold many ways </li></ul></ul><ul><ul><li>Aim is to maximise yield via better targeting </li></ul></ul>
  25. 25. Targeting vs. Reach: The Big Picture commercial in confidence Reach Targeting 1,000,000s 100,000s 1,000s 10,000s 1 10s 10,000,000s Billions Millions Thousands 100s Smallest individually Addressable Market in terms of Unique Browsers Aggregated Total Addressable Market in terms of Unique Browsers Too Small To Sell Unless Content is Highly Unique Site Traffic needs to be Aggregated within a Publisher Network Massive Reach but little targeting Run of Network Sales at lower CPMs Critical Mass Reach AND Highly Targeted Very high CPMs But Requires High Technology for scale Medium to Large Reach AND Some Targeting Variable CPMs depending on Target Parameters and Advertiser Interest But Requires Medium Technology for scale
  26. 26. Targeting vs. Reach: Where the Players Fit Reach Targeting 1,000,000s 100,000s 1,000s 10,000s 1 10s 10,000,000s Billions Millions Thousands 100s Smallest individually Addressable Market in terms of Unique Browsers Aggregated Total Addressable Market in terms of Unique Browsers “ Hundreds of markets of Millions” Niche Individual Publishers Variable CPMs Tier 2 / Performance Ad Networks Low CPMs Highly Automated Minimal Human Sales Tier 1 / Full Service Ad Networks High CPMs Dedicated Sales Team Popular Vertical Individual Publishers Variable CPMs Major Portals Variable CPMs Customised Aggregation Sites Variable CPMs “ Millions of markets of Hundreds”
  27. 27. Where the money is…
  28. 28. Winners and losers Source: IBM
  29. 29. Value of Targeting has Increased <ul><li>2007 saw the Biggest media boom ever </li></ul><ul><li>$12 billion invested in 120 days </li></ul><ul><ul><li>Microsoft buys aQuantive for $6 bn, up 11,000% from 2001 </li></ul></ul><ul><ul><li>WPP Group buys 24/7 Real Media for USD$649 million </li></ul></ul><ul><ul><li>AOL buys Adtech AG </li></ul></ul><ul><ul><li>Publicis buys Digitas for $1.3 billion </li></ul></ul><ul><ul><li>Yahoo buys ad exchange Right Media Inc. for USD$680m </li></ul></ul><ul><ul><li>Google buys DoubleClick Inc. for $3.1 billion </li></ul></ul><ul><ul><li>News Corp buys Strategic Data Corporation </li></ul></ul><ul><ul><li>Hitwise bought by Experian for $USD240m </li></ul></ul><ul><ul><li>NBC sets up USD$250m tech fund </li></ul></ul>
  30. 30. So… what does this all mean? <ul><li>Platform and Content must be Integrated </li></ul><ul><ul><li>TV and Online media experience will become increasingly intertwined </li></ul></ul><ul><ul><li>IP delivery will eventually supplant broadcast…. but not just yet </li></ul></ul><ul><li>Content must be </li></ul><ul><ul><li>Organised </li></ul></ul><ul><ul><li>Relevant </li></ul></ul><ul><ul><li>Easy to access / share across multiple platforms </li></ul></ul><ul><li>Advertising must be </li></ul><ul><ul><li>Targeted (personal, relevant, anticipated, timely) </li></ul></ul><ul><ul><li>Increasingly Integrated Cross Platform (follow the consumer) </li></ul></ul><ul><ul><li>Easy to buy </li></ul></ul>
  31. 31. iPrime (Hyperlocal) <ul><li>Content </li></ul><ul><ul><li>Custom filtered </li></ul></ul><ul><ul><li>Multi source aggregation </li></ul></ul><ul><ul><li>Bespoke additional content </li></ul></ul><ul><ul><li>Focus on conversation </li></ul></ul><ul><li>Advertising </li></ul><ul><ul><li>Integrated placement with offline media TV / Radio </li></ul></ul><ul><ul><li>Deep Quant Analytics </li></ul></ul><ul><ul><li>Hyper Targeted Accessible Markets for advertisers </li></ul></ul>
  32. 32. Net Neutrality Why this is important for continued economic prosperity
  33. 33. Implications of Net Neutrality <ul><li>Net Neutrality (def’n) </li></ul><ul><ul><li>&quot;Network neutrality is best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites, and platforms equally” – Prof Tim Wu. Columbia Law School </li></ul></ul><ul><li>Implications </li></ul><ul><ul><li>Open Access for all Content and Service providers </li></ul></ul><ul><ul><li>Reasonable and fair access costs to consumer </li></ul></ul><ul><ul><li>Increased Global Competition…. </li></ul></ul>
  34. 34. Not All Bits are Created Equal <ul><li>Media Unit Size Cost Cost/Mbyte </li></ul><ul><ul><li>SMS 160 bytes 20c $1,250.00 </li></ul></ul><ul><ul><li>Email (Text) 500 – 2000 bytes $0.002 </li></ul></ul><ul><ul><li>Banner Ad 20 – 40 Kbytes $0.002 </li></ul></ul><ul><ul><li>Web Page 200 – 600 Kbytes $0.002 </li></ul></ul><ul><ul><li>MP3 Song (3 mins) 2 – 4 Mbytes $0.002 </li></ul></ul><ul><ul><li>You Tube Video (2mins) 5 Mbytes $0.002 </li></ul></ul><ul><ul><li>SD Movie 300 Mbytes / hr $0.002 </li></ul></ul><ul><ul><li>DVD Movie 2.2 Gbytes / hr $10 (90mins) $0.003 </li></ul></ul><ul><ul><li>Blu Ray HD Movie 5.6 Gbytes / hr $45 (90mins) $0.005 </li></ul></ul>$129.95 Bband Plan 60 Gbyte/ Month limit 17 Mbps 5 30 40 20 50 10 Mbps 1.5 Mbps 10 Mbps 512 kbps 256 kbps 17 Mbps Cable Modem / DSL2+
  35. 35. Broadband has enabled many Web2.0 Businesses…
  36. 36. … that have created a lot of value Source: esnips.com
  37. 37. .. But Broadband Isn’t Just About the Bits <ul><li>Broadband Creates Channels for Conversation… </li></ul><ul><ul><li>Rich Media (video, audio) </li></ul></ul><ul><ul><li>Two Way Communication </li></ul></ul><ul><li>… Web 2.0 Adds Smarts to Manage Them…. </li></ul><ul><ul><li>Timely, Relevant, Engaging Group communication </li></ul></ul><ul><li>… the Result: </li></ul><ul><ul><li>What once were Functions now become Emotions </li></ul></ul><ul><ul><li>When this happens </li></ul></ul><ul><ul><ul><li>Communication Frequency Accelerates </li></ul></ul></ul><ul><ul><ul><li>Social Capital Growth accelerates </li></ul></ul></ul><ul><ul><ul><li>Value Creation Accelerates </li></ul></ul></ul>
  38. 38. Global Trends Drive IT Services Source: rs.resialliance.org
  39. 39. The Next Wave of Opportunities <ul><li>Consumer </li></ul><ul><ul><li>(Yet More) Convergence </li></ul></ul><ul><ul><ul><li>Integrated Cross Platform Media </li></ul></ul></ul><ul><ul><ul><li>Content and Advertising blur </li></ul></ul></ul><ul><ul><li>Mobile Applications Emerge </li></ul></ul><ul><ul><ul><li>Predominantly Social Focus </li></ul></ul></ul><ul><ul><ul><li>Increasing use of hi-res screens and rich media </li></ul></ul></ul><ul><ul><li>Search Dominates (Still) </li></ul></ul><ul><ul><ul><li>Until Semantic Web takes off… </li></ul></ul></ul><ul><li>Business </li></ul><ul><ul><li>Social Networking / Enterprise2.0 takes off </li></ul></ul><ul><ul><ul><li>Group Communication within business processes </li></ul></ul></ul><ul><ul><li>Right Sourcing Continues </li></ul></ul><ul><ul><ul><li>Increased use of internationally remote teams / skilled labour </li></ul></ul></ul><ul><ul><li>Software As A Service (SAAS) </li></ul></ul><ul><ul><ul><li>Increasing use of externally administered applications </li></ul></ul></ul><ul><ul><li>Immersive Interfaces Appear </li></ul></ul><ul><ul><ul><li>Increasing use of Larger Screens and Touch in Business </li></ul></ul></ul>
  40. 40. Thank You Roger Kermode CTO/COO iPrime [email_address]

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