2010 Razorfish Outlook Report Key Findings
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With consumer adoption of digital media becoming ubiquitous and distribution models improving, our 2010 report takes a look at mobile and social media marketing trends as well as other key media trends that may not be getting as much attention, but will have an important impact in 2010.
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2010 Razorfish Outlook Report Key Findings
- 1. THE 2010 RAZORFISH OUTLOOK REPORT TOPLINE FINDINGS
- 2. THIS REPORT TAKES A SNAPSHOT OF MARKETING TRENDS AND MEDIA SPEND.
- 3. WHAT DID WE FIND IN THIS YEAR’S REPORT? MARKETERS NEED TO TRANSFORM THEMSELVES. OR DIE.
- 4. THE RECESSION HAS SUBSIDED. MARKETERS ARE SPENDING AGAIN ON DIGITAL.
- 5. CONTRARY TO POPULAR BELIEF, CLIENTS WERE WILLING TO EXPERIMENT DURING THE RECESSION.
- 6. MOBILE MARKETING HAS ARRIVED, FINALLY—THANKS TO APPLE.
- 7. MARKETERS WILL INVEST MORE INTO DIGITAL VIDEO.
- 8. BRANDS WILL TAKE OVER TWITTER.
- 9. BRANDS ARE FOCUSNG ON SOCIAL INFLUENCERS, NOT SOCIAL MEDIA.
- 10. BRANDS ARE GETTING SAVVIER ABOUT MEASURING SOCIAL.
- 11. GOOGLE STILL DOMINATES SEARCH. BUT NOT FOR LONG.
- 12. GLOBAL BRANDS ARE LEARNING HOW TO THINK AND ACT LOCALLY.
- 13. Thank You David Deal Vice President, Marketing 312-696-5056 David.Deal @razorfish.com Superhypeblog.com Twitter.com/davidjdeal Facebook.com/davidjdeal Slideshare.net/davidjdeal
Editor's Notes
- On May 24, Razorfish will publish our sixth annual Razorfish Outlook Report. Today we are giving you an advance look at its findings before our clients do. We’re going to share with you the same kind of information that we are discussing with Razorfish clients, who include companies like Best Buy, Levi Strauss & Company, and Terra. The report is an annual snapshot of trends affecting the way Razorfish clients invest their marketing dollars. Past editions have discussed trends ranging from the future of social media to the advent of interactive TV. Many people who watch our industry, including journalists, have found the report useful because it includes an analysis of how our U.S. clients conducted their media buys the previous year. That’s because Razorfish manages a heavy volume of media spend for our clients. The actual dollar amount is confidential, but it runs into the hundreds of millions of dollars. As in previous years, this year’s report once again discusses some of the trends affecting how our clients are embracing marketing more generally, such as the ascendance of digital-out-home.
- So as when we examined the way clients are investing into marketing, we came to one realization quite rapidly: marketing is quickly polarizing into a world of leaders and also-rans. The also-rans think of marketing as nothing more than a way to deliver a clever message. The leaders think of marketing as a way to transform their businesses. To launch new products and services. To re-invigorate the way they connect with consumers. Leaders are companies like Mercedes-Benz, a Razorfish client that successfully launched its new E-Class sedan last year with the help of a digital customer experience that employs 3D technology. We find that digital is the catalyst for a perpetual revolution in business and culture, a digital domino effect that encompasses everything from the death-by-DVR of appointment TV to the role that Twitter played last year in Iran’s attempt at revolution. When we ask CEOs or CMOs which part of their business is stable today, all we generally hear is the sound of crickets. That’s because most companies, brands, and marketers are attempting to navigate a landscape that continues to shift beneath their feet. Who has the luxury of long-term strategic planning when technology is leapfrogging, conventional marketing tactics are tanking, and the only thing consumers seem to be confident about is Twitter and Facebook?We think it’s time to let go of the old rules. It’s time to really embrace change — and hone the skills necessary to harness it. If you take Moore’s Law seriously, then the pace of cultural evolution — and the prevalence of digital innovation — is going to continue doubling every two years from now until the cows come home. More than ever before, it’s essential to evolve. Quickly.
- If you are a marketer who took time during the recession to experiment and innovate, you are in a great position right now. If you did not, you are going to fall further behind the companies that innovated during a down time. Because the down time is over. An economic recovery is occurring now. Our analysis shows that in 2009, clients gradually increased their media spend, by 4 percent. That doesn’t sound like much until you realize that during the previous year, they decreased their spend by 13 percent the previous year. MillerCoors innovated during the recession – for instance by launching the wide-mouth can and the cold-activated can to make drinking beer more fun. Billboard innovated during the recession – employing streaming video and interactive content to reinvent itself from a staid business-to-business brand to a vibrant business-to-consumer brand.Companies like MillerCoors and Billboard are better positioned to leapfrog the competition.
- An analysis of our media spend shows that clients have been willing to experiment with newer forms of marketing, too, even amid the recession..When we asked our media teams about client spending in channels that were new to them, we found some robust statistics. One hundred percent of Razorfish clients that spent in digital out-of-home did so for the first time this year. More than 80 percent of clients investing in ad exchanges in 2009 were doing so for the first time. All told, the channels which clients experimented with the most in 2009 were ad exchanges, data brokers, digital out-of-home, and social media.
- For years the so-called experts have been predicting the rise of mobile marketing. Finally, the experts are sounding somewhat correct. That’s because Apple continues to launch new platforms like the iPad that make the mobile a more attractive user experience. Mobile marketing no longer means creating awkward direct-response text messages. Mobile marketing means creating a fun, engaging experience like what Polo Ralph Lauren did with its Make-Your-Own Rugby application in 2009. With Google and Apple moving forcefully into mobile advertising with their purchase of mobile ad networks, and Apple’s announcements around iAd, the mobile landscape will quickly change. Both companies have the ability to change both the ad experience, and start to connect together the user information so that it can be tied to meaningful activities. We are watching Google and Apple closely in the mobile space, and intend to test new ad platforms and measurement systems as they come on line. You can also expect the surging popularity of FourSquare to generate more real spend on mobile marketing, more in the form of direct response marketing – more pinpointed and relevant because it is location-based.
- We are seeing more and more of our clients invest in video advertising as well as other forms of rich media. We expect more and more dollars and impressions to move into video in 2010, particularly as analog dollars move to digital. It will be crucial for brands to understand the true value of video ads – valuations which may be very different from what ad buys cost on TV. For instance, the currency of offline video – the GRP and TRP – are much less relevant in the digital space where actual rather than estimated exposures and views can be counted and subsequent actions can be measured. Until analog becomes more precise and/or a more common language is found, evaluating online and offine video will continue to be a challenge. In addition, when digital video becomes more interactive, and less like a 30-second TV spot, we expect to see more focus on it.MillerCoors is a company that knows how to employ video. To support the roll-out of the cold-activated can I mentioned earlier, MillerCoors worked with Razorfish to create a number of videos of scientists doing goofy experiments with their cold-activated cans – which appeals to the male consumers important to our client. The videos on the site are driving engagement. The average time spent on the videos is just over 3 minutes, which exceeds dwell time for any other videos we have created for Coors Light in 2009.
- Twitter advertising is a work in progress. Have you noticed any exciting sponsored Tweets lately? Did not think so.But Twitter is a lot more than an advertising platform. Smart brands have been discovering its value to service customers, broadcast content, and offer deals to brand loyalists (defined as people on Twitter who follow your brand). In fact, we did some separate consumer research in 2009 that revealed people like to follow brands on platforms like Twitter and Facebook because they expect special deals, like what Dell provides via Twitter.Forget what people tell you about brands not belonging on Twitter. Companies like Whole Foods are taking over Twitter, and consumers are happily going along. As of May 2010, Whole Foods has 1.7 million followers.
- The massive growth in blogs has led many publishing companies to develop sophisticated methods of bringing bloggers into conversation about products and services. Blogger outreach networks such as BlogHer serve as third parties for brands to have relationships with these individuals, through, for example, a centralized area for the brand’s sponsorship. Network bloggers are then invited to add to the conversation around a certain topic, usually spawned by the advertiser. To amplify conversations, the host will ask the more influential bloggers to chime in, thus creating a halo effect of influence with their loyal followers. Consumers no doubt consider bloggers to be influential since they offer educated opinions on products and services; however, they aren’t always clued into the relationships that may exist between bloggers and marketers. In October 2009, the Federal Trade Commission ruled that bloggers who receive products or paid endorsements from brands must disclose these relationships to their readers. So what’s the impact? We actually believe blogger outreach will become better. More transparent and sophisticated. And that’s good for consumers. In fact, Forrester Research just unveiled a new tool called Peer Influence Analysis, which offers marketers a more refined tool for understanding who influences their opinions and how. More about that here: http://forrester.typepad.com/groundswell/2010/04/introducing-peer-influence-analysis.htmlWe’ve barely scratched the surface in understanding how other people influence our purchase decisions. Models like Peer Influence Analysis will give brand the confidence they need to embrace influencers more effectively.
- The advent of tools like Peer Influence Analysis also point to a larger trend, which is that marketers are getting savvier about measuring the value of social media – which we call Social Influence Marketing at Razorfish. Razorfish is developing a tool of our own called the SIM Score. The SIM Score tracks both the volume of impressions made about your brand in the social world and their favorability. We used the SIM score to assess just how much damage Toyota was experiencing with the crisis caused by performance problems with its cars. Our SIM score showed that Toyota’s brand was not suffering as much as we had assumed – likely because there main a strong number of Toyota loyalists who believe complaints about its cars have been exaggerated. Our findings were vindicated when Toyota experienced a sales surge in March 2010.The SIM Score is the only such tool on the market, and we’re using the SIM Score to help clients assess the strength or weakness of their voices in the social world. Better tools for the social world are crucial for marketers to make more serious, long-term investments into social – just as the development of analytics tools have fueled the growth of online more broadly.
- We don’t want to give you the impression that marketers have been experimenting with newer channels like digital out of home at the expense of the “established” channels like search. About 45 percent of Razorfish clients’ media spend in 2009 was invested into vertical properties, search, ad networks and portals – the equivalent of the old guard in the digital world. Google still leads the search category. However, Razorfish expects the combination of Microsoft Bing and Yahoo! to challenge Google’s dominance. Bing is a good example of how business transformation is occurring even in good-old-fashioned search marketing.Razorfish helped Microsoft redefine search as a more engaging and relevant consumer experience by launching Bing in 2009 – and created one of America’s hottest brands according to Advertising Age. Microsoft upped the stakes for the already well established search-engine market by rethinking search as a decision engine when it launched Bing in June 2009. For instance, Bing focuses on four industries (travel, shopping, local, and health) to help consumers make quicker decisions. Bing organizes and categorizes results (rather than simply serve a list of weblinks) to give information and to make it easier to sort and understand search results.Advertising Age saw something special in Bing by naming it one of America’s hottest brands.
- Many of our clients aspire to be stronger global marketers. They have heard it said before – “think globally, act locally.” But we think global marketers needs to go a step further by immersing themselves in the increasingly sophisticated and fragmented digital micro-markets around the world.Let’s look at one of those micro-markets – Brazil, an increasingly powerful and digitally savvy consumer base that is crucial to the future of global players like Nike.From a digital perspective, Razorfish sees a big megatrend in Brazil: Almost 70 million people – the largest socioeconomic block in the nation -- are becoming upwardly mobile and are about to swell the country’s previously anemic middle class. In the past, Classe C -- as they are known in Brazil -- was believed by digital marketers to be on the wrong side of the Digital Divide. Today, digital brands ignore Classe C at their peril. In the next 18 months, almost half of them will buy computers and smartphones -- and with that they will jump definitively across the Digital Divide. Brazil is already the world’s leader in usage of email, IM, and time spent with social media, and in 2010, understanding how to connect online with Classe C should be at the top of the marketer’s agenda. Razorfish is now launching research into Classe C that we will announce later in 2010.