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October 3, 2008 1 Hot Trends:


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October 3, 2008 1 Hot Trends:

  1. 1. Hot Trends: Social Networks, Mobile Marketing and Online Video October 3, 2008 Debra Aho Williamson Senior Analyst eMarketer Inc. October 3, 2008
  2. 2. What’s On Tap Today <ul><li>Internet Ad Spending Trends </li></ul><ul><li>Social Networking </li></ul><ul><li>Mobile Marketing </li></ul><ul><li>Online Video </li></ul>October 3, 2008
  3. 3. October 3, 2008 Internet Ad Spending
  4. 4. Internet: Approaching 10% of Worldwide Ad Spending October 3, 2008
  5. 5. $25B in US Online Spending in ‘08 October 3, 2008 Source: eMarketer, August 2008 US Internet Ad Spending (billions)
  6. 6. Faltering Economy is Impacting US Ad Budgets October 3, 2008
  7. 7. Why Will Online Advertising Thrive in a Difficult Economy? <ul><li>Online ads are more measurable than other media, making them increasingly appealing to advertisers </li></ul><ul><li>The Internet audience is huge, so the simple process of advertising following eyeballs will lift spending </li></ul><ul><li>Internet ad prices are rising , thanks to targeting and other techniques, which can push up overall spending </li></ul>October 3, 2008
  8. 8. Advertisers are Committed to Increasing Online Spending October 3, 2008
  9. 9. Social Networks, Mobile and Online Video: THE GOOD <ul><li>High penetration </li></ul><ul><li>Enviable user demographics </li></ul><ul><li>Elusive “buzz” factor </li></ul><ul><li>Engaged audience </li></ul>October 3, 2008
  10. 10. Social Networks, Mobile and Online Video: THE BAD <ul><li>Few standardized ad formats </li></ul><ul><li>Consumers who are disengaged from ads </li></ul><ul><li>Questionable ROI </li></ul><ul><li>Measurement challenges </li></ul>October 3, 2008 &quot;If a certain kind of spending hasn't been in your [advertising] budget for three straight years, you'll likely cut it when things get tougher.” --Russell Fradin, president, Adify
  11. 11. And of Course, the Ugly October 3, 2008
  12. 12. October 3, 2008 Social Networks
  13. 13. Social Networks: Only One of Many Types of Social Media October 3, 2008 Source: Universal McCann
  14. 14. Is This Your Image of Social Networking? October 3, 2008
  15. 15. Social Network Growth Markets: Mideast, Europe and Latin America October 3, 2008
  16. 16. 58% of Worldwide Internet Users Have Created a Profile October 3, 2008
  17. 17. US Usage Is Still Growing October 3, 2008 Unique Visitors to MySpace and Facebook August 2007-August 2008 (thousands) 75.5 million (up 10% from ‘07) 41 million (up 21% from ‘07) Source: comScore Media Metrix
  18. 18. But Is It a Fad That’s Losing Steam? October 3, 2008 US visits to social network sites are down 17% year-over-year vs. August 2007
  19. 19. SN Ad Spending Growth Slows in 2009 and Beyond October 3, 2008
  20. 20. US Spending Still in Flux October 3, 2008 Source: eMarketer, 2008 +55% +27% +15% +13% +11% 12/07: $1.6B 12/07: $2.7B
  21. 21. News Corp. Acknowledges This October 3, 2008 “ Social networking has gotten a disproportionately lower share of digital advertising budgets. If you compare the amount of traffic and the amount of users we have with the portals, most of those guys have been putting 50%, 60% of their budgets in portals, and 10% of their budgets against social network sites.” -- COO Peter Chernin at Merrill Lynch presentation, Sept. 2008
  22. 22. Social Network Ad Experiments Continue October 3, 2008 <ul><li>MySpace home page takeovers </li></ul><ul><li>Reach 40mm+ people/day </li></ul><ul><li>Popular with movie studios </li></ul><ul><li>“ Dark Knight”: Trailer streamed </li></ul><ul><li>70mm times </li></ul>
  23. 23. What About HyperTargeting? <ul><li>Banner-ad targeting based on information people provide in their profiles </li></ul><ul><li>Updated in real-time </li></ul><ul><li>Half of all ad insertions now include some form of HyperTargeting </li></ul><ul><li>Major brands: General Motors, Coke, Red Bull, Target </li></ul><ul><li>Double eCPMs vs. untargeted ads </li></ul>October 3, 2008
  24. 24. Facebook Continues to Experiment With Viral Marketing <ul><li>Comment directly on </li></ul><ul><li>an ad </li></ul><ul><li>- Become a fan of a </li></ul><ul><li>brand without leaving </li></ul><ul><li>the page you’re on </li></ul><ul><li>- Send a virtual gift to </li></ul><ul><li>a friend </li></ul>October 3, 2008 New Ad Features “ Facebook has always tried to push the envelope. And at times that means stretching people and getting them to be comfortable with things they aren’t yet comfortable with. A lot of this is just social norms catching up with what technology is capable of. ” Mark Zuckerberg, New York Times, September 2008
  25. 25. On the Other Hand, Too Much Targeting is Never a Good Thing October 3, 2008
  26. 26. October 3, 2008 Mobile Marketing
  27. 27. 2008: The First Year Ad Spending Tracks Ahead of Subscribers October 3, 2008 Worldwide Mobile Ad Spending and Subscribers 2006-2012 (millions)
  28. 28. Mobile Usage Facts <ul><li>Over 85% of people 18-49 have a mobile phone (Pew Internet & American Life Project, August 2008) </li></ul><ul><li>In two years, the average number of text messages we send every month has grown nearly 500% (Nielsen Mobile, September 2008) </li></ul><ul><li>39% of teens believe the mobile is the only type of phone they will own (CTIA, Harris Interactive, September 2008) </li></ul><ul><li>68% of consumers say the mobile Internet is an important factor in their next mobile phone purchase (AKQA/dotMobi, June 2008) </li></ul>October 3, 2008
  29. 29. Why Mobile Advertising Trails Mobile Subscribership <ul><li>“ Lack of awareness of the audience size, complexity of the mobile marketing ecosystem and a lack of trust among advertisers in the mobile advertising investment.” </li></ul>October 3, 2008 Privacy Intrusiveness
  30. 30. Do Consumers Accept Mobile Phone Advertising? October 3, 2008 Source: Nielsen Co., September 2008
  31. 31. Where is the Money? October 3, 2008 Mobile Search Mobile Display Ads Text Messaging Or Here?
  32. 32. Or Here? October 3, 2008 Google Android
  33. 33. Messaging Dominates Ad Spending October 3, 2008
  34. 34. US: 36% of 2008 Mobile Spending October 3, 2008
  35. 35. BMW’s Snow Tire Campaign in Germany <ul><li>Personalized MMS message to customers, showing image of their car with a recommended tire and price </li></ul><ul><li>Option to call dealer directly for appointment </li></ul><ul><li>30% bought tires from dealer during promotion </li></ul>October 3, 2008
  36. 36. Mobile Marketing: A Two-Way Street October 3, 2008 Take a photo, send it in a multimedia message Receive a picture of a customized Nike shoe Save as wallpaper, send to friends Order personalized shoes directly
  37. 37. The iPhone is Changing How Consumers Use the Internet October 3, 2008
  38. 38. Mobile Phone Applications: New Advertising Medium iPhone App Store Stats (9/08) October 3, 2008 <ul><li>100 million apps downloaded in 60 days </li></ul><ul><li>700 games </li></ul><ul><li>62 countries </li></ul>“ The iPhone has changed users’ expectations of what is possible in a mobile device and UI, and the AppStore finally showed the promise of mobile data applications.” --Kleiner Perkins VC firm
  39. 39. October 3, 2008 Online Video
  40. 40. The Digital Landscape Confounds Many in the Media Biz October 3, 2008 “ We don’t know what’s gonna work. Predicting what the media world is gonna look like in eight years is incredibly daunting. I defy anybody to do that.” - Jeff Zucker, president-CEO, NBC Universal, September 2008
  41. 41. Consumers Love Online Video October 3, 2008
  42. 42. Half of US Population Watches Online October 3, 2008 Source: eMarketer, February 2008 US Online Video Users, 2006-2012 (% of population)
  43. 43. 71% of US Internet users watch online videos at least once a week October 3, 2008 Source: Universal McCann, April 2008 % respondents , Mar. 2008
  44. 44. Types of video content people watch monthly: short, short , short October 3, 2008 Source: eMarketer, February 2008 Full TV shows = 27% % total US video viewers, Feb. 2008
  45. 45. Websites Love Video, Too <ul><li>Average CPMs: $43 for video ads ; $15 for display ads (Bain & Co. for the Interactive Advertising Bureau) </li></ul><ul><li>High sell-through rate: 90% for premium content creators (TV networks, etc.); 50% for content aggregators (YuMe and Collins Stewart LLC) </li></ul>October 3, 2008
  46. 46. Video Ads: 2.6% of Online Spend in 2009 October 3, 2008 Source: eMarketer, September 2008 US Online Video Ad Spending (millions and % of Internet total) “ Video is the growth format on the Internet. ” -- David Hallerman, eMarketer 1.5% 2.0% 2.6% 3.4% 4.7% 6.8% 9.8%
  47. 47. But Video Won’t Challenge Search or Display -- Yet October 3, 2008 US Online Ad Spending, by Format (billions) 2008 & 2013 Source: eMarketer, August 2008
  48. 48. Factors supporting a (future) boom in online video spending <ul><li>Broadband is reaching a “critical mass” </li></ul><ul><li>TV efficiency is declining yet still very expensive </li></ul><ul><li>Advertisers can replicate the sight, sound, motion – and emotion – of television, but with better measurability and targetability </li></ul><ul><li>There are vast opportunities for communication among consumers ( aka, viral ) </li></ul>October 3, 2008
  49. 49. But There Are Significant Hurdles October 3, 2008 Can consumer- generated video be monetized? What ad formats work best? Will consumers skip over ads?
  50. 50. Four flavors of video ads <ul><li>Pre-roll (also, mid-roll or post-roll) </li></ul><ul><li>( the ad runs in-stream with video content ) </li></ul><ul><li>Overlays (aka, bugs or tickers) </li></ul><ul><li>( the ad runs at bottom of video, not interrupting content ) </li></ul><ul><li>Skins (aka, player skins) </li></ul><ul><li>( the ad runs surrounding video content window ) </li></ul><ul><li>In-page banners </li></ul><ul><li>( the ad runs in a box, not connected to video content ) </li></ul>October 3, 2008
  51. 51. In-Stream May Be Most Effective Ad Type October 3, 2008 <ul><li>LiveRail* </li></ul><ul><li>~ 80% preroll completion rate </li></ul><ul><li>11.5% clickthrough rate </li></ul><ul><li>88% of all video ads </li></ul>*provider of video ad technology
  52. 52. YouTube Experiments with Overlays October 3, 2008 New: Ad runs post-roll (after clip) if user doesn’t click on overlay
  53. 53. But Ads on User-Generated Video Trail Consumer Usage October 3, 2008 Source: The Diffusion Group, July 2008
  54. 54. Zappos Gets Clicks for Its Video Ad Campaign October 3, 2008 Ad appeared on 50 sites targeted to females Video plays only after user clicks on it Simplicity: Ad served by same company that serves rest of Zappos’ ads Result: 5% clickthrough rate (vs. just 0.3% for banner ads)
  55. 55. When It Comes to Video Ads, One Attitude Does Not Fit All October 3, 2008
  56. 56. 67% Will See an Online Video Ad At Least 1x a Month in 2008 October 3, 2008
  57. 57. The eMarketer View <ul><li>Social networks are here to stay. Evolving ad models mean new opportunities to connect with consumers </li></ul><ul><li>Mobile: The iPhone and phones based on Google’s Android will be the new benchmarks for mobile content </li></ul><ul><li>Video: The time to start online video advertising is now; the audience has reached critical mass </li></ul>October 3, 2008
  58. 58. Thank you ! Debra Aho Williamson Senior Analyst eMarketer Inc. October 3, 2008