2013 State of Media

UNDERSTANDING GROWTH TARGETING THE NEW MOBILE AUDIOAND FRAGMENTATION 26 CONSUMER82 STATE OF MEDIA 2013

ANALYTICS DEATH OF BIG DATA, RISE OF SMART DATA 68

ESPN: End of an Empire? 34

02 VIDEO EVERYWHERE FACT, FICTION & FUTURE Letter from the President

For me, working in the discussions that will continue this industry has to drive growth and progress. always been an exciting adventure. Offline and online are cohabitating It still is to this now more than ever to earn day. Nevertheless, viewers’ time, so let’s examine the continuous shakeup of content and provider advancements models. Today technologies like in the media Dish Network’s Hopper and landscape Aereo (page 6) are stirring the can make pot, but tomorrow, who knows? our jobs and the task of tracking I also happen to be a tablet addict, trends a challenging endeavor. so it’s been enjoyable to see my These rapid changes are what favorite magazines adapting to the encouraged us to write our very ever-increasing push for crossover first STATE OF MEDIA (SOM) content (page 22). This process has four years ago, and I am proud to already made for some truly creative say our mission to keep business uses of the medium and I can’t wait partners, clients, new friends and to see what’s next. Again, it all ourselves informed has successfully reminds me that we should dispel continued to this day. Now, just the premonitions and instead look like the industry in which we work, at the opportunities a more unified KSM is evolving our publication media ecosystem will produce. by giving it a new editorial style to The SOM always gives me a welcome deliver pertinent insights in a quick chance to reflect on concepts like and easily consumable format. these and discover ways we can Just before the SOM’s annual utilize its findings for our clients. I release, I frequently find myself hope it lets you do the same, and thumbing through its articles. It’s ultimately sparks the kind of creative funny, but with each read I often discussions that will benefit your feel a mix of inspiration and business well into the next year. bewilderment over the debates All the best, taking place amongst our peers.

We all know that the video landscape (page 2) has evolved immensely in the past five years, but surely I’m not the only one who’s tired of hearing about Joni Williams the “death of traditional TV,” or any President medium for that matter. Our focus 312.621.9230 should instead be on the evolution of [email protected] media, and how we can all participate in what’s on the horizon. These are Vol. V state of media Contents

The Changing Face of Tablets 20

Business Audio Sports 01 Tuning In 19 of Ink 25 waves 33 blitz 02 • Video Everywhere 20 • Print Fast Facts 26 • Audio 34 • Is the ESPN Learn about TV Empire in Trouble? 22 • Print Stays Afloat On-Demand misconceptions and ESPN’s reign on the Publications are 30 • The Streaming next generation sports market has been adapting to the digital Audio Lineup providers. largely unchallenged, landscape fast, but is We break down but is that about to 11 • Spot TV it enough for them to the main players in change? 12 • Cross-Device stay alive? streaming audio. 41 • League Targeting 32 • Local Market Observations 14 • SVOD Radio new thisVol. year V

Social 43 Interactions 44 • The Art and Science of Social Measurement

46 Facebook: Today & Tomorrow Facebook’s rise to dominance has been impressive, but where is the social network headed? 50 • Facebook Exchange

Gaming 53 Landscape 54 • The Continued Rise of Mainstream Gaming 44 56 • Is the Gaming Console Social Here to Stay? Measurement: 58 • Focus on Emerging Art & Technology Science

Search 59 trends Automation: Mobile The Analytics Nation 60 • Search landscape 67 79 Discover the new look of search & Data Game 80 • The Mobile Landscape How smart data systems are and where market share is going. 82 • Focus: Mobile reshaping business intelligence. 62 • Google’s Enhanced Consumer Engagement Campaigns 68 • The Big Data Fad Learn how consumers are 71 • Marketing & Web Analytics engaging with mobile in different 64 • Search Fast Facts ways than you might think. 66 • SEO vs. PPC Campaigns 73 • Programmatic Buying Automation Marries Expertise 86 • Mobile Fast Facts 75 • Cookies & Privacy Mobile: The Future of Broadcast? How Brands Target Consumers Across Multiple Devices What’s Going on With Spot TV Pricing? Tuning In

Video Everywhere: Myth-busting the TV Rumors.

State of Media • 1 Video Everywhere How Traditional and Digital Viewership Are Collectively Driving TV’s Future

2 • Vol. V • ksmmedia.com Convergence is happening, but the process is muddled and rife with drama. The brave new television world is one of lawsuits, threats, overnight sensations and technology-driven change. At stake in the battle for consumer video eyeballs are billions of dollars, viewership convenience, programming innovation and the entire television landscape as we know it—and that’s just the beginning.

Due to video viewing fragmentation, in the form of early adopters. That day to watch live TV. Add in DVR marketers now have an increasingly being said, traditional advertising playback, online video, video games complicated landscape to inherently looks for groups with and DVD playback and the living address and must have a deep commonalities (with the exception room television set gains another 50 understanding of the elements of a few select product categories), minutes of use per day. The obvious driving fragmentation. Those so early adopters can help identify conclusion here is that traditional include programming delivery where the market is potentially TV remains the undisputed king systems and their relative adoption headed. This means that until the in terms of time spent with video. levels, measurement efficacy and market actually falls in line with the overall effects of an on-demand low-cost equipment and broad However, there has been a fair viewership model. Both hype and an choice, mass adoption and targeting amount of argument associated overly-enthusiastic entertainment segmentations can’t happen. with younger viewership and their community are adding to migration towards alternative video industry confusion, making it Myth-Busting platforms. Nielsen has found that very easy to lose perspective. 18-24 year olds currently watch just The first essential step in gaining over 23 hours of traditional TV per It’s important to know that true perspective on the video week versus two and a half hours consumer adoption can only be landscape is to dispel the most of online video per week. While the accelerated by the following factors: egregious rumors and myths: lion’s share of their viewing is still technology availability and choice, Traditional TV is Not Dead live TV, it is important to note that reasonable price points, awareness According to Nielsen, U.S. consumers there has been a steady decline in and overall ease-of-use. Adoption sit in front of a television an average viewership within this age group can’t be defined by a few outliers of four hours and 39 minutes per over the last three years. The

Traditional TV Viewing, by Age

3000

2250

1500

750 Weekly time minutes spent in Weekly

0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Source: Neilsen 65+ A50-64 A35–49 A25-34 A18-24 T12-17

State of Media • 3 18-24 year old age segment actually watches about 11 fewer minutes of Cord Cutters in the US, 2008-2013 (millions) TV per day in 2013 than in 2012. 5.0 4.70 Both the 12-17 and 18-24 age 4.5 4.0 3.74 3.58 groups have registered a 12 3.5 percent viewership decline (in 3.0 minutes per week) since Q1 2.5 2011. The 25-34 and 35-44 age 2.0 1.5 1.05 0.93 1.08 0.96 groups have each experienced a 1.0 6 percent decline in the last two 0.5

years, exhibiting the effects of 2011 2012 2012 2013 2008-2012 2008-2012 2008-2012 alternative video options. However, (Forecast last year) (estimated this year) (forecast this year) (forecast last year) (estimated this year) (forecast this year) while the declines are noteworthy, Source: MarketingCharts.com alternatives are not yet robust enough to overtake television’s of them receive video content on This difference does not imply a huge hold on overall viewership. other devices such as a computer, disparity of usage. And while Zero In addition, the peaks and valleys smartphone or tablet (37 percent on TV households are by definition associated with time spent watching a computer; 16 percent on Internet never viewing traditional television, traditional television signify how TV; 8 percent on smartphones, and it is questionable whether their content plays a big role in viewership. 6 percent on tablets). More than interest levels are dramatically Ratings increases in Q4 and Q1 and 50 percent of Zero TV households different than light TV viewers. decreases in Q2 and Q3 are common are composed of consumers Finally, it is unclear whether these due to new content and production under 35, un-married, with no cable cord-cutters are migrating schedules that are dictated by children in the household who more to online content or to traditional television networks. also live with roommates. It is satellite and telco subscriptions Consumers are still following the generally understood that their instead. Cable subscriptions viewing periods defined by program primary motivation for cord- declined by 2.7 million year-over- creators and will continue to do cutting is the high expense of year in Q1 2013, but telco providers so as long as the content remains cable subscriptions combined (Verizon FiOS, AT&T U-Verse) competitive. Consumers are also with lack of interest in current gained 1.4 million subscribers. The becoming more comfortable with traditional television content. number of TV households with no alternative video platforms, but the Nielsen has found that the lightest television users also tend to be limited streamers.

In fact, some evidence points to an access to traditional subscription industry still needs a major game- extension of that lack of interest programming actually only grew changer to push a majority of users online. Nielsen has found that the by 106,000. Due to constant churn entirely onto digital platforms. lightest television users also tend to in the cable and telco marketplace, Cord-Cutting is Not (Yet) a Worry be limited streamers. Users in the it is difficult to track exactly how Zero TV households (U.S. bottom quintile of TV consumption many households have no access consumers who have no access to watch approximately 36 minutes to subscription television. Cable, traditional television beyond the per day and stream only about satellite and telco subscriptions use of an antenna) now number six minutes per day. The heaviest as a category have grown by approximately 5 million. While 75 quintile of TV viewers watches nearly 2 percent over the last percent of these homes do have approximately 10 hours per day and year despite cries claiming an traditional TV sets, 67 percent streams three and a half minutes. impending rise in cord-cutting.

4 • Vol. V • ksmmedia.com Cord-Thinning SHOULD works towards its goal of 90 million and cable networks will see a shift. Be a Worry (for Some) subscribers in the next five years. There are currently conflicting Cord-thinning is the act of canceling reports regarding Netflix’s share of pay channels delivered through While it’s true that HBO currently viewing and the effect the service cable, satellite, and telco providers. has 114 million subscribers has on viewership of traditional In light of the shaky economy worldwide and Netflix has yet to broadcast and cable networks. All over the last few years, many TV create a fan base outside the U.S., told, there is yet to be a major shift. subscribers have chosen to cancel there is no doubt that the next few However, should its subscription expensive premium channels like years will be telling for the state base continue to increase, there is HBO and Showtime while retaining of premium channels. HBO in no doubt that Subscription Video their basic cable subscriptions. In particular, has experienced great on Demand (SVOD) and premium many cases, consumers are looking success with its line-up of original channels will manage to peel to Over-The-Top (OTT) options content, awarding the network both off traditional viewers based on delivered through the internet clout and its pick of projects. This is the quality of their content and (Netflix or Hulu Plus) to replace certainly an advantage that Netflix overall selection. The race is on and premium channel programming will have difficulty overcoming. traditional TV will have to continue in their living rooms. HBO More importantly, all the to invest heavily in content to reportedly expressed no concern competition among OTT and compete, which is a challenge given when Netflix recently reached 36 traditional premium channels the ever-fragmenting environment. million subscribers, surpassing will definitely affect over-the-air To cast further confusion on the HBO’s approximately 30 million viewership. As HBO, Netflix and U.S. subscribers. But the industry platform issue, there has been other content producers attempt to discussion about whether Netflix is watching as Netflix attempts to lure customers to their premium produce more original series and will become a traditional cable platforms, traditional broadcast network offered by cable MSOs,

State of Media • 5 and conversely whether identify which areas are both are major game- able to deliver broadcast HBO will become an OTT most appropriate for changers in the world of network programming service relying solely media spend right now. TV advertising. Though through the internet to on an improved and However, the industry is the legal battles are far households without cable streamlined HBO GO app. changing faster than ever from over, it is believed subscriptions. And what’s Regardless, based on the and identifying direction that these two will more, they deliver live- direction the industry for future plans will create upheaval that will streaming television to is going, this discussion keep advertisers relevant elicit necessary shifts any device, be it phone, is irrelevant. HBO and and ensure efficiencies. in the marketplace. tablet, or laptop. The Netflix will solidify their Technology, measurement service costs $8 per month staying power in the advancements and power Aereo: The world of and allows subscribers landscape based on their shifts are drastically smartphones had the to completely bypass content and consumer molding the future of video iPhone and now the world cable providers while also demand regardless and this year marks the of TV has Aereo. Though it providing them with fully- of their broadcasting beginning of some major is not predicted that Aereo functioning DVRs that platforms. Since all video upheaval. Here’s what you will have the staying power record, pause and rewind. is moving towards an should be watching over of Apple’s electronics, And here’s the catch: online streaming hub, the next six months: it will be a catalyst for Aereo pays the networks and all signs point to change on the scale of nothing for the privilege cable MSOs maintaining Technology Catalysts Apple’s breakout success. of re-transmitting the control of the hub, the There are two Aereo is a small start-up broadcast programming. real question is actually major technological (boasting Barry Diller This year, the courts ruled how long it will take for developments that as a primary investor) that its re-transmission mainstream a la carte threaten the current which has created a major is completely legal. offerings to be available. television marketplace: upset in the world of TV. Aereo and Dish Network’s Within the last few years, By installing tiny antennas Moving Forward Sling Hopper. Both have all cable providers began won initial 2013 court across New York and paying extremely hefty Applying perspective to battles for the rights relaying broadcast signals re-transmission fees to the marketplace helps to their existence and to the cloud, Aereo is air broadcast channels as

Reasons for Streaming Online Video, May 2013 (%, among monthly+ users)

Original Professionaly TV Online User-Generated Content Produced Online Video To catch up on an episode 50% To get a laugh/for the humor 67% I prefer to watch original 27% I missed on TV professional online video on my own schedule I prefer to watch TV shows 44% I click on a link I stumble 33% To watch video content about 23% online on my own schedule upon and get drawn in my hobbies or interests I like watching older 32% I prefer to watch video content 23% Watch content not available 22% shows/episodes that are on my own schedule on TV or in UGC videos not available on TV Watching TV shows online 24% I like watching video content 22% I like watching video content 21% is no different from watching that is not available on TV that is not available on TV regular TV to me I don’t have pay TV Service 23% To fill time while waiting for 15% I click on a link I stumble 20% appt or other activity to start upon and get drawn in

Source: MarketingCharts.com

6 • Vol. V • ksmmedia.com part of their subscription the foundation for a services. These fees have US Concurrent Media Usage nationwide rollout. All represented around 10-15 While Watching TV live-streaming attempts by percent of the broadcast broadcast networks thus networks’ revenue. If the far have required viewers courts continue to side to prove they have a cable with Aereo, there will subscription, and this be no incentive for cable 62% requirement will continue. providers to continue Broadcast networks are to fall in line with not yet willing to split network’s demands for 41% from their lucrative re-transmission fees, and relationships with cable 28% these broadcast giants will providers, though Aereo certainly feel the pinch. will likely force them to In addition, the fees paid 11% 9% adapt over the next year. by the network affiliates Computer/ Laptop Mobile Phone Book/ Newspaper Tablet Computer Game Console to major broadcasters for Dish Sling Hopper: Dish Source: Accenture Outlook | The eyes have it: guess who controls the future of TV (Feb. 2013) airing broadcast-owned Network’s introduction of programming may also the Hopper DVR in 2012, subscribers should be more have a right to worry. They a Set Top Box (STB) that come into question. noticeable. As a private lease broadcasting licenses Aereo’s technology allows automatically removes company, Aereo has been from the FCC and a move ads from broadcast consumers to stream quiet about the exact to cable would release the same locally-aired programming recordings number of subscribers it the spectrum which they on viewers’ DVRs, stirred broadcast signals that has acquired but the mere currently utilize back to affiliates pay the major discussion across the existence of its technology the FCC, who would then industry. But its newest networks to air, and the has been sufficient enough look to rent this inventory affiliates currently have introduction, the Sling to make waves in the out to telecommunications Hopper, has created no way to quantify these television community. companies. off-the-grid viewers panic. Dish’s 14 million for advertising revenue. As soon as Aereo’s The obvious response to subscribers (they are the This missing revenue capabilities were available Aereo’s existence is for the third-largest MSO in the affects the value of the to subscribers, broadcast broadcast networks to beat U.S. market) have access to transmission, striking a networks and other Aereo at its own game and an STB that zaps broadcast wedge through the major entertainment affiliates begin live-streaming their ads and allows them to broadcasters’ negotiations sued on the grounds of programs through their sling programming to with their affiliates. “copyright infringement.” own websites and apps. The their phones, tablets FOX, CBS and Univision impact of live-streaming and computers. The Thus far, Aereo has have even threatened to presents audience Sling Hopper is the first been very careful to migrate to a cable-only aggregation problems device to take on the “TV obey the legalities of model, which would leave and threatens the pricing Everywhere” premise by its re-transmission, ABC and NBC as the model on which live TV allowing viewers to watch cutting signals outside last pillars of free, over- has been based for over 70 TV outside the home and of the network affiliates’ the-air broadcasting in years. NBC dipped their even outside the country traditional geographic the U.S. Though these toe in the water with live- with no geo-blocking areas and mirroring the broadcasters claim that streaming of the Olympics restrictions. Up to this capabilities of a traditional Aereo is not a threat to last year and NHL coverage point, no cable provider antenna. As it expands their business, litigious in 2013. ABC, meanwhile, has attempted to challenge beyond NYC into 26 actions show that the shift intends to release live- geographical restrictions markets in the latter Aereo represents is having streaming in Boston and on viewership because half of 2013, its impact an impact. Broadcast is NYC, two Aereo markets, it is a direct attack on in terms of number of in a tough place and they in order to begin laying

State of Media • 7 the broadcast networks’ access to their channels in Networks boasting high cable have paid off and control of the airwaves. all Dish subscriber homes. viewership numbers they are now immune Cable MSOs have a friendly demand big payments to “cord-cutting.” The Since there currently but tenuous relationship in exchange for carrying majority of “cord-cutters” aren’t any acceptable with broadcast networks, their programming, and who cancel their cable metric standards for but actions like Dish’s they’ve been able to dictate or satellite subscriptions tracking consumers indicate a storm on the the “rules and regulations” still require a relationship watching TV outside of horizon. If cable MSOs associated with contractual with an MVPD in order their homes, broadcast band together to push obligations of cable and to have access to online will face a challenge trying the current limitations satellite MSO deals. This entertainment options. to maintain current TV of “TV Everywhere,” the means networks have Since many industry pricing benchmarks if the Sling Hopper will definitely restricted “TV Everywhere” experts believe that virtual Sling Hopper catches on. go down as one of the and TV viewing outside the MSOs are the wave of the The Sling Hopper is the first device to take on the TV“ Everywhere” premise by allowing viewers to watch TV outside the home and even outside the country with no geo-blocking restrictions.

Initially, spotty availability catalysts that pushed this home, preventing access future, it is only a matter of WiFi and 4G networks shift in the marketplace. to live streaming of their of time before a la carte seemed to be a natural programming. Additionally, programming options are impediment to the growth Disaggregation and they’ve bundled in less delivered online through of out-of-home viewing. Cable Provider Shifts desirable networks with current cable providers. However, the Sling Hopper desirable ones to force It happened to both the takes this on directly by channel inclusion on Their business model of music and newspaper allowing subscribers to consumers’ cable line-ups. aggregating entertainment industries, and the download programs to This power structure is providers, providing television industry their devices for delayed about to be dismantled. platform hardware and viewing, requiring no certainly is not immune. serving as bill-pay hubs for access to internet on-the- Content is key and As viewership begins to content is still translatable go. Time will tell if the consumers won’t put fragment and previously even if the entire video Sling Hopper is adopted up with bundling much mentioned game- market transfers to digital. on a mass scale, but in longer. Why pay for 700 changers storm on the MVPDs will survive and the meantime other cable channels when the average scene, networks will thrive as content producers providers are monitoring consumer only watches increasingly lose control like cable and broadcast the situation closely. They 7-10 on a regular basis? and the Multi-Video networks struggle to will not be able to compete With OTT SVOD options Programming Distributors maintain relevance and with the convenience supplying competitive (MVPDs—e.g., Comcast, keep up with demand. The and on-demand viewing pressure, cable providers AT&T, Dish Network, question is, when will they offered by Dish Network. are more than happy to DirectTV, etc.) will take a stand? It has to be start creating unbundled increasingly dictate terms. soon. Aereo’s attempts There will certainly be options to meet consumers’ to become the first repercussions for Dish interests and budgets. MVPDs have acted behind “virtual” MSO and Dish Network’s bold moves. the scenes to ensure their Network’s “TV Everywhere” Throughout television The broadcast networks relevance in the video offerings are pushing the history, cable and have already threatened landscape for years to envelope and the flood broadcast networks have to increase Dish’s re- come. Their efforts to gates are about to open. transmission fees and even held the upper hand be the main providers said they plan to cut off in their relationship of internet, phone and with cable providers.

8 • Vol. V • ksmmedia.com State of Media • 9 audience reach, frequency and Gross Rating Points (GRPs) for Internet display and video advertising.

While Nielsen’s future intentions and efforts thus far have been fairly well-received and even accredited by the online community, the roll-out process is slow and labor- intensive. Nielsen is the master of traditional TV ratings but has little experience with online/offline inter-play and therefore must partner with online data vendors for data integration. An impatient ad community is not making Nielsen’s job easier and an acceptable and extensive measurement base Measurement: Popular online video to the traditional is still a couple years away. commentary loves to disparage and basic demographic segments traditional TV networks for can greatly hinder the power of Content Remains falling behind the times and not digital advertising. In addition, the Number One addressing viewers’ desires to watch on-demand model of most online television programming online. video viewing wreaks havoc on In the meantime, advertisers This dialogue is worth addressing traditional reach and frequency must make due with the research if for no other reason than to benchmarks, all while disrupting that’s currently available. Online assure consumers that over-the- the mass scale on which traditional video is a new medium and its use, air TV will be delivered primarily advertisers have come to rely. especially in combination with through digital platforms at some traditional television, will require point in the next five to 10 years. The issues lie in a number of factors: more and more experimentation Though traditional TV entities have specifying viewable versus served as consumers change their habits definitely contributed to retarding impressions, categorizing ad types, and dollars shift to the platform the offline and online convergence, counting individual impressions with the most advantageous ROI. measurement and valuation are instead of primarily gross Effective measurement models really two of the major factors impressions, standardizing metrics may take time to develop, but their that are preventing convergence. and developing equally comparable use will unlock the true power and metrics for online viewership potential of video everywhere. Finding parity in offline and online versus offline viewership. Nielsen, metrics has become the holy grail the industry leader in television It’s true that delivery platforms of video measurement. The industry ratings is attempting to ease the are important, but the real focus cannot experience a major shift transition of online and offline needs to remain on programming. from an over-the-air model to video convergence through its As networks vie to retain control online video platforms without Online Campaign Ratings (OCR) and of bargaining power against ensuring pricing benchmarks. In Cross-Platform Campaign Ratings strengthening MVPDs, the race order to do that, value must be (XCR) measurement systems. These to create captivating content will defined. Traditional television’s systems employ a patent-pending remain hot. This battle will no GRP relies on the live viewing of process combining traditional doubt continue to provide some aggregated groups defined primarily Nielsen TV and online panel data entertaining dramas both on- and by basic demographics and age with aggregated, anonymous off-screen for some time to come, ranges. Digital video metrics demographic information from proving once again that content obviously extend far beyond basic participating online data providers. is and always will remain, king. demographics. In this light, limiting The data provides overnight

10 • Vol. V • ksmmedia.com Spot TV What’s Going on With Pricing?

KSM anticipates spot broadcast expenditures to grow at least 2.5 percent over the election-fueled spend of 2012. After successfully navigating spot broadcast expenditures to network and digital channel through another presidential grow at least 2.5 percent over the migrations. This decline in supply election, spot broadcast negotiators election-fueled spend of 2012. In combined with the increase in were looking forward to a peaceful fact, some midsize top-50 markets demand has created difficulties 2013. The market was buyer-friendly without significant 2012 political for station inventory management and the ability to pick and choose expenditures are currently pacing and resulted in virtually sold-out optimal broadcast partners for more than 25 percent ahead of market conditions in many DMAs clients was a reality. However, before last year. Technology induced for Q2. Due to the corresponding April hit those best laid plans had increases in broadband and increases in unit rates, agencies been turned upside down due to telecom spending, and the overall who did not buy early on behalf of the still struggling economy. So competitiveness of many retail their clients must now creatively what exactly happened and how categories are some of the factors structure their buys in order to can advertisers best prepare for a helping to propel them forward. obtain them at or near budget. future where logic fails to predict what lies ahead? A look back at This increase in non-political Moving forward, it is essential the past year’s events should demand continues to play against to plan and buy early in order to provide some helpful perspective. yearly contractions in supply. protect against costs spiraling Although the spot broadcast market out of control. Simply waiting History demonstrates that the functions in a similar manner to for a soft market is not a viable U.S. is a nation of consumers. We the fixed unit sale of airline seats, strategy. Unlike airline seats, for are most happy when buying and the currency of broadcast supply is which there are often penalties spending, often beyond our means. actually measured more by target for changes, spot television allows The forecasts of overall negative rating points (TRPs) or ratings than advertisers the flexibility to tweak growth in 2013 local spending failed supply. The majority of buys are schedules or cancel them altogether to account for the psychology of purchased on a rating point versus with virtually zero risk (assuming being able to put the presidential unit basis with each unit being changes are made according to the election behind us. Whether for or defined by the rating it can deliver. standard terms of spot television against the current administration, A weekly 100 TRP buy consumes contracts – generally 4 weeks the population was more than 40 spots when the average rating prior to air). It is advantageous ready to deal with the outcome is 2.5. The same buy utilizes 50 for both agency and client to for the next four years, carrying spots if the average rating is a 2.0. negotiate early and establish cost- the expectation that our economy per-point benchmarks. As long would likely remain stagnant. Although overall media as the majority of the schedule consumption continues to increase, stays fixed, these benchmarks Bolstered by an auto industry many spot broadcast DMAs are will be honored should there be that is expected to increase 2013 experiencing year-to-year declines minimal shifts implemented after new auto sales by 6.6 percent to in ratings due to continued cable the market begins to tighten up. 15.3 million, KSM anticipates State of Media • 11 Cross-Device Targeting Americans today are constantly on the go, consuming content across multiple devices—be it catching up on their favorite TV shows in their living rooms, watching short video on their smartphones or streaming movies on their tablets. In this highly fragmented media landscape, advertisers have struggled to effectively measure multi-screen content consumption or deliver a cohesive message to consumers across the divide. However, technology providers like Collective, Tapad, and Firefly among others are bridging the gap through their development of Cross-Device Targeting (CDT).

12 • Vol. V • ksmmedia.com CDT leverages advertisers’ geo- and demographic traditional TV schedules intelligence leveraged How CDT Affects Ad Recall and measures whether from data providers, like General Ad Recall spots were seen by its Experian, to score and 52 intended target audience. rank TV-viewing behaviors 44 +18% Using these data points, that coincide with a client’s those exposed to the target audience. The Brand Recall 35 ad can be effectively campaign is then launched +35% retargeted online to based on these findings 26 increase campaign in an effort to help: Ad Message Recall frequency. Conversely, 29 • Add incremental +53% an advertiser can also 19 frequency to TV to focus targeting efforts Ad Likeability boost ad recall on audience segments 17 +31% who did not see its ad • Maximize 13 to subsequently extend unduplicated reach campaign reach. Source: Collective Media TV + Premium Online Video TV Only • Target key TV programs So, how exactly does increase in brand recall industry works to CDT work? First, it • “Sync” online ads when CDT is layered into establish a universal sources data from nearly with live TV a digital media plan. form of multi-screen 10 million set-top-box measurement. Until • Conquest competitors households (depending on Used effectively, CDT one is created, CDT provides a solution to the provider) to identify Cross-platform gives advertisers an measuring cross-platform viewing behavior based on measurement leaders like opportunity to extend campaigns, which proves TV shows and ads watched. Collective typically see their campaigns’ reach especially useful as the ad Next, data is overlaid with upwards of a 35 percent and minimize TV waste.

TV Accelerator: How It Works

1 2 3 Consumer TV viewing TV viewing behavior captured by STB data, TV viewing behavior anonymously balanced to local and national norms appended with geo-demographic data

GEOGRAPHY HH COMP 8 million HHs ETHNICITY INCOME

2 million HHs

4 5 6 7 8 Microsegments Households grouped into microsegments Microsegments Consumer Online ads placed in target representing ~200 HHs and excluding ranked by TV data added served to group microsegment definitions smaller than 30 HHs behaviors (e.g. A18-49) target group

35 Data Providers

30,000 consumer attributes

Source: Collective Media

State of Media • 13 SVOD: What it is and why it’s important

All eyes are on the video cable operators, Comcast Because SVOD properties while viewership becomes streaming community as and Time Warner, have include the opportunity a secondary data set. it continues to grow and 22 million and 12 million for on-demand binge make a name for itself subscribers respectively, viewing, they command Interestingly, television in the media landscape. lending perspective to attention in a way that programming from The rise of online video the massive audience pay-TV networks like established networks is consumption, increasing SVOD is beginning to Showtime and HBO never driving much of the recent broadband penetration enjoy. Hulu Plus, with did. Netflix and Amazon SVOD growth. According and the growth of in- three million subscribers, even offer commercial- to a new study by the NPD home connected devices and Amazon Prime, with free programming, Group, TV programming have lead to the rapid 10 million subscribers allowing users to enjoy accounts for 80 percent of adoption of Streaming (though far fewer actually uninterrupted video on a SVOD streams, and Netflix Video On-Demand (SVOD). use Amazon’s streaming scale never experienced enjoyed an 89 percent capabilities), have before. In addition, SVOD market share in Q1. As Currently, the major quite a bit of catching video hubs have turned Netflix and Amazon Prime players in SVOD are up to do with respect viewership-tracking battle for rights to second- Netflix, Hulu Plus, and to Netflix’s size. Still, on its head, measuring run premium television Amazon Prime. Netflix these competitors have views by how many times series, the SVOD services boasts just over 35 million not been deterred. All they’re executed rather continue to compete monthly subscribers and three have made major than when. In today’s for this rapidly-growing would be the 15th most- announcements in the marketplace more than market. Undoubtedly, watched network if it was last six months regarding ever, traditional television this battle has been a traditional TV channel. improvements or library relies on live viewing with further bolstered by the It currently dominates the expansion in order to ratings defining supply fact that viewership for SVOD landscape, holding draw more subscribers and demand. In the SVOD SVOD TV shows rose by a 90 percent share of video and reach late adopters. marketplace, content 34 percent year-over-year streaming units as of actually drives subscribers in Q1 2013. Hulu Plus Q1 2013. The largest U.S. accounted for 10 percent of

14 • Vol. V • ksmmedia.com TV streams and Amazon poised for success with In addition, Hulu’s Prime viewers are eager Prime, with the fewest a line-up consisting several attempts at to purchase spots in TV programming rights primarily of second-run original programming SVOD wherever possible. in the SVOD category, television programming, production have gone Thus far, they’ve ignored accounted for only 2 but the reality is this largely unnoticed when Hulu’s lackluster growth percent of streamed units. content hasn’t done much compared to Netflix’s in overall subscribers and have snatched up In an effort to command Netflix boasts just over 35 its inventory. Still, this an increased share of the business model puts highly-profitable and million monthly subscribers Hulu’s consumer value popular television category, and would be the 15th most proposition at a severe Amazon recently captured disadvantage and is a the rights for all Downton watched network if it was a factor that the provider Abbey episodes, a property traditional TV channel will need to consider previously residing in as it moves forward. Netflix’s catalogue. At the to increase its subscriber efforts. However, one same time, Netflix signed base. Hulu’s shaky of the most frequent How Does On- contracts with Disney, paid relationship with the complaints regarding Hulu Demand Viewing top dollar for AMC’s Mad networks that created the Plus subscriptions is the Affect Traditional Men and Breaking Bad and hub (ABC, FOX, and NBC) number of commercials. premiered two original Television prior to mass adoption Unlike Netflix and Amazon Viewership? programs, House of Cards of online streaming has Prime, a paid subscription and Arrested Development. been well-chronicled. to Hulu Plus does not Recent studies show that Remarkably, the latter of As streaming became entitle the subscriber to SVOD viewing has not those two series is actually more commonplace, the commercial-free viewing. dramatically affected an extension of a cancelled networks began to reserve In fact, Hulu Plus often traditional television primetime program that premium content for streams as many ads as viewing. Because SVOD originally aired on FOX their own branded sites the free Hulu platform. services do not offer the in 2003. Amazon has rather than supporting This means that Hulu can newest installments of also announced plans Hulu. The snub indicated remain fairly profitable TV series or movies, they to produce original that networks viewed in spite of its struggles. are still considered “add- programming, but has the hub as an outdated The lack of alternative ons” to current cable yet to set a release date. model for streaming ad-friendly, long-form subscriptions. For this growth and marked the SVOD hubs means that reason, wealthier homes So where does Hulu Plus index much higher for fall in the race for SVOD beginning of industry advertisers missing out abandonment for Hulu. on Netflix and Amazon SVOD subscriptions than control? It should be lower income homes, the

State of Media • 15 Effect of Monthly Netflix Use on Regular TV Consumption, Sept 2012 (% of users who use it on at least one platform monthly)

Theatrical movies (those originally shown in theaters) 26 59 16 shown on broadcast or cable TV networks

Reruns of episodes of comedies or sitcomes on 25 60 15 broadcast or cable TV networks

Reruns of episodes of dramas on broadcast 23 60 17 or cable TV networks

New episodes of dramas on broadcast or 22 68 10 cable TV networks

Original movies shown on broadcast or 20 67 13 cable TV networks

New episodes of comedies or sitcomes on broadcast 20 69 11 or cable TV networks

Source: Marketingcharts.com Watch more Makes no difference Watch less

latter of which still represent a viewers are watching episodes on a production line-up. Though a set growth market for SVOD. Cable weekly basis. Networks still stand to development timeline has not been package rate increases could become profit from SVOD rights contracts, announced, the Amazon pilots the main catalyst behind driving but advertisers could be left in the represent a clear move towards the adoption of SVOD subscriptions dark if the lion’s share of premium competing directly with Netflix’s in lower income households. programming is shifted to non original programming success. ad-supported SVOD platforms. Interestingly, viewers report they To further emphasize its are least likely to watch reruns of The most important benchmark commitment to stealing share from dramas, comedies and theatricals on of SVOD growth and TV share Netflix, Amazon has announced it broadcast or cable since they have acquisition will be the success of plans to develop a Set-Top Box (STB) access to these programs through original series. Though Netflix did for streaming video. On the heels SVOD. However, their desire to not release viewership numbers of hardware successes with Kindle watch new episodes on broadcast or for either of its recently launched readers and tablets, STBs seem cable has been mostly unaffected. original programs, critical acclaim the obvious next step considering and third-party website traffic the profitability of the streaming It is a generally considered a boon monitoring seem to indicate success. market. Many believe the recent to the networks that they can profit Netflix is quick to emphasize that deal with Epix (earning Amazon from the rights to the programs delayed viewing is the norm in 3,000 popular movie titles including through SVOD contracts and, at the SVOD world, and program The Hunger Games and Iron Man the same time, get new viewers “launch” dates are meaningless 2) was a play to put them on the hooked to original series during when viewers can choose when and map before aggressively entering the network off-season. This is how many episodes they watch the marketplace with an STB. especially true in light of recent in one sitting. Amazon has also indications that network and cable taken steps to compete on the Current competitors in the STB TV sites are not faring well. Slight original programming platform landscape include Roku, Apple drops in viewership have been with the simultaneous release of TV (which does not support an reported, showing that of the free 14 unique pilot episodes that can Amazon streaming app), Google (ad-supported) TV shows made be viewed and critiqued in order to TV, and Boxee. The leaders are Roku available online last year, fewer help determine the service’s final and Apple TV, carrying 5 million

16 • Vol. V • ksmmedia.com Viewers report they are least likely to watch reruns of dramas, comedies and theatricals on broadcast or cable since they have access to these programs through SVOD.

State of Media • 17 and 10 million devices respectively. programming will increase each It will become more important to However, 56 percent of US year as a result of consumer guide consumers as they spend households have a current gaming demand. The monthly cost of more time with streaming video, a console, making those devices the SVOD services is low enough to platform that lacks the traditional true competitors in the streaming attract a high income household to tune-in updates supplied by STB space today. Adding further multiple subscriptions. However, broadcast and cable television. fragmentation to the landscape, on the flipside it’s still high enough connected TVs are now in 60 percent that low income houses won’t Netflix Will Increase its of broadband households, and consider it in addition to cable fees. Platform Advertising though only about 40 percent are Successful original programming They’re currently making their way actively connected to the internet, will be the key to drawing there through sponsored original these households own an average of consumers from both groups. programming that includes product one and a half internet-connected placement and high-quality, relevant devices in their entertainment Consumers Will Gravitate content. Series and feature films systems. With so much choice in to Smart Hubs produced by major Hollywood the marketplace, the true winner Netflix’s current interface is a prime figures that are designed around may be whichever device melds example of “tailored offerings.” products are becoming so sleek and cable, internet, gaming, SVOD and The drawback of commercial- subtle that even subscribers can’t social capabilities all into one. free programming services and differentiate them from traditional delayed viewing is that users have programming. THIS is the wave What Does the Future difficulty finding new and popular of the future and will ultimately of SVOD Hold? programming. SVOD solves this by be advertisers’ access code to offering suggestions based on past the 30 million Netflix viewers. Despite the growing numbers of viewing behavior to help fill the void SVOD subscribers and STB units, left by the missing “water cooler.” streaming services are not yet poised to replace traditional TV in the near future. However, it is expected that activity will increase in the SVOD Top Online Video Downstream Sources– landscape in the following ways: Fixed Access, first half 2013 SVOD Services Will Expand Currently there is dubious loyalty to specific streaming brands. Though Netflix commands overwhelming share, streaming services are seeing some movement. In Q1 2012, 76 Other percent of SVOD subscribers 17% Netflix streamed only from Netflix. In Q1 HBO Go: 0.34% 32.25% 2013 sole Netflix users dropped to Amazon: 1.31% 67 percent, and 10 percent of SVOD Facebook: 1.48% streamers used both Netflix and Flash Video: 1.72% Amazon Prime, while 8 percent used SSL: 1.89%

both Netflix and Hulu. Whoever iTunes: 1.9% offers the most variety and popular titles will win. Battles over theatrical Hulu: 2.41% and program rights will undoubtedly YouTube MPEG: 2.58% ensue over the next few years. 17.11% BitTorrent: 5.57% Programming Pressure

Will Increase HTTP: 11.11% Investments in original Source: Sandvine

18 • Vol. V • ksmmedia.com Print Fast Facts Bridging the Offline/Online Gap How Tablet Ad Spend is Surging Business of Ink

Publishers Continue Adapting to the Digital World.

call out copy in bubble lorem ipsum

State of Media • 19 A Simmons Multi- Media Engagement More than half (64%) of Study finds that avid magazine readers magazines index 36 points higher than have visited a magazine’s TV or the Internet Facebook page citing relevant for ad attention and receptivity content as the reason Out of 100 leading U.S. and U.K. consumer magazine titles, 83% have at least one app available in the Apple App Store, Newsstand or Google Play; 65% of publishers have created Print iPhone apps and 40% have fast facts created apps for the Android 62% of avid readers aged of adults under 25 read magazines 18-34 who — and those under 35 read more use Facebook 96% issues per month than adults 35+ have posted magazine In a recent Adobe study, U.S. articles to the consumers listed newspaper site, while more and magazine advertorials than one third have uploaded as the least annoying type of content to a ads (5% and 7% found them magazine’s annoying, respectively) Facebook page

Sources: Magazine Publishers of America’s 2012/13 Magazine Media Factbook; The Association of Magazine Media, Magazine Media Readers Are Social; Adobe, The State of Online Advertising Study—Regional Comparisons; Brand Perfect, Adventures in Publishing: The new dynamics of advertising; WAN-IFRA, World Press Trends: Increasing Audience Engagement is Future for News Media.

20 • Vol. V • ksmmedia.com More than half the world’s adult population read a daily newspaper: 2.5 billion in print, more than 600 million in digital form

Seven of 10 (69%) avid readers follow One in three media readers aged 18–34 believe magazines to be a magazine brand on Twitter; Two- “one of the most highly credible thirds say they have re-tweeted sources of information for areas articles from a magazine’s feed that I am personally interested in”

More than 60% of print magazine readers took action as a result of a magazine ad Digital magazines also drive response, with 91% taking action after reading a digital issue Print Magazine apps are among the top grossing apps for key fast facts categories in the iPad App Store Magazines rank number one in driving consumers online among adults 18+

The newspaper industry Studies show that 43% of generates more than $200 billion magazine readers make of revenue annually; circulation online purchases versus and advertising performance vary widely by region 21% of non-readers

On average, magazine readers spend 41 minutes with each issue, and among digital readers, 73% read or tap on advertisements appearing in electronic magazines

State of Media • 21 Print Stays Afloat With Crossover Content

Publishers look to remain relevant by pushing digital extras.

Magazine publishers and sales dropped 8.2 percent decline seen in the period methods, such as using advertisers alike continue and Cosmopolitan, last year. Standouts include newspaper carriers. The to remain wary heading the biggest seller on several epicurean titles USPS has since postponed into the second half of average at newsstands such as Bon Appetit, Eating the elimination of 2013, and rightly so. While saw single-copy sales Well and Food Network Saturday delivery, but it seems the dark days of drop 18.5 percent. Magazine where pages concern still lingers 2009 – 2011 are behind were up at least 34 percent. for weekly magazines them, publishers have still Regardless of those dismal Auto, global luxury and which require delivery seen a 39 percent decline figures, Q1 of 2013 actually beauty brands are also on Friday and Saturday. in ad pages since 2006. brought some hope with expected to provide an Even more telling is that the launch of 27 new uptick in ad spending as Since the Postmaster in 2012, 82 magazines magazines and only nine the U.S. economy continues General has proposed a folded and total revenue closing shop. The latter its sluggish improvement. five-year-plan that would increased just 0.2 percent figure is down from a Q1 still reduce delivery in Q1 2013 compared to 2012 that saw 12 titles Initially, news that the to five days a week, the same period last year. close. Ad pages across all United States Postal publishers have good Paid subscriptions across monthly magazines from Service was cancelling reason to worry as the print and digital increased January to April 2013 Saturday mail delivery implementation of drastic 0.7 percent, but newsstand declined just 0.9 percent sent publishers scrambling operations changes will versus the 5.6 percent to find alternate delivery eventually need to occur.

22 • Vol. V • ksmmedia.com Evolve and Rebrand Time will tell if these brand almost three-and-a-half has subscription options to Survive extensions allow publishers iPad and iPhone apps, three available for $9.99 and to sustain audiences in a Kindle apps and nearly $14.99 per month for In order for print to stay continually converging two-and-a-half Nook apps. its smaller library of 87 relevant and attract new environment. Still, their titles. Next Issue was audiences, publishers attempts to address print Predictably, many digital formed in 2012 by Conde have had to evolve and weaknesses instead of magazine storefronts have Nast, Hearst, Meredith, rebrand. Utilizing creative waiting for the inevitable popped up with offerings News Corp. and Time tactics that capitalize on should be applauded. compatible on iPad, Inc., and had 120,000 existing brand equity, publishers are attempting Growth of Digital to establish a presence US Tablet User Growth, by Age, 2011-2015 Formats (% change) beyond the printed page. It is predicted that by Elle, whose ad pages were 2015, the Internet will 2011 2012 2013 2014 2015 up 10.4 percent in Q1 account for 23.4 percent 0–11 173.2% 132.3% 53.6% 27.6% 15.0% of 2013, partnered with of global ad spending, 12–17 190.0% 117.7% 51.4% 26.3% 14.5% Net-a-Porter and Rent with much of its growth 18–24 201.3% 116.8% 50.2% 25.0% 14.3% the Runway. The Net-a- coming at the expense 25–34 162.6% 111.8% 47.3% 22.3% 12.4% Porter online e-commerce of both newspapers 35–44 123.1% 89.6% 32.4% 16.0% 8.8% portal on Elle allows and magazines. Digital users to browse and subscriptions now 45–54 142.0% 91.3% 37.4% 16.3% 9.8% search for selections of comprise 2.4 percent 55–64 193.9% 114.7% 31.3% 13.0% 9.4% makeup, hair, fragrance of total magazine 65+ 190.9% 134.0% 53.4% 27.1% 15.7% and fashion items. circulation, up from 1 Total 158.6% 106.5% 42.3% 20.5% 11.9% percent a year ago. Launched on April 22 in Note: individuals who use a tablet at least once per month Source: eMarketer, June 2012 62 million homes, The Publishers continue to Esquire Network promises emphasize their growing to bring the iconic men’s paid circulation on digital Number of Brands Advertising in brand to television. platforms such as the iPad, US Print, Web & iPad Magazines, Kindle and Nook. Conde Teen Vogue (up 10.2 Q1 2012 & Q1 2013 Nast believes devices such percent in ad pages), as the Kindle Fire and expanded in April from Q1 2012 Q1 2013 Nook Color encourage the magazine rack to Print 2,904 2,778 further digital circulation 150 Macy’s stores as a Print, web and iPad 8,357 9,621 growth. Indeed, while fashion line for girls. Apple products still % lift vs. print editions alone 187.8% 246.3% This type of partnership dominate the market, has occurred before with Note: based on 58 publishing brands with monitored print editions, sites and iPad editions. the number of publishers the Elle line, which is Source: Publishers Information Bureau (PIB) with Kantar Media as cited by MPA–The Associ- developing Kindle apps ation of Magazine Media, May 23, 2013 currently sold at Kohl’s. has grown two and a half Conde Nast has launched times, up from 24 percent Windows 8 and Android a video series connected to in 2011 to 67 percent in subscribers as of Q1 2013. devices. Zinio’s Z-Pass print titles Glamour, GQ, 2012. Nook apps have Still another competitor, offers users access to any Wired and Vogue. Wired increased more than four Magzter offers individual three of the available 5,500 was the latest to launch times, from 14 percent in titles on an issue-by-issue plus magazines for only and has three new series on 2011 to 57 percent in 2012. or subscription basis. $5 per month. That model its branded video network Additionally, publishers differs from the unlimited- The popularity of reading and YouTube channel. aren’t just offering a single access pass offered by digital editions on tablets app for each device. On Next Issue Media, which indicates a potential average, they’re producing

State of Media • 23 growth opportunity for Digest, Taste of Home magazines, especially and Popular Science. since tablets have not yet reached critical Publishers expect Are QR Codes mass. Tablet users are profitability to double expected to grow by as from smartphones and Obsolete? much as 15 percent year tablets by 2015. According over year, particularly to a recent Alliance for The short answer: no. Nearly a quarter of amongst those aged Audited Media survey smartphone owners have scanned a QR code at least once. While not an earth-shattering 25-34 who at 35 percent (formerly the Audit Bureau percentage, fewer than half of smartphone boast the highest usage of Circulations), more than owners do anything else daily with their phones and ownership figures. 20 percent of its media companies foresee their other than make calls, text and use the Internet. One of many challenges digital assets—websites, The fact that code scanning is still being tried by millions of people is somewhat promising. publishers face with mobile, social media—will attracting new digital account for at least 25 Codes have also become much more functional audiences is getting percent of ad revenue by and engaging over the years, rather than simply noticed in an already the end of this year. That ending the user experience at a brand’s website. crowded market. Between figure would represent a Companies are attempting to expand content 2008 and mid-2012 it is huge leap, as it currently to increase the overall incentive for consumer estimated that consumers stands at just 4 percent. scanning. QR codes are also less unsightly today downloaded more than as brands have experimented with ways to 40 billion apps, but half If that prediction proves integrate them into content, inciting further trial. of that business went true, it will be important to 0.1 percent of all the to watch app developers Publishers like Hearst have even begun available apps. In order to that cater to a wide putting codes on print copy covers, encouraging increase awareness levels, audience. Flipboard is one shoppers to scan them with their phones in checkout lines. It is expected that both magazine many titles are touting of those players, providing and newspaper publishers will increase their their digital versions in a promising magazine integration of QR codes in order to capitalize the publication’s table of app that is both iOS and Android compatible. It on consumer cell phone use and create higher contents, directing readers levels of engagement with their content. to download the content allows users to act as public onto their tablet device. curators by aggregating their Twitter, Facebook, obviously has a ways to by building out engaging Every publishing house Tumblr and other social go with engagement. digital assets that add has unique subscription feeds into a virtual extra elements to printed policies, with some offering magazine. Much like Custom publishing has content. Still, finding the their subscribers free Pinterest, images are one long been a profitable right platform to launch, access to the digital version of the principal hooks. business model for many and figuring out ways to in addition to the hard magazines. Flipboard attract the eyes of online- copy content. The majority With its 2.0 version release could present a nice centric consumers will be of publishers are taking in late March, Flipboard extension for magazine the real key to success. the bundled approach now allows readers to brands to provide readers For now, publishers and where readers pay once tag specific articles and with additional content brands focusing on print to access the content actually build their own that may otherwise should prioritize the anytime, anywhere. magazines that can be not have fit into a 160- creation of engaging tablet Magazines with the largest made public or kept page printed edition. experiences that create digital circulation include private. However, only a meaningful links between Game Informer, Maxim, single-digit percentage of It has been clear for quite offline and online content. Cosmopolitan, National its 50 million registered some time that the true Geographic, Reader’s users visit Flipboard leaders in this space are every day, so this network adapting to online growth

24 • Vol. V • ksmmedia.com Audio’s ‘Anywhere, Anytime’ Model Breakdown: Top Digital Brands The Shift Towards Shorter Radio Spots Audio Waves

Think Audio is a ‘Played-Out’ Format? Think Again.

State of Media • 25 audio on-demand

In the past year we have seen the now in-dash car units can relay AM/FM listening. In fact, 18 audio space continue to move both terrestrial and online radio. percent of internet radio listeners toward an “anywhere, anytime” Still, players in the audio space face did not listen to terrestrial radio model as both device types and many challenges. The traditional at all, which is a 36 percent internet availability flourish. radio industry must adapt to this year over year growth. Similar to the video space, convergence effect or risk losing consumers are experiencing a further listening share. On the Pandora is responsible for 76 percent shift in delivery methods for other hand, internet “pure-play” of all internet radio sessions among traditional audio entertainment. or digital radio services also must the top 20 publishers (and CBS, find a way to increase revenue Cumulus and Clear Channel total However, due to the nature of audio, and broaden advertiser base in just 14 percent). Thus, only a small the convergence has advanced even order to effectively compete with portion of the average 1.75 hours more quickly than it did with video. their offline counterparts. per day with online audio can be Average time spent per user with online radio in 2013 is projected to be almost triple that of online As of May 2013, 45 percent of persons video, at just shy of 12 hours per 12 or older listened to online radio in week compared to four hours per week with video. Consumers can the last month and 33 percent listened increasingly take highly personalized content wherever they go and are in the last week. no longer bound by the confines of terrestrial radio signal strength. As of May 2013, 45 percent of accredited to terrestrial stations’ As a result of device proliferation, persons 12 or older listened to streams. It also means that Pandora total time spent with audio has also online radio in the last month is the undisputed online market increased in recent years. While and 33 percent have listened in share leader in terms of time the number of AM/FM listeners the last week. The time spent with spent listening. While some other has grown slightly over the past 10 any online radio is approximately providers such as Clear Channel’s years, listening has remained steady 20 percent of total audio usage— iHeartRadio and Spotify have also at about two hours a day. Therefore, almost 12 hours a week versus 9.75 seen gains in users, the majority the largest growth in total usage in 2012. The average online radio growth in overall listening time is time is coming from the online side. listenership is around 1.75 hours per largely being driven by Pandora. day. These numbers are inching very Smartphones, tablets, computers, close to the total average time of Even in the automobile, the long- TVs, DVD players, appliances and two hours per day for standard held dominion of the AM/FM radio,

26 • Vol. V • ksmmedia.com avoid alienating their current user Percent of Consumers Who Currently Use base, an audience unaccustomed to the Following Devices in Their Primary Car listening to ad-free audio options.

Device 2011 2012 While Clear Channel’s offerings AM/FM Radio 84% 84% are definitely the most robust of any terrestrial-based radio CD Player 68% 63% stations in the digital space, it will iPod/MP3 player 24% 29% still be important for all stations Satellite radio 8% 15% to remain aggressive on this Online radio (any) 12% 12% front. Competitors need to keep HD radio 2% 3% pace with standard and emerging social platforms and attract fans Source: Source: Clear Channel by delivering station content via these channels. Capturing share there is an increased use of other made good gains in usage and of smartphone time will also be devices. Increased traffic congestion has a strong mobile app similar essential for making strides in the across the country is potentially in functionality to Pandora. The digital audio space. Designing apps leading to more time spent with iHeartRadio app also allows for to dominate real estate on users’ other devices in the vehicle, such live streaming of all Clear Channel phones is key, such as alarm apps as MP3 players and satellite radios, terrestrial radio stations which as that can wake users by playing while there are notable decreases of now is the only portion of the their favorite radio station, or in CD player usage. Online platform that airs advertisements. mobile-based voting that casts radio will presumably grow in song requests to terrestrial DJs. subsequent years as in-dash players All of the custom channel content become more common, and for all on the iHeartRadio mobile app Streaming Strides is ad-free and the website runs intents and purposes HD radio is In many ways, Pandora sits in a seeing very low gains in usage. only display ads and occasional pre-roll video. Since the largest power position. Its many strengths Traditional radio’s challenge now potential growth area is in the include strong growth in both online becomes protecting itself against mobile sphere, Clear Channel is listening as a category and online- further terrestrial share erosion currently developing ad delivery only listeners, great year-over-year while simultaneously trying to to this portion of their online increases in awareness, robust gains gain digital platform listeners. audience. It is assumed that they in registered users, the most online Clear Channel’s iHeartRadio has will proceed with caution in order to listener sessions and high customer satisfaction with its current ad

State of Media • 27 platform. Ad interruptions are Average Self-Reported Time Spent per Week with minimal for free use of its service All Sources of Online Radio and this less-cluttered environment (% change) simultaneously benefits advertisers as well, but that’s not to say storm 11:56 clouds aren’t on the horizon. 9:46 9.17 The challenge for Pandora and 8:02 other online players will be to gain 6:13 6:31 ad revenue in the midst of 2013 predictions stating that subscription revenues will decline by 2.3 percent. In addition, the licensing costs

are significant for internet music 2008 2009 2010 2011 2012 2013 providers and could threaten their Note: Online Radio = Listening to AM/FM radio stations online and/or listening to audio content available only on the internet existence when current laws expire Source: Edison Research and Arbitron Inc. and contracts come up for renewal. to expand and gain ad revenue is not essential, but advertisers Pandora reported their licensing share is within the local space. with short-flighted retail sales goals rates have increased 9 percent in But while Pandora can geotarget cannot afford to utilize a platform 2013 and are scheduled to increase ad delivery to specific areas, they that is unable to accommodate their an additional 16 percent in the currently have operational and standard minimum impressions. next two years. Rolling out a pure- executional limitations which play service isn’t easy. It requires may hamper advances in gaining Additional challenges for Pandora negotiating with labels, publishers long-term advertiser share. and other pure-play competitors The challenge for Pandora and other online players will be to gain ad revenue in the midst of 2013 predictions stating that subscription revenues will decline by 2.3 percent.

and the rights holders. Spotify Requirements for ad purchase are looming on the horizon as users in the U.S. can’t listen to on Pandora’s platform include companies like Apple and Google certain songs that a Spotify user in minimum impression levels and just jumped into the ring. Apple’s France may be able to access. These specific time period limitations. newly-launched iTunes Radio is free obstacles may eventually be the Acquiring a bank of total and supported by ads across Apple’s deterrent that keeps paid streaming impressions over multiple markets multiple devices including iPhones, music sites from ever taking over is entirely feasible, but Pandora iPads and Apple TV. With almost 40 completely. What’s more, it would will not guarantee impressions on percent of the smartphone users in be unwise to increase ad frequency an individual market basis (unless the US toting an iPhone, one would in order to pad current ad revenue each market in and of itself meets have to believe the generally loyal since, contrary to terrestrial the minimum). In fact, in many Apple customers will be very willing radio, there is an unwritten smaller DMAs they may not have the to try the new iTunes Radio. On the expectation among users that music inventory available within the time other hand, Google is able to boast interruptions will be minimal. frame that an advertiser wants it to close to 20 million tracks available be served. Thus, this system suffices for its users. When customers pay The logical area for Pandora and for advertisers with long-term for the All Access service, the user other pure-play competitors branding campaigns where timing is able to listen to as much music

28 • Vol. V • ksmmedia.com as they want while also being able With smartphones taking over So what is an advertiser ultimately to download songs onto their for MP3 music players, the future to do? For national or major market- mobile device for playback later is clearly in streaming music. scaled businesses, campaigns should when 4G or Wi-Fi is unavailable. Pandora has seen its users jump include capturing online-only audio from 125 million to over 250 share as that is unmistakably where Google, like every other streaming million in the past 18 months. listening is headed. For smaller music site knows the key is Spotify has recently expanded market efforts and limited-time fighting for the reported 1 billion into eight new countries, bringing offers, online audio should be smartphone users worldwide—136 their total to 28 million, and also used with caution as traditional million of which are in the U.S. carries offline playback capabilities advertising or terrestrial radio There is still a lot of room for similar to Google’s new offering. platforms may be the only viably other major players to come in and executable alternative at this time. grab their corner of the market.

State of Media • 29 The Streaming Audio Lineup Songza

One of the newer streaming platforms, Songza launched listeners are given five different activities such as its current setup in March 2012 and is rapidly picking “waking up,” “working (no lyrics),” “relaxing,” “working to up popularity. After a few years of testing and changing a beat” and “hanging out at Songza.” After choosing the its approach on streaming radio, the company finally mood, users are then directed to certain playlists based settled on delivering playlists based on certain moods on that theme to “enhance” whatever activity they are and themes. That strategy seems to be paying off since currently doing. Songza secured the honor of being the top free iTunes app for iPads and iPhones in June 2012. Songza also offers playlists based on themes or different eras such as “90’s School Dance” or “Famous Movie Similar to Pandora, listeners have the choice to vote Soundtracks” that play on the idea of music bringing the on songs being played, which in turn helps Songza listener music bringing the listener a sense of nostalgia. determine what future music to play. However, this As of today, listeners from the United States and Canada platform differentiates itself by using “music experts” to are able to experience Songza’s twist on streaming radio create playlists based on different times of the day, or a with their smartphones and tablets free of charge. particular listener’s mood. Upon logging in to Songza,

Spotify Myspace

Spotify allows users to access over 20 million songs on a variety of Myspace has once again reappeared platforms. Launched in 2008, Spotify grew to ten million users in 2010 on the music scene with their 2013 re- and eclipsed 24 million users worldwide by March of 2013. The platform launch headed by Justin Timberlake. allows users to stream songs, albums and artists of their choice but also One of the pioneers in online music has a radio feature similar to Pandora. sharing, the original Myspace allowed unsigned artists to get their work out While users may access and stream music for free if they agree to to the public. intermittently listen to 15 and 30 second ads, there are also premium services available. For $4.99 per month, users may stream ad- Myspace’s new aim is to fuse free music, while for $9.99 per month “Spotify Premium” users can streaming music with social media additionally push music to their mobile devices and play songs offline. and in turn create the largest online This premium functionality is one of the reasons Spotify has recently music network. Artists create their been gaining steam in the marketplace. Spotify also has a streaming own page, melding features found in radio feature, similar to Pandora which allows users to listen to artist- facebook, twitter and Instagram all recommended stations. While Pandora only allows you to skip five into one. Myspace has also followed songs in a specific amount of time, Spotify Premium members are in the footsteps of many streaming allowed to skip as many songs as they would like. music sites where users can create playlists or start a custom radio station Another added feature of Spotify is its integration with Facebook. This simply by inputting a song or artist. allows users to browse their friend’s playlists, recently played songs Currently, the site is free for users to and lets them share music with friends through Facebook’s messaging sign up, but this re-launch will be one service. Many of these features are reasons why Spotify has been able to watch closely. to convert a reported 20 percent of their free users into premium users.

30 • Vol. V • ksmmedia.com The Streaming Audio Lineup Last.fm Grooveshark

Founded in the United Kingdom in 2002 and Grooveshark is an online music streaming then acquired by CBS in 2007, Last.fm has service allowing users to search, stream and held strong to their original roots of connecting upload music that can be played immediately or the gap between social media and the music added to a user created playlist. The platform industry. Using a music recommender tool called was one of the first streaming services that “Audioscrobbler,” Last.fm keeps track of songs users allowed users to actively search for content listened to from other radio streaming websites and create custom playlists from scratch, rather or even their computer’s personal collection. than simply inputting an artist or song to receive custom but unalterable radio play. This information is then “scrobbled,” to a database where profiles are produced based on artists, While allowing users to search for music and genres and the popularity of certain music. Users create their own playlists, Grooveshark still then are given access in this tight-knit virtual has radio options. The platform also has a free community to see trending artists, concerts and app that is ad supported, but for $9 per month events. They can even interact with other users users may stream music from anywhere ad listening to the same music. Like any other social free. However, one important caveat is this media website, users are then able to browse application’s incompatibility with stock iPhones. through other’s profiles and connect based solely Apple users wanting access to Grooveshark on their taste in music. As of April 2011, Last.fm had must either use its html5 site or jailbreak their over 50 billion scrobbles in the U.K., U.S., Germany, phones to download the app. While the HTML5 Canada, Ireland, Australia, New Zealand and site still provides much of the same experience Brazil. Like Pandora, they offer a free version with as the app, this could prevent some adoption ads or a $3 ad-free version in certain locations. among Apple users.

Pandora

Still a leading player in the internet radio streaming their playlist almost anywhere. Pandora offers a free industry, Pandora creates musical playlists based on subscription with advertisements and a paid subscription listeners’ personal music preferences. Listeners select without ads. While a majority of subscriptions are fee different genres, artists, or even a single song and based, Pandora leads the category with an astonishing Pandora builds a customized playlist related those 150 million users in the United States, New Zealand, selections. Listeners can then provide positive or and Australia. In August 2012, Pandora reintroduced the negative feedback on each song, helping Pandora 40-hour free listening limit, but only when streaming further hone in on the users musical taste. from a mobile device. Pandora also tested a Facebook application in 2012 allowing users to share their created As the popularity of Pandora grew, the demands for “stations” with the social network community, similar to streaming its service over different media increased too. Spotify. However, the company removed this application Today, Pandora can be used with all major smartphone later that year. providers as well as tablets letting the user take

State of Media • 31 economy and supply and demand economics. The latter was a direct result of Arbitron implementing Local Market its Portable People Meter (PPM) In 2013, is Less technology in 48 of the top 51 U.S. radio metros. Simply put, this new Radio Really More? audience measurement methodology has reduced available ratings or TRP inventory up to 50 percent In early 2004, Clear Channel this imminent conversion? After of pre-PPM levels for the largest attempted to convince ad agencies all, there have been no dramatic market’s top 12 stations. The last and their clients to convert from shifts in the ad community’s set of markets fully transitioned the standard local market radio ad perception of the 30-second unit. to PPMs in late 2010 and have length of 60-seconds to 30-seconds. experienced an average decline The move was generally understood The David Allent and St. Joseph’s University’s study of 2006 is in ratings of 30 percent for adults to be the radio giant’s desperate 25-54 on their top 12 stations. effort to generate incremental generally accepted as the standard- ad revenue and service its debt. bearer regarding unit length and When the new ratings currency Offering some independent was conducted in response to the was priced at an equal cost-per- support that 30-second spots “Less Is More” campaign. It did point to the old diary currency, were more effective than 60s, not necessarily support shorter- radio advertising delivered a vastly Clear Channel was attempting to form spots and, in fact, concluded enhanced comparative value. charge advertisers up to 80 percent that although brand recall for However, as demand has increased, the cost of a 60 second spot for commercials of varying lengths so have cost-per-points. This these suddenly “better” units. is not statistically different, results in advertisers switching the proven recall of advertising to 30-second units in order to Turns out less was not more for messages from 60-second units is effectively control radio media Clear Channel and the concept significantly greater than that from inflation. The onus has shifted to the failed to take hold of a very skeptical 30-second commercials. Indeed, creative team to deliver comparable audience. In fact, facing flat or the study suggests that message value regardless of copy length. falling ad revenue in many of its recall for a 30-second spot is less In order for agencies to maintain markets, Clear Channel announced than half that of a 60-second spot. year-to-year audience delivery for it was being taken private in late The reality that 30-second ad units clients incorporating radio, less 2006 and would eventually sell will be more because it has to be. almost one-third of its radio assets. have become more prevalent in 2013 With the Great Recession of 2008 is primarily due to an improving ad further impacting advertising demand, 30-second ad units continued to be priced close to 50 percent of a 60-second unit on all but the top radio stations.

Now as we move through 2013 it appears as if the 30-second radio ad unit, standard on network radio, has finally begun to emerge as the potential standard-bearer in many local markets. Have advertisers and their agencies finally realized that less was more all along, or have other factors significantly impacted

32 • Vol. V • ksmmedia.com How Lockouts Affect Brand Loyalty League Observations: NFL’s Popularity A Look Into ESPN’s History Sports Blitz

Is the ‘Worldwide Leader In Sports’ Headed for Future Success, or Dark Days? State of Media • 33 Is the ESPN Empire in Trouble?

34 • Vol. V • ksmmedia.com Humble Beginnings and college soccer would mean the network is now in the slightest. However, become what it is today. a serious competitor for larger storm clouds have Throughout the history any rights they desire. recently been brewing in of athletics, we have The initial sports the cable universe, and witnessed the rise and programming on ESPN Competitive Storm they go by the names NBC fall of countless teams, was far from what could Sports Network (NBCSN) athletes, brands and Over the past 33 years, be considered “top- and Fox Sports 1 (FS1). even sports. But it is tier.” One of the first ESPN has grown into the easy to forget that big licensing deals that most dominant sports Looking to mirror ESPN’s the primary source of ESPN secured was to network in the country, success, sports networks present day sports news, show re-airings of 18 with its rise to dominance have sprung up across ESPN, the dominant NCAA sports. While this being nothing short of the country over the media brand in sports, programming was not very meteoric. ESPN has been last decade, with most almost wasn’t a reality. desirable, it still provided met with great success, vanishing as fast as they a start for the network. with its biggest threat appeared. However, ESP, as it was known More importantly, the being the question: does recently the broadcast prior to launch, was the NCAA name gave ESPN the network report or networks have taken brainchild of three East instant credibility. create sports news? strong steps into the Coast businessmen who Whether content criticism cable sports network were looking to launch In the early years, is earned or not, it has landscape. While others a Connecticut-focused ESPN was airing small not affected ESPN even have tried and failed, sports cable network to professional sports such as cover professional, semi- the NHL and USFL. That pro and college sports was until 1982, when the teams, similar to the NBA took a risk and agreed Recent present-day regional Fox to a rights deal airing Sports Networks. Through their games on cable for blind luck and new the first time ever. After Launches satellite communications the NBA rights deal, the NBC Sports Network launched on January 2, 2012 technology, their locally- floodgates opened for and was a result of the Comcast and NBC merger. focused cable sports ESPN and the network While only 18 months old, the network is struggling network ended up instead picked up broadcast rights to gain traction with the viewing audience, which launching as a network may be due to its limited desirable programming. to more notable sports When and if NBCSN begins to air higher profile with national reach. such as the NFL and MLB. sports, they may become a strong competitor to At 7pm on September 7, ESPN, but envisioning this network surpassing Between 2000 and ESPN is difficult. Additionally, beyond the Olympics 1979, ESPN was born. 2004, ESPN held at and Sunday Night Football, NBC does not have a SportsCenter was the least a portion of the track record of winning high profile sports rights. first show to air on the broadcast rights to every Based on their bidding history, NBC may not be network, with Lee Leonard professional sport in willing to make the commitment required to beat ESPN, because it could cost tens if not hundreds of proclaiming, “If you love the country. This helped billions of dollars over the next decade. sports… If you really love propel the network into sports, you’ll think that mainstream status, and Fox Sports 1 launches on August 17, 2013 and will you’ve died and gone to with the benefit of a dual immediately have access to high profile live sports heaven.” Looking back on revenue stream (carrier via Fox network rights. This might mean FS1 will that broadcast, not many fees and advertising avoid the potential pitfall that NBCSN seems to be trapped in. Looking across the FS1 broadcast line- could have guessed that a sales), ESPN eventually network whose first night up of MLB, NASCAR and UFC to name a few, they became the catalyst appear prepped to compete head-to-head with of programming consisted behind ever-growing ESPN. And unlike NBC, the Fox Network has shown of a 30-minute sports rights fees currently paid a commitment to live sports and appears willing to studio show, a slow-pitch to sports leagues. All continue that investment long term. softball game, wrestling these factors combined

State of Media • 35 the deep resources of in Sports,” doesn’t always incredibly volatile for developed over a period broadcast networks could apply well to their online the past year, and recent of two years and claims to mean they have the best efforts. Depending on how content partnerships account for unduplicated chance to compete. you classify their family of by top competitors visitors across both online sites, ESPN can technically NBC and Yahoo Sports and mobile traffic. However, it will not be easy claim ownership of 10 mean ESPN has been for new networks to grow unique online properties, intermittently knocked With this new combined given that broadcast rights with their flagship, from its increasingly method, many sports to live sports are long content providers are term deals and it could be 10 or more years before The hard fact is ESPN has only held bids open up. That said, the cable sports networks the top spot in comScore’s rankings may benefit from existing rights held by their big of unique visits to U.S. sports sites brother networks. For example, NBCSN has three times since 2008. aired NHL, Olympics and Notre Dame games via ESPN.com containing 29 shaky digital throne. seeing significant jumps the rights held by NBC, major subcategories. in overall numbers. and FS1 will air MLB and This aforementioned ESPN even saw its site NASCAR via Fox rights. No matter how they’re partnership came just lead the pack during measured, all of these in time for comScore’s beta measurement with Online Blitz diverse ESPN properties March upgrade to its 62.6 million unique Currently ESPN’s focus translate into an immense traffic reports that views. However, as of the remains on establishing amount of content. Yet, effectively fused previously platform’s official March a strong presence in the does that confirm its segmented desktop, release, that number had digital world, and the web traffic dominance? smartphone and tablet slumped down to 44.7 increasingly important The short answer: not audience measurements. million and was beat out mobile landscape. Though necessarily. Fluctuations The new tracking format, by Yahoo Sports’ audience asserting themselves to in the online sports dubbed “Media Metrix of more than 51 million. be the “Worldwide Leader market have been Multi-Platform” was

Highest Rated Media Brands in 2012 Based on feedback from top-tier advertising (marketing & agency) professionals

Digital Content Digital Portals Digital Ad Print Cable TV Broadcast TV Mobile Sites & Social Media Networks Brand Strength ESPN the ESPN.com Facebook Google ESPN NBC Facebook Magazine Display Network Sales Knowledge Cooking Light Bloomberg.com AOL Meredith NFL ABC Fandango Women’s Network Network Customer Service Martha Stewart Economist.com Yahoo! Vibrant The ABC Jumptrap Living Media Weather Channel Advertiser Satisfaction Food Network People.com Twitter Tremor Video AMC ABC Millenial Media Highest Rated Media Brand Overall: Google

Source: MarketingCharts.com

36 • Vol. V • ksmmedia.com win broadcasting rights Top Online Sports Properties by Monthly Traffic Numbers between 2021 and 2024, where eleven major sets NBC 60 of rights will open up.

See Note Even with contract Below and content struggles, 45 competitors like Fox Sports, NBC Sports Group, CBS Sports and other various cable challengers 30 won’t stop trying to make a dent in ESPN’s online engagement numbers. Mirroring their ever- 15 Unique VisitsUnique (millions) expanding television offerings, these networks have greatly improved

0 their mobile counterparts May ‘12 Jul ‘12 Sep ‘12 Nov ‘12 Jan ‘13 Mar ‘13 May ‘13 as well. One such example Month is NBC’s coverage of the 2012 Olympics, which Yahoo! Sports NBC Sports Network ESPN FOX Sports CBS Sports netted big traffic numbers Note: NBC and Yahoo Sports form digital alliance, report combined numbers as of March 2013 for its NBCOlympics.com Source: SportsBusinessDaily and comScore site. A press release direct from the network claims When looking at overall competitors fall far behind, under contract well into it achieved “the most traffic, the hard fact is only averaging around the next decade, hindering device verifications ever ESPN has only held the 40 minutes per visitor. the growth ability of NBC for a single event in TV top spot in comScore’s Sports Group and Fox Everywhere history,” Still, the fact that rankings of unique visits Sports. While NBC and Fox securing 9.9 million competitors are overtaking to U.S. sports sites three will still strive to compete devices on both its site and them in visits is something times since 2008. However, with ESPN for broadcast NBC Olympics Live Extra the sports giant will need that’s not to say the rights, they will have to app. They also blew out web to address, especially if network isn’t earning its make do with second-tier numbers clocked during the live-sports rights war web keep. For the past six live sports programming the 2008 Beijing Olympics, tips in other networks’ months it has averaged and inventory from a number most likely favors. The ability to around 43 million unique their parent networks. affected by technology stream games is becoming visitors per month and improvements and the increasingly important to Big Ten Football, NBA and consistently pummeled live-streaming of all 2012 consumers, and ownership the World Cup are the only all other competitors events. in consumption and over top-rated sports rights set to expire this engagement metrics, events and leagues will decade and if the past is Mobile: Beginnings averaging around 91.4 allow providers to give any indicator, bidding for and Future minutes per visitor. The their mobile audiences these will be significantly ESPN’s prior-mentioned latter is of course the the exclusive on-demand higher than the current engagement numbers real key for advertisers, feeds they need to convert deals. If NBC Sports indicate the good health as the time spent on a followers into fans. So far, Network and FOX Sports of its mobile offerings. site positively correlates ESPN is benefiting from 1 manage to exist into the Yet while its efforts are to overall impressions. the fact that it has the vast next decade, they will be starting to pay off, the In this aspect, ESPN’s majority of sports rights well-positioned to bid and network’s entry into this

State of Media • 37 38 • Vol. V • ksmmedia.com These numbers are even ESPN consistently pummeled all more compelling when you consider that Nielsen other competitors in consumption also claims Hispanics spend 68 percent more and engagement metrics, averaging time watching online video and 20 percent more around 91.4 minutes per visitor. time on mobile video than non-Hispanic whites. If realm began with a rocky breathe some life into the its mobile network every ESPN continues to carve start in early 2006. Mobile project in late 2007. This day, and the gains are only out a slice of this target ESPN, as it was known multi-year deal provided expected to increase. at the same pace achieved then, initially launched as Verizon subscribers with thus far, competitors a dashboard that delivered a fairly navigable interface Additional opportunities could be playing catch-up live sports scores, news and laid the groundwork through Hispanic- on mobile engagement and video highlights. At for what would eventually focused properties like well into the future. the time, ESPN actually become the catalogue of ESPN Deportes provide a recipe for strong growth acted as its own Mobile 13 mobile apps that the Still, top threats FOX throughout the next Virtual Network Operator newly branded “ESPN Deportes and NBC’s decade. A May Nielsen by leasing wireless Mobile” offers today. Telemundo Deportes are report figures that while spectrum from Sprint and far from sitting idly on Fast forward through soccer still reigns supreme releasing content solely the sidelines. Both are five years of service, among many Hispanics, over their network. ramping up their targeting strategy and technology the NFL is starting to gain and content efforts in an By today’s standards, upgrades and the company surprising popularity. attempt to capitalize on Mobile ESPN had a is experiencing healthy Just last season, the this ever-growing audience. painfully crude interface, engagement with its NFL achieved its largest In a May press release, but to some it satisfied mobile suite. SVP and Hispanic Super Bowl Telemundo announced a previously unfulfilled General Manager of ESPN audience to date with an expansion of its mun2 need for truly on-demand Mobile Michael Bayle almost 10 million viewers, and Telemundo Deportes sports information. even stated that ESPN’s and a total season average properties that will see the Unfortunately, that plan is to “design from of 1.5 million. This network broadcast more “some” only amounted to about 10,000 platform subscribers in the first Last season, the NFL achieved six months. This low popularity could have its largest Hispanic Super Bowl resulted from its lack of availability across multiple networks, or the audience to date with almost platform’s questionable launch timeline (it went 10 million viewers, and a total live after the Super Bowl). season average of 1.5 million. Low popularity paired with a hefty $30 million the mobile standpoint viewership number is not than 60 Barclay’s English ad campaign (and $150 first,” and this strategy one to be overlooked, as a Premier League games million total investment) is definitely proving recent Forbes report states in Spanish, on top of the prompted parent company successful. According to that Hispanic purchasing Latin American games they Disney to pull the plug. It the Wall Street Journal, power is expected to surge already carry. Additionally, took an exclusive contract more than 10.3 million to $1.5 trillion by 2015. they will launch a “Sports with Verizon Wireless to users are now accessing

State of Media • 39 upticks in live streaming Hispanics spend 68% more time watching usage for their mobile online video and 20 percent more time on and online offerings, especially considering the mobile video than non-Hispanic whites. contractual blocks written into some deals. Its recent Briefs” show to recap the issue: how do major with some form of wireless slim-down of personnel day’s highlights for all developments in streaming partnership driving them expenses to possibly major sports, and will avoid being hampered by towards future growth. make way for some bold feature content from data caps? One option the mobile partnerships is many of these broadcasts network is considering If that proves true, then also a good differentiator across its Telemudno would include footing the the big story to watch will in an increasingly Deportes mobile app. bill in order to absolve be whether the network’s cluttered market. its mobile content from main competitors follow On the other hand, suit, or take a different counting towards wireless Still, the competitive Fox Sports has thrown approach. Getting in bed carriers’ data caps. offerings from FS1, a challenge flag with with wireless providers NBCSN, CBS Sports and its FOX Deportes According to a recent Wall could be an expensive others are moving in fast, channel and various Street Journal report, proposition, especially which could force strong sports programming on the network has been when the future of data and scrutiny upon ESPN’s MundoFox. However, in talks with “at least spectrum is so uncertain. premium subscriber and the network has yet to one major U.S. carrier The last thing a company inventory prices in the build out a dedicated to subsidize wireless fresh off of hundreds of near future. The network mobile app for this connectivity on behalf layoffs wants to do is wind will need to stay aggressive segment. Users are able of its users.” However, up gambling on an overly on its mobile direction and to download Fox Sport’s with the spectrum war costly approach only to end keep engagement numbers mobile app in Spanish, also continuing to rage up mirroring past mistakes. high if it wants to continue but this retrofitted on, many aren’t sure if generating the nearly $11 capability doesn’t include this would draw some End game billion revenue to which the Hispanic content or unwanted attention Ultimately, ESPN still it’s grown accustomed. league focuses of its online from regulators. Either appears poised for success Only time will tell whether and cable counterparts. way, it seems some of through the next decade gambles with wireless This is a downfall that the the initial strategy that considering its strong companies and rights deals network will definitely launched “Mobile ESPN” broadcast rights acquisitions. will eventually pay off. need to address in the may be coming full circle These are sure to drive coming year. Especially if it hopes to continue building out the strong Hispanic audience it’s captured with Average Viewers A12+, 2012 Season (Hispanic Demographic, in thousands) Fox Deportes’ “Central Fox” and “La Ultima Palabra” shows, both of 2,637 which secured number one

rankings in April for U.S. 1,484 Spanish cable sports news 404 and weekday soccer talk 55 29 programs, respectively.

LIGA MX MLS INT’L MEXICO NAT’L NFL 2012 Aside from cultural APERTURA SOCCER GAMES considerations, ESPN’s Read as: An average of 404,000 Hispanics 12+ tuned into the Liga MX Apert for the 2012 season future direction in mobile Source: Nielsen rests on a hot-button

40 • Vol. V • ksmmedia.com League observations Shadow Effects of Lockouts

The NBA, NFL and NHL have all experienced lockouts in the past few years, but all have also been able to rebound nicely and even grow their brands. Below is a look at how each sport recovered and ultimately fueled more fire from its fans.

NHL NBA

The NHL has recently become accustomed to dealing with lockout The NBA has seen two shortened effects after having one wipe out the entire 2004-2005 season, and seasons in the past 15 years. The having the start of the 2012-2013 season disrupted by a labor dispute. most recent lockout that occurred Luckily for the NHL, they have rebounded quite well after this most during the 2011-2012 season saw a recent stoppage. The key to the 2012-2013 season was the fact that rebound similar to this year’s NHL they were able to save the coveted and higher rated playoffs, which in lockout. The league shortened turn made every regular season game that much more significant. the 2011-2012 season by 16 games resulting in an estimated 100 million NBC’s first telecast of the 2013 season scored the best national lost in ad revenue. Nielsen household overnight rating in 11 years. NBC’s season opening telecasts were the highest rated games on NBC since they began However, despite the delayed airing them in 2006. Attendance was up almost 1.5 percent over last start, attendance was still up that year, and an uptick in viewership from casual fans was aided by the season compared to the year before. success of larger market teams in Boston, Chicago, New York The NBA started the season with and Los Angeles. five premier games on Christmas, resulting in highest overall ratings Locally, teams are seeing that success in a shortened season can have since 2001. Through the first six a tremendous effect on ratings. The Chicago Blackhawks’ four highest weeks of that season, the NBA saw rated games in Comcast Sports Net Chicago’s history all occurred increases in both attendance and within the first six games of the 2012-2013 season. This represents a broadcast ratings throughout the 75 percent jump from the 2011-2012 season’s first four games. As is league. Cable networks saw a 22 the case with many professional sports, when large markets are doing percent increase in ratings while well, so is the league. NBA TV was up almost 60 percent.

NFL

The NFL experienced a lockout just before the 2011 NFL games that year were watched by an average of season however, no regular season games were lost. 17.5 million viewers, second highest since 1989 (17.9 in Even with the lockout, the NFL dominated the sports 2010). The NFL networks primetime viewership was airwaves and controlled sports networks such as ESPN up 18 percent from the 2010 season. The power of the with continuous coverage. That’s not to say that online NFL was seen even greater locally where NFL games properties didn’t take a hit, but it wasn’t a significant one were the highest rated program 91 percent of the given typical offseason traffic. time. 2011 also saw the NFL dominate other primetime shows on broadcast, boasting 144 percent higher ratings on average.

State of Media • 41 NFL’s Popularity Still Surging

Within the past ten years, the NFL has gone from from a Saturday morning in April to primetime on a a professional sports powerhouse to a $9 billion Thursday night. In 2013, the NFL draft scored a 2.9 juggernaut. It has outpaced the three other major rating on ESPN, second only to The Big Bang Theory sports leagues (MLB, NBA, NHL) by a wide margin. that night. The NFL Super Bowl also continues to build The NFL is not only for the die-hard fans anymore. The on its reputation as the event of the year. After setting league has done a fantastic job of luring in even the the record for the most watched show in US television most casual of fans. Not only has every team enhanced history in 2012, the 2013 Super Bowl saw 108.4 million their in-stadium experience, the home experience it’s viewers. A 30-second in-game spot ran advertisers created is second to none. anywhere from $3.8 - $4 million, up $300,000 from 2012 and a whopping $1 million from only four years The sudden rise of fantasy football has made Sundays ago. Commercials and the Super Bowl have now in the fall a can’t-miss event. Office pools keep become so linked that the night before this year’s everyone, from the novice fan to veterans, involved Super Bowl on CBS, the network aired a “Super Bowl’s and engaged in the game. Another important factor to Greatest Commercials,” program. the NFL’s popularity is the general parity seen among teams on the field. This parity keeps fans focused on Suffice to say that the NFL’s continued success comes all of their team’s moves both in-season and during the from the unique environment it’s created, where offseason. even the most unfamiliar fan will be able to become individually involved. This phenomenon is something Programming moves are also helping the league’s that other sports leagues haven’t yet achieved. cause. The NFL draft’s first round was recently moved

42 • Vol. V • ksmmedia.com Art and Science of Social FBX: What You Need to Know How Facebook Has Evolved, and Where it’s Going Social Interactions

Dive Into the Intricacies of Social Measurement & Facebook’s Complex History.

State of Media • 43 artthe& scienceof Social Measurement

Social media can be confusing. With Before launching a fan page, brands It’s important to note that not so many options and little direction should determine exactly what every piece of content a brand on successful tactics, brands have they hope to achieve with social creates will be successful. Brands a hard time deciding where to media, and how it supports their should not be afraid to fail, but they invest time and energy. Without greater business goals. Once this should be prepared to learn from specific measurements, brands is determined, the next step is content that flops. Social media is often don’t know what success in to craft content that supports constantly evolving, and branded social media looks like or how it their social media objectives and content will need to evolve along supports their success as a business. ultimately drives consumers to that with it. When a post is successful, Paid social advertising and owned greater business goal. Each piece building upon it and continuing brand content should be measured of content should be measured to grow that universe of owned differently, but both work together to determine if it successfully content is key to future wins. Once to drive consumers to obtain more meets the brand’s objectives. brands have determined their social information about, or purchase, a product. Successful social media is a To be successful, brands need to delicate balance between the art and science of content and measurement. define what they hope to gain from The Art social media and how it supports The first piece of the social media their business. puzzle is branded content. When looking at opportunities, brands tend to think of owned content Measurements include number goals, crafted successful content first. Branded pages are free and of engagements with the content, and grown their fan base, they’re it can seem like an easy place positive brand conversations driven, ready to add in “the science.” to start. However, companies or even fan growth. Tools such often forget to set goals and as Radian6, Sysomos and Klout The Science objectives before diving in. This is can help to track and measure Paid advertising is the second piece where “the art” comes into play. these types of branded content. of the social media puzzle. “The art”

44 • Vol. V • ksmmedia.com can help boost awareness and consideration for a brand but “the science” drives the message home. Branded content may attract some consumers on its own, but paid advertising can drive a much wider audience to branded social pages. Ultimately this can also drive consumers to complete a purchase or sign up for more information.

“The art” is measured by engagements and positive conversations while “the science” requires assessment of harder metrics. The cost associated with your social advertising can be weighed against how many new consumers it drives to complete a desired action. Social advertising should be extremely efficient in convincing a consumer to visit a website or purchase a product. Social browsing is a realm used for entertainment and communication, so the simpler and more convenient your message, the better. Metrics used to evaluate efficiency are cost per website visit, cost per conversion (purchase or other online action) and ultimately ROI. Tools such as Wildfire, Buddy Media and Unmetric can help brands measure advertising performance and calculate ROI.

Even if a brand doesn’t have products available for purchase online, ROI can still play an important role. The key here is to assign a value to the desired result quote or an appointment with a representative), then of the campaign. If a brand wants to drive consumers the brand should determine how much “revenue” to request more information (such as an insurance that action is likely to bring in. Once this estimated revenue number is determined, you can apply it to the number of times social ads drive the desired The Art & Science of Social Measurement action and compare it against the cost of those ads.

Takeaways Awareness To be successful, brands need to define what they hope to gain from social media and how it supports their Opinion business. Knowing your audience well is essential since users on Twitter are not the same as users on

The Art Consideration Facebook, so brand objectives might vary by social platform. Brands should focus on the platforms Preference that fit their social objectives best, and practice the art of crafting messages that encourage consumer Purchase conversation and interaction. Successful content will build awareness and consideration for a brand, bringing consumers into the top of the purchase funnel. The The Science The science of optimizing and calculating paid advertising will drive preferences and purchases, ultimately bringing consumers to the bottom of the funnel.

State of Media • 45 facebook today & tomorrow

Unrivaled Success month per user, by late potential and user breaking things” mentality, 2012, the Facebook Since Facebook’s launch engagement opportunity it has often shunned mobile app became the in 2004, Mark Zuckerberg through this platform. user feedback with an most used in the United has made frequent changes Facebook is continuously arrogance that implies States with 85.5 million to the platform, harping evolving, creating new absolute confidence in monthly uniques across on a mission to “make products and announcing growth without learning iOS, Android and RIM the world more open and new partnerships in from its audience. This platforms, surpassing connected.” Through his order to take advantage management style may Google Maps. efforts, Facebook can now of its unique audience. have helped lead the company away from 2011 boast over one billion The app also drove Usage statistics aside, predictions that market monthly active users the highest level of Facebook has encompassed cap would reach $224 across all platforms, 58 engagement, accounting the spirit of an unruly billion by 2013; as of percent of which return for 23 percent of time teenager throughout its January 2013, it’s closer to on a daily basis. Although spent in-app. All things almost nine year history. $55 billion. Nonetheless, desktop usage has considered, there is With a “moving fast, Facebook continues to surpassed six hours a an extreme marketing

46 • Vol. V • ksmmedia.com Facebook has the ability to target down to the zip code level as well as by gender, interest and custom audiences using offline data such as email address, phone number or Facebook user IDs. move forward in its unique These ads are priced on interest and custom FBX advertising spirit. It’s a cost-per-click (CPC) audiences using offline The Facebook Exchange one that many believe or cost-per-thousand data such as email address, (FBX) launched in exemplifies the ultimate (CPM) model and allow phone number or Facebook September 2012 and form of “native advertising” the agency full control. user IDs. In February advertisers were ready or media that mimics the Additionally, larger buys 2013, Facebook announced to capitalize on the format, style and voice of a can be purchased through new partnerships with retargeting opportunities. given platform. Facebook direct negotiations with a Datalogix, Acxiom and By December, FBX’s has kept this concept close Facebook representative Epsilon that expands retargeting impressions since birth and recently for access to premium the custom audience accounted for 63 percent it has gained traction in content. As of September product to include of all online display the digital ad industry. 2012, Facebook also made offline purchase data. retargeting impressions its inventory available on worldwide. More Facebook offers a variety of the Facebook Exchange As Facebook continues than simply securing ad placements, all of which (FBX), making social to update its platform, impressions though, blend seamlessly into the media inventory available advertisers and agencies FBX is driving action. user experience. Desktop to programmatic buying, are adapting and preparing A Triggit study found ads can appear on the right resulting in lower cost for the future. What FBX drove 36 percent hand side of the homepage availability for advertisers. is behind Facebook’s or user profiles, embedded most recent changes? more conversions than in the newsfeed or within Facebook has the ability to What are predictions retargeting efforts with the log-out experience. At target down to the zip code for the rest of 2013? Google Display Network, this point in time, mobile level as well as by gender, Admeld, PubMatic or ads only appear within the Rubicon. As of March 2013 newsfeed. Advertisers are FBX expanded offerings responsible for choosing Facebook’s User Growth to include News Feed the content that appears inventory, considered to be within their ads. This may 1.2 80% a more premium placement include custom ad copy, in comparison to the right- 70% hand column inventory. promoted page content or 1 sponsored stories based on 60% In addition to FBX, another the campaign’s marketing 0.8 key component in efforts objective and purpose. 50% to increase revenue, which

0.6 40% is projected by analysts to Advertising: A slow for a fourth straight Social Experience 30% 0.4 year in 2013, Facebook Currently advertisers 20% announced the acquisition Users (in billions) (in Users can purchase Facebook Growth User Year-Over-Year of Microsoft Corporation’s 0.2 inventory through a 10% Atlas Advertiser Suite in number of different February. This acquisition 0 0% routes. Media agencies Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 should help with both can create, optimize and Monthly Active Users Year-Over-Year MAU Growth campaign measurement report on campaigns Daily Active Users Year-Over-Year DAU Growth and overall advertising in-house through the Mobile-Monthly Active Users Year-Over-Year MMAU Growth effectiveness as well as give online, self-serve platform. Source: AllThingsD.com them an edge in the display

State of Media • 47 marketplace. With Google’s Facebook results and Bing if it can break users’ habit improving its mobile acquisition of DoubleClick, paid search ads on their of relying predominantly capabilities if the company they had access to ad results pages. Furthering on the search giant. Graph wants to carry over serving technology, its presence in the search Search is useful when the momentum of last growing their business to space, Facebook also users specifically want quarter. As mentioned a projected 18 percent of recently announced Graph information as seen earlier, monthly uniques the U.S. display ad market Search, an initiative through a social lens. reached nearly 100 million in 2013. According to described by Facebook’s Searches like “what kind of in late 2012 and users eMarketer, Facebook is VP of Global Marketing restaurants do my friends reported spending nearly not far behind with 15 Solutions Grady Burnett like in Chicago?” can be one-fourth of their time percent, and they hope to as a function without highly relevant, but the in-apps on the platform. grow through acquisition. the intent of competing question remains how with Google or Microsoft often uninitiated users will As the audience is Aside from display Bing, but with the intent make searches of this kind. clearly present and opportunities, Facebook of improving search engaged, Facebook has has expanded its search. from within Facebook. If these recent additions a huge opportunity to Currently, the social are any indication, the next boost mobile ad revenue, network encompasses the Regardless of intention, year will show significant which as of January, Bing Ads search network Graph Search functions as growth for Facebook. only accounted for 23 within its platform. When a social recommendation While as a private company, percent—but was up 64 using the Facebook search engine and has a chance executives were able to percent from Q3 of 2012. bar, users receive both of competing with Google aim for more humble Unfortunately, the answer growth projections, the will not be as simple as now-public company’s merely increasing the stock prices have only just volume of ads in mobile. begun to recover from a Formats need to evolve to dismal start, resulting catch users’ attention in a in intense pressure to non-intrusive way while increase revenue for overcoming the limitations shareholders. This goal of the mobile experience will depend heavily on itself. As more advertisers its ability to prove value look for ways to invest in to advertisers and keep mobile, Facebook needs to them coming back. While pair its wide reach with an Facebook certainly isn’t improved mobile app and going anywhere now that advertising experience to it has become an integral increase overall revenue. part of everyday life, it will likely morph into a While mobile will different and far more be a valuable space robust platform than the to conquer over the one with which current next year, Facebook users are accustomed. will likely encounter pressure to improve its Mobile and Video ad units across the board. Aspirations Industry experts have expressed concern with First on the development the disconnect between list will be the expansion Facebook’s size and of mobile. Facebook engagement value and will need to continue the lack of engagement in

48 • Vol. V • ksmmedia.com its advertising opportunities. The video will be just one of many As Facebook looks to become more current ad units must be upgraded tactics Facebook will introduce transparent and accountable, many from text-like adds in order for to appease advertisers looking believe that opportunities will arise advertisers to engage consumers in to utilize the social hub’s wide involving the use of its proprietary a meaningful manner. Advertisers reach and high user engagement. data for targeting purposes. While everywhere have long-struggled from the start Facebook adamantly with the limitations of Facebook’s Moving Forward rejected the opportunity to sell user design template. This newly-public While creative updates will be an data, it is becoming more amenable company will likely expand its important piece for Facebook’s to the idea in order to remain creative canvas to cater to the growth, the overarching theme of competitive. The introduction of specific needs of advertisers in the releases in the next few years products like Facebook Exchange an effort to keep them happy. will likely involve measurement and the expansion of custom audience segments were harbingers One way industry experts are and transparency. For a community that is accustomed to the wealth of change. It is only be a matter of suggesting Facebook improve its time before Facebook offers audience advertising capabilities is through of knowledge and measurement Facebook will need to continue improving its mobile capabilities if the company wants to carry over the momentum of last quarter. the integration of online video. that comes along with digital advertising, Facebook’s unique segments based on user interest With usage skyrocketing across and activity within the platform nearly every other online media performance metrics have long- been a point of contention for to target users across the web. The outlet, Facebook will fall behind wealth of information Facebook has competitors if video is not included advertisers, as they struggle to quantify the value of a “like.” collected on its roughly 1 billion within its suite of offerings. Rumors monthly users across all platforms have been swirling that additional Now more than ever, Facebook is extremely valuable if this can features, like a video production tool will be pressured to provide more be marketed to advertisers. are coming soon. Still, no release tangible metrics and support its timeline has been announced, but value proposition if it plans to Facebook’s progress in the last Facebook’s sales teams have already secure returning business. A great year alone shows its affinity begun speaking with media agencies example of this evolution was towards evolution. However, it is about this impending opportunity. the introduction of conversion- certain Facebook will continue tracking in late 2012. Advertisers with its disposition of “moving If Facebook can create an fast, breaking things,” leaving environment similar to YouTube, everywhere welcomed the long- overdue opportunity to hold advertisers left to speculate, and that also helps produce and host more importantly adapt, as it content across the web, it opens Facebook to performance indicators that by now are ubiquitous continues to release updates and the door for pre-roll or branded shake up the digital space. video content and the additional within the online advertising income that comes with it. As an space. Hopefully, this is just the added bonus, these videos might beginning and Facebook will look ignite a larger social buzz, allowing to roll-out more finite ways to track Facebook to directly benefit from performance to meet the needs of the incoming traffic and sharing advertisers and clients everywhere. activity within the platform. Overall,

State of Media • 49 Understanding facebook

50 • Vol.exchange V • ksmmedia.com Recent updates to Facebook allowing for increased points or latent page visits. This makes it difficult for advertising functionality have been well-received by advertisers to dig deep into their performance in an the industry. Improved targeting possibilities will effort to continuously optimize campaigns. Marketplace now make Facebook ads more effective, bringing ads are also currently unavailable on mobile devices advertisers one step closer to effective segmentation and cannot be used to retarget consumers. Limited of the large and diverse audiences housed under its conversion tracking, mobile ad reach and data usage have umbrella. Still, reaching more than 1 billion users likely restricted overall Marketplace ad performance. in an organized and targeted manner is complex and has traditionally been a challenge on the social Facebook Exchange Capabilities leader’s ad platform. Understanding the evolution of Facebook Exchange (FBX) ads bring new opportunities Facebook ad opportunities and targeting capabilities for advertisers to target based on user data. These will shed light on the overall effects of recent changes ads are purchased via Facebook’s own ad exchange and how campaigns will be altered moving forward. and have the same look and feel as Facebook’s Facebook Marketplace Capabilities The first Facebook ads appeared in 2006 and were CTR Rates for Facebook Exchange created through Microsoft’s advertising platform, adCenter. Soon after, Facebook launched its Marketplace platform for advertisers to create page-like ads that All FBX ads are above the fold targeted users based on the site’s demographic and and changes in CTR between psychographic data such as gender, education, interests positions are minimal to none and connections. In 2012, the Marketplace took a big step by allowing first-party targeting using CRM compared to AdWords data like email addresses and phone numbers.

In April 2013, the Marketplace was enhanced again through the addition of user data targeting from third- party providers such as BlueKai, Epsilon and Datalogix. Third-party user data is collected from outside sources anywhere on the web. The data providers take this information and create unique user profile segments 1 2 3 4 5 based on their online behaviors and activity. Advertisers then use these segments to target specific audiences. Ad Position CTR Rates

Marketplace ads are particularly proficient at driving Source: Triggit traffic to a brand’s website or increasing fans on a brand’s Facebook page. Advertisers can optimize outreach by utilizing the Marketplace’s targeting opportunities Marketplace ads with the main difference being that and buying ads on a cost per thousand impressions FBX can utilize programmatic technology. User data (CPM), cost per click (CPC) or cost per action (CPA) basis. is particularly valuable for direct response advertisers Choosing a maximum CPM, CPC or CPA lets advertisers because while Facebook’s demographic data focuses automate by setting limits on what they’re willing on audience attributes and interests, user data can to spend for ad impressions, clicks or conversions. give more insight into their holistic behavior and buying habits. This programmatic layer also allows Facebook Marketplace Drawbacks advertisers to retarget with dynamic creative to send Facebook users the most relevant messages. Most display ads tag users that see an ad but can’t track latent website visits or conversions. A major Similar to Marketplace ads, FBX ads have a visibility limitation to Marketplace ads is that they cannot track advantage over standard display ads because the post-impression activity. Facebook recently launched creative scrolls “above the fold” alongside the Facebook a conversion tracking tool, but reporting is limited to pages on which they appear. Because of this scrolling one conversion type rather than multiple conversion position, studies have shown that FBX ad position

State of Media • 51 Regular Creative Dynamic Creative

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has little negative effect on CTR, unlike other ad social activity and browsing activity. Users who “like” platforms like search engine marketing (SEM). Starbucks on Facebook may not be classified as coffee enthusiasts based on their browsing behavior. For a FBX Drawbacks user to fall within the “coffee enthusiast” segment, FBX brings exciting opportunities for advertisers, but they must meet strict criteria set by third-party data still has its limitations. One big drawback remains sources. Fans of the Starbucks page would likely be that its ads don’t appear on mobile devices or track interested in coupons and other promotions, while subsequent page likes directly related to its interactions. “coffee enthusiasts” might spend time on coffee-related Just as Marketplace ads in Facebook’s platform can’t websites but not “like” Starbucks on Facebook. For leverage user data, FBX ads also can’t layer on Facebook’s Starbucks to maximize reach in this scenario, they must demographic data. For example, if Starbucks wants run a more complicated mix of FBX and Marketplace ads. to serve coupons to customers who display “coffee enthusiast” browsing habits, Starbucks could create Has FBX Revolutionized an FBX placement and layer on user data to reach Facebook Advertising? this audience. But if Starbucks wants the same ad No, but it has improved it dramatically. FBX has added to reach users who are coffee enthusiasts and “like” another layer of much-needed targeting capabilities Starbucks’ Facebook page, they’re out of luck. Both that make Facebook advertising more effective criteria cannot be used for one ad placement because when used in conjunction with existing Marketplace “fans” of Starbucks’ Facebook page are tracked based on opportunities. Initial response to the addition of FBX Facebook demographic data while “coffee enthusiasts” may result in a majority shift of budgets away from are segmented based on third party user data. Marketplace ads, but that would be a mistake.

Since user data and Facebook demographic data sets The behavioral and retargeting options through can’t be combined, the targeting process is not as FBX make it a complement to the Marketplace, not smooth as advertisers might have hoped. To reach a replacement. FBX ads are another form of display this audience, Starbucks would need to create one advertising, while Marketplace ads are inherently ad through FBX to reach “coffee enthusiasts” and a social and will hold strong in that arm of the digital second ad through the Facebook platform to reach media mix. Facebook’s ecosystem has room to grow and fans of the Starbucks Facebook page. Both ads reach many wish for the ability to combine demographic data users interested in coffee but use two different tools. with user data in future evolutions of the platforms. In the meantime, advertisers should view the use of The need for Marketplace and FBX ads to work in FBX ads as a strong display-ad strategy and the use of tandem is further illustrated by variances in consumers’ Marketplace ads as part of their social ad strategy.

52 • Vol. V • ksmmedia.com How Emerging Tech Could Revolutionize Tracking Next-Gen Consoles Mobile Pushes Gaming Mainstream Gaming Landscape

Gaming is taking home entertainment by storm. Find out how brands can cash in…

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State of Media • 53 The gaming industry has achieved staggering growth industry. As gamers move toward a multi-platform in the U.S. and is projected to top $7.2 billion by 2016. engagement style, there is an emerging need for The landscape itself has experienced a seismic shift programmers to take a platform agnostic approach to from a formerly niche market composed of males 12-24 game development. The traditional consoles of today are to mainstream American culture. In fact, the average competing with the mobility of smartphones and tablets. gamer’s age is now 30 and the audience is split almost evenly between males (53 percent) and females (47 More developers are building platform agnostic games percent). This mainstream shift in gaming popularity and many of them remain free-to-play to increase trial is owed to advancements like emerging technology, the and expand the general market audience. Through the proliferation of mobile devices, free-to-play games and combined support of advertising and virtual goods, social gaming or “multi-screening.” Advertisers are monetization has proven successful. Within the social capitalizing on this trend by integrating sophisticated gaming environment, virtual goods are the primary marketing tactics to reach this highly engaged audience. form of monetization, enabling users to purchase items in order to advance the progress of their game. Mobile gaming in particular has grown exponentially Advertisers are cleverly capitalizing on this phenomenon and is poised to maintain its steady upward trend to drive brand awareness. Dove, for instance, partnered well into 2014. The advent of free-to-play games has had a crushing impact on established console brands, as more consumers are engaging with free game US Mobile, Online Casual & Social Gamers 2010-14 content on tablets (59 percent) or smartphones (52 (millions) percent) in brief, bite-sized sessions. Angry Birds, a 2010 giant in the casual gaming market, has achieved over 1 billion downloads, which underscores the explosion 61.5 84.9 53.0 and near universal adoption of the gaming trend. 612011 85++ 53+= Social gaming is often categorized as a subset of casual gaming, though its growth is comparatively 80.8 89.5 69.6 stagnant. While social gaming gained almost immediate 812012 89++ 70= popularity in 2011, it has since lost some momentum, leaving industry leaders like Facebook and social game developer, Zynga, struggling to regain their 102.0 93.7 76.5 footing. Gaming franchises created by Electronic Arts 1022013 +94+77= (EA) and Disney are having more luck establishing a following outside of social environments and migrating 121.3 97.3 80.9 into Facebook with already well-known games. 1212014 97++ 81= Capitalizing on this popularity by setting up owned gaming portals to completely avoid social hubs like 141.2 101.0 85.4 Facebook will allow next generation game developers 141101++ 85= to track “multi-screening” activity among users and establish themselves as go-to brands within the Mobile Gamers Online casual gamers Social gamers Source: eMarketer, Aug 2012

54 • Vol. V • ksmmedia.com with EA’s The Sims Social game to incorporate a or rewards within the gaming environment as the free Dove-branded virtual hair spa into the gaming TV series progresses. Defiance combines the intense experience. The hair spa certificate was redeemed by action of a shooter, with the persistence, scale, and more than 1 million players in the first two weeks. customization of an MMO. Additionally, its TV counterpart exudes the scope, story, and drama of Utilizing opt-in videos, McDonald’s executed a similar a classic sci-fi epic to truly bring about previously campaign in support of its Monopoly program that unachievable angles. Because they exist in a single enticed users to watch the brand’s commercial in universe, the show and the game will influence each exchange for unlocking tools specific to the game. other and evolve together over time, with actions in This value exchange between brands and consumers both mediums driving the overall story of Defiance. is proven to drive 98 percent video completion rates and engagement rates of nearly 4 percent, double There is an emerging the average for pre-roll. Similarly, appssavvy has developed a means of serving ads based on users’ in- need for programmers to game activity (e.g., congratulate users for completing a game level), which is shown to create positive take a platform agnostic brand association for users within the game. approach to game Additionally, some franchises have turned to TV development. programming partnerships in an effort to drive unique engagement. The Massive Multiplayer Online (MMO) There’s no denying that gaming has evolved from a niche game Defiance is one such example. Defiance is the activity to a popular past time. It will be essential for first multi-platform shooter, which interconnects with advertisers to think outside of the box in an effort to a global television program on cable’s Syfy channel. develop unique and engaging brand experiences that This allows for not only cross-screen advertising help foster brand affinity with its customers. While opportunities, but also reaches a larger audience, consoles are certainly on the decline (despite buzz while still creating core viewership and interaction. about the next generation systems slated for release Both Dodge and Axe body spray have partnered with this year), technology leaders are creating solutions ‘Defiance’ on multiple levels for in-game use, as well to the multi-screening conundrum through platforms as on screen. Dodge has lent its Challenger for use in like AirPlay, which syncs iPhones and iPads directly the MMO game, with online buzz speculating that the to users’ TV sets. Advertisers definitely need to stay Dart and Charger that will be featured prominently abreast of gaming trends and emerging technologies in the Syfy series will become downloadable content in order to reach an increasingly mobile audience.

State of Media • 55 Is the Gaming Console Here to Stay?

The changing face of gaming demographics in recent years has created an even broader market for gaming devices.

Console developers, the ground- its high-priced units. In addition, transitions and entertainment breaking leaders of the gaming consumers have complained hubs to their consoles. world, paved the way for general that newer versions of consoles market expansion with interactive haven’t established a compelling Gaming has entered the fight for devices like the Wii remote value proposition to induce an the living room in a big way and and Xbox motion sensors. upgrade to existing models. developers won’t give up easily. Many consoles are being converted With the advent of human Nintendo’s Wii all but disappeared to entertainment hubs, used recognition and interaction, gaming from production and then produced primarily for movie and YouTube was revolutionized forever. As of lower than expected sales in this streaming. In fact, Microsoft boasts September 2012, Nielsen reported year’s attempt at a comeback that 40 percent of all current that 56 percent of American TV with the Wii U. The Xbox One Xbox activity is non-game. While homes owned a gaming console unit and Sony’s PS4 console disturbing to “hardcore” gamers of some kind. However, sales of are both releasing this holiday who believe console developers are consoles dropped a significant season and have received mixed leaving the gaming community in 24 percent by the end of 2012 reviews based on early demos. the lurch in favor of more general and physical game sales dropped market pursuits, the Big Three It is clear that Sony, Microsoft 25 percent between April 2012 must focus on larger market share and Nintendo (also known as and May 2013. Increasing in order to secure their futures. competition from smartphones, the Big Three) are aware of their tablets, and even desktops has dubious futures and are quickly Consoles have been a boon to both made it difficult for the console adding “value features” like DVRs, consumers and advertisers in recent business to attract customers to seamless TV-to-game-to-internet years, offering the opportunity to

56 • Vol. V • ksmmedia.com connect TVs to the internet before available and easy to gather and the demographics of the heavy connected TVs and Over the Top through the main console. technology users in every household. (OTT) devices became mainstream. However, they also represent an Game console owners often use their As is often the case in today’s invasion of privacy unknown gaming devices to stream video information-gathering world, thus far to today’s consumers. from hubs like Netflix and Hulu and, privacy questions bring the in recent years, to surf the internet excitement of ad possibilities to Though Microsoft says they through easy-to-use interfaces a sobering pause. Will consumers will “strip Personally Identifiable on their TV screens. Current ad be comfortable allowing the “eyes” Information (PII)” from all collected opportunities on these interfaces (Xbox’s Kinect device equipped data, their privacy disclaimers do have proven to be successful and with a camera) and “ears” (the nothing to put consumer fears at highly measurable, allowing brands technology that allows for voice ease. With statements like, “You to benchmark performance of video command control) into their should not expect any level of views with click-through data. homes? The ad community has been privacy concerning your use of Upcoming versions of Microsoft discussing camera technology in the live communication features and Sony consoles will make living rooms for years and with the (for example, voice chat, video and further use of screen dashboards new generation of gaming consoles, communications in live-hosted to transform the consumer it looks like it’s finally coming gameplay sessions) offered through entertainment experience at home. true. Cameras can answer age-old the Xbox service,” Xbox users will advertising questions like how many gain no peace of mind. Microsoft Advertising implications through people are gathered in front of one has also disclosed that details about the advanced technology of new TV set, how engaged viewers are, consoles are endless. Xbox One has created a hands-free, voice commanded dashboard that allows How We’re Spending Time With Our Game Consoles users to watch TV on one side Share of Console Time Among Users Aged 13+, 2012 v. 2011 of the screen while surfing the 28 + internet on the other. Seamless Xbox 360 PS3 Wii40 + 38 transitions and multi-tasking Playing video 33% 28% 55 40% make advertising and click-to-buy games offline 34% 38% 55% 18 + 11 + options easier than ever. Voice 33 + 16 6 activation can pause programming Playing video 33 33% 18% 11% while viewers search the internet games online 33% 16% 8% 24 + 32 + for products they’ve just seen on 13 + 15 33 TV. Ads will also be customizable Watching video on 14 13% 24% 32% in the very near future to allow for demand/streaming services 14% 15% 33%

voice activation. The TV spot will be 9 +

revolutionized from a broad reach, Watching 9 9% 18% N/A push device to a broad reach, pull DVDs/Blu-Ray 9% 18% device where television is no longer 4 + 7 + passive and sales can be activated 5 Watching 5 7% 4% immediately through one platform. Downloaded N/A 5% 5% Additionally, if consumers use Xbox Movies, TV Shows 8 + 17 + 6 + One as their primary entertainment All other (listening 4 4 5 6% 8% 17% hub the way Microsoft hopes, to music, using the 5% 4% 4% further information regarding internet, etc.) multi-tasking, video-viewing, and Source: Nielsen 2012 2011 ad engagement will be readily

State of Media • 57 Focus: Emerging Tech Equals Big Opportunities

Probably one of the most exciting prospects for impression rates and sentiment for display ads or advertisers to watch in the next couple years better yet, broadcast commercials. Take that one will be how Samsung’s “Eye Scroll” and “Eye step further and allow the system to “scroll” ad Pause” technologies develop. This past January content and you open up yet another capability the company filed for trademark status of these for more adaptable and immersive creative. aforementioned capabilities. According to the filing, they will enable devices to sense “eye What’s more, gadgetry like Google’s much-hyped movements” and automatically scroll displays “Glass” could easily take that technology to the of “mobile phones, smartphones and tablet streets. This could not only open up avenues for computers according to eye movements.” more advanced and anticipatory altered-reality branding experiences, but would also allow A less-advanced version of this capability is already these devices to accurately render those ads into included in Samsung’s Galaxy S III. This mobile the real-world environment. Picture if a pair of phone’s Smart Stay software watches users via its glasses could track a mixture of eye, head and front-facing camera and detects if they’re looking at external movements in order to project these the phone or not. If they are, the screen stays bright VR ads back to the user with unprecedented and any video playback is engaged. If they look preciseness. The users engagement would away, the screen darkens and playback pauses. likely increase as the complexity and responsiveness of these creative pieces Further intriguing are the possibilities that a improved through technological development. technology like this could have on gaming systems like the Xbox One and its counterpart Kinect. If the For now we can only eagerly wait and see two were to ever partner up, then the possibilities how these tech giants implement their ideas for intricate tracking of ads served over the into consumer technology. Still, one thing is for entertainment system’s network would be endless. sure: the oft-dreamed about future of gadgets Imagine advertisers utilizing the abilities of eye- depicted in sci-fi films like Minority Report and movement tracking to determine more accurate Looper is definitely closer than we think.

users’ voices, faces, bodies, frequency Time will tell if consumers are If privacy could be maintained while of exercise, “calories burned, willing to give up some of their gathering the console hub’s valuable time spent playing, and physical living room privacy for unlimited media consumption information, intensity of their movements” are entertainment and shopping advertising opportunities all being saved either directly to opportunities on their television will abound. The current data the Xbox device or Microsoft’s sets. In the meantime, it behooves fragmentation caused by the main servers. Additionally, the the advertising industry to maintain multiple devices currently setup “always on” feature of Kinect means privacy standards and gain the in consumers’ living rooms will be that the box will respond to voice trust of consumers. PII should a thing of the past if collection is commands even when it is powered be carefully guarded and privacy centralized for all home platforms. down. Which begs the question, statements should be very clear so what kind of information bits are that lack of consumer education the eyes and ears gathering even doesn’t hold back new technologies. when the device is not in use?

58 • Vol. V • ksmmedia.com Discover the New Look of Search How Google’s Optimizing Device Targeting SEO vs. PPC: The Ups and Downs of Both Search Trends

The Search Landscape is Evolving Yet Again. Discover How Inside...

State of Media • 59 the search engine Landscape Google has been at the forefront of all conversations around search for many years. However, niche engines and databases have increased their presence in the search space, chipping away at Google’s search-engine domination.

Historically, Google has been at over 16 percent market share in more tailored results in comparison the forefront of all conversations comparison to Google’s 67 percent. to the all-encompassing Google, around search. Regarded by many The campaign resurfaced the age old preference and share could change as an omniscient tool with the question, “What components make over time. Google has a huge answer to all user queries, its reign up a good search engine?” Most amount of information, yet it at the top has been long and healthy. users want a single search engine provides the greatest volume with Since the search engine’s birth that delivers three key features: each query and the results can in 1995, the term “Google it” has relevant results, an uncluttered be overwhelming. Niche search become increasingly common, if not habitual, and most consumers don’t even consider using a different Many of the tailored search engine. It is the world’s most sites allow consumers to see popular search engine, processing millions of searches every day what friends and trusted sources all over the world. However, in recent years as users have become “like” and how they think. increasingly savvy and discerning in their searches, niche engines interface and helpful options to engines and databases overcome and databases have increased broaden or tighten a search. Ask. this problem through specialization: their presence in the search space, com, AOL, and Dogpile are all search Wikipedia : This ever-evolving taking away small percentage engines that boast these functions encyclopedia contains countless points of Google’s domination. but still hold a much smaller share of searches than Google, so quick facts and timelines. It Aside from Google, there are the secret to success is obviously eliminates the need for sifting countless options to consider when more than just functionality. through several websites to looking for information. Microsoft, find a single data point. which encompasses both the Yahoo Ultimately, users want accurate Amazon: Carrying the title of and Bing networks, is second in results that provide the information world’s largest online retailer, line in consumer usage in spite of they are seeking in the timeliest users are able to use Amazon to its recent “Bing It On Campaign,” manner. However, they also need search for products and pricing. asking users to compare the two to be educated on the benefits of Since shopping is one of the main engines in a blind test. While using content-specific search tools activities performed online, Amazon Microsoft reports that extensive to find more relevant answers provides a trusted environment to testing proved users preferred with less effort. As consumers are investigate and comparison shop. Bing 2:1, they still only have a little finding niche engines that offer

60 • Vol. V • ksmmedia.com Twitter : Its niche is recency, contact information as well as search methodology. The reception offering quick snippets of user-generated ratings and content. has been tepid at best. Google’s news and editorial. Users can quiet attempt to accomplish the find comments and opinions Facebook : This social giant operates same social search overlay, named from their trusted sources. by connecting people, centering on “Google Plus Your World”, has also interest and activity-based results received little attention. Some argue YouTube: Providing unlimited generated by friends and contacts. that emphasizing social overlays video and free hosting with a focus in search is in direct opposition to on education and entertainment Many of the tailored search sites allow consumers to see what friends the results of studies on human is this media giant’s specialty. The conformity. While both Google YouTube search function makes and trusted sources “like” and how they think. With the release and Facebook banked on the idea it easy to navigate the site and that consumers want to be just like find video on relevant topics. of Graph Search in Q1, Facebook attempted to capitalize on users’ their peers, countless studies show Yelp: Venue and local business networks. Facebook transitioned consumers would rather aspire to reviews as well as advertising into a recommendation engine that be like influencers who likely fall populate Yelp’s dynamic online merges social information filters outside of their social networks. community. Users can use this with data collected from its over one In spite of Google’s royal status, the site to search for location and billion users, all while using modern search category is cluttered and fluctuating with experimentation. Profit is still the ultimate goal Explicit Core Search Share: April 2013 (%) of all business endeavors and search engines need to adjust their methodologies and offerings in an attempt to give consumers what 1% they want. Over time, it remains 3% to be seen which company can capitalize on their success as an engine and maintain enough fuel 12% to stay alive? Just last year Google, Yahoo, Microsoft, Facebook and AOL combined took in $23.9 billion in ad revenues, which comprised nearly two-thirds of total digital 17% 67% ad spending last year. Google lead the pack with 41.3 percent of total revenues last year and is projected to keep its healthy lead through 2016. However, changing consumer habits and search innovation may further fragment the category in years to come.

Google Sites Microsoft Stes Yahoo! Sites Ask Network AOL

Source: comScore

66+17+1232 State of Media • 61 Google’s Enhanced Campaigns

In early February Google announced performance levels across all of them own an iPad, which does a revolutionary change to its devices. Search behavior varies not support Flash. Because of this, AdWords paid search platform, dramatically depending on platform businesses need to ensure that called Google Enhanced Campaigns. and optimizations will be more there are no Flash elements on It’s sure to have a huge impact labor-intensive with the new, cross- their landing pages or within any on digital advertising as a whole, platform possibilities, especially stage of their conversion funnels. and the biggest changes will for clients whose campaigns appear on the mobile platform. have previously been isolated to The continued increase in tablet desktop or mobile-only efforts. adoption also reinforces the need What are Google for unique tablet-optimized sites, Enhanced Campaigns? From a creative standpoint, it similar to the mobile-optimized site is more important than ever to demand that has increased in recent Previously, advertisers were able to ensure clients’ sites are tablet- years. It is no longer simply a “best choose where they wanted to serve friendly. A Pew poll conducted practice” to have a tablet-optimized their ads, isolating mobile from in 2012 shows that 25 percent of site, but is mandatory for success desktop search campaigns. With Americans own a tablet device (up and an opportunity for businesses the Google Enhanced Campaigns from only 4 percent in 2010), and to differentiate themselves as update, search campaigns will of those tablet owners, 52 percent top players in the tablet space. automatically appear on desktop, tablet, and mobile devices by default. Google Enhanced Campaigns will Top 10 Mobile Content Activities Among US change how paid search campaigns Smartphone & Tablet Users, Dec 2012 (% reach) are structured and executed, shifting focus to the “where” Smartphone Users Tablet Users and “when” of searchers instead 1. Sent text message to 90.5% 1. Accessed search 73.9% of just the “what” and “how.” another phone

What Does This Mean? 2. Took photos 83.4% 2. Used email 73.6% 3. Used email 77.8% 3. Accessed social network 67.5% Now that tablets and mobile 4. Accessed weaher 67.1% 4. Played games 66.3% users are automatically included in search campaigns, 2013 is 5. Accessed social network 65.3% 5. Accessed weather 64.6% expected to see a large increase 6. Accessed search 58.7% 6. Accessed news 58.8% in search ad volume across both 7. Played games 52.9% 7. Accessed photo/ 51.5% devices. More ad volume means video sharing site more competition, which ultimately 8. Accessed maps 51.2% 8. Read books 51.2% could mean higher cost-per-clicks 9. Accessed news 49.2% 9. Watched video 50.9% across the board. In addition, media 10. Listened to music on 48.0% 10. Accessed retail 49.8% companies may require increased mobile phone Note: three-month average ending Dec 2012. service charges in order to run their Source: comScore Inc., “2013 Mobile Future in Focus,” Feb 15, 2013 clients’ campaigns at consistent

62 • Vol. V • ksmmedia.com the advertiser’s site beyond Ad Extensions: US Local Mobile vs. Desktop Search Why Every the main ad landing page. Volume, 2011-2016 Campaign Should Location Extensions (billions) Be Using Them (Google and Bing): While many of the changes Help nearby consumers 113.4 that come with Google find or call the nearest brick-and-mortar store. Enhanced Campaigns 85.9 85.6 revolve around the 77.1 Call Extensions (Google 69.2 increasing adoption 84.0 and Bing): Connect users 61.6 of mobile advertising, 54.9 63.7 Enhanced Campaigns also to a business directly by phone with the click-to- provide improvements 46.0 to Ad Extension options. call option on mobile devices and listing a phone 30.7 When Google launched 19.7 AdWords, paid ads number on desktop and 2011 2012 2013 2014 2015 2016 purchased on a cost-per- tablet devices. Additionally, Enhanced Campaigns thousand (CPM) model Desktop Mobile had a standard format will provide mobile call extension reporting at zero Source: BIA/Kelsey, “Annual U.S. Local Media Forecast 2011-2016” cited by and appeared only in the Search Engine Watch, March 30, 2012 right rail section of the cost where previously, a search engine results page fee was associated with receiving this information. (SERPs). Today, thanks to convey the primary New customized call RAIS - Rich Ads In Ad Extensions, Google and advertising message. conversion types are Search (Bing): Include Bing ads also appear at deep links, forms, images also now available to Additional information the top and bottom of the or videos in ads. SERPs and have evolved the advertiser to better also improves the user beyond the standard measure mobile click- A key benefit to running ad experience by making format. Competition in to-call ad success. extensions is the increase ads more relevant. Using ad extensions the paid search landscape Offer Extensions in an ad size, which gives searchers the continues to increase (Google): Promote increases the amount opportunity to navigate year-over-year, making in-store coupons with of owned real estate on to the information that it vital for advertisers to advertisers’ online ads. SERPs. Larger ads attract distinguish themselves more eyeballs, which in they are seeking versus if they want to achieve Product Extensions turn may lead to increased directing all ad traffic to a successful campaign. (Google): Include more engagement. With many a single, predetermined product information ad extensions, such as landing page. Increasing With Enhanced Campaigns, in the body of the ad. sitelinks, you are able to ad relevancy not only Google will offer even more include additional “ad copy,” enhances the searcher’s Social Extensions customization options, such as location, phone experience, but can also (Google): Link users’ as well as additional number and services. help businesses boost Google+ endorsements reporting capabilities These are information click-through-rates (CTRs). for a business +Page to that were not available bits advertisers wouldn’t Improving CTR is a factor AdWords campaigns. in the previous legacy normally be able to include in improving quality score, campaigns. Available ad which in turn can also Seller Ratings (Google): due to PPC ad character extensions now include: assist in lowering average Show an advertiser’s limits. This is all achieved CPC and overall cost. Sitelink Extensions online business rating without sacrificing the (Google and Bing): inside the ad. already limited amount Promote more pages within of space allotted to

State of Media • 63 77% of cancer Searchers are much sufferers use 81% more likely to notice of ad clicks are ads when they the internet incremental for are in a purchase advertisers whose environment to research organic search results are in the second to cancer post- fourth position 45% of mobile searches “are conducted to diagnosis help make a decision” 45% of consumers (in a store, that number goes up to 66%) 77% of mobile searches are have no specific brand in a location (work or home) or business in mind likely to have a PC available when they begin their search on their desktop or smart phone 22% of QSR searches occur in November fast & December alone 71% of all shoppers Suse earch search at least twice to 7% of queries help them with their have a typo; banking decisions percentage facts is higher on 6% of daily longer queries queries on 89% of traffic Google have generated by search ads is not replaced never been by organic search 51% of total seen before when ads are paused marketing contributions 60% of 53% of conversion to website visits queries are informational, paths end with a come from not purchase click on a generic paid search orientated keyword

Sources: Google and Nielsen’s “Mobile Search Moments” study, Webbiquity’s “102 Compelling Social Media and Online Marketing Stats and Facts” and Third Door Media’s SMX East Expo.

64 • Vol. V • ksmmedia.com There is a 94% 78% of increase in CTR (Click-Thru-Rate) 70% of buyers converters when search and use search at on education social media are some point during websites are used together their research

influenced 55% of purchase-related conversion occur by search within one hour of initial mobile search 28% of mobile searches result For “commercial” searches on in conversions Google, actual organic links can take up less than 20% of the screen real estate and links 83% 57% of Baby of beauty consumers use search engines Boomers have fast as a direct result of seeing an ad in a searched online print magazine after seeing something on TV Search 66% of paid ad clicks occur in the absence of an associated organic result on the first page of search results 95% of smartphone users have facts 73% of mobile searched searches trigger for local 70% of queries follow-up actions have no exact information matched keyword of time spent on the web is in any account on a Search Results Page. The Less than 5% rest of the time in on content

63% 27% of patients Websites with of mobile search- asked a doctor about triggered actions a Google+ occur within one hour a specific drug after business page of the initial search researching it online yield a 15% rise in search rank

State of Media • 65 SEOSEO Vs.Vs. PPCPPC CampaignsCampaigns

Sponsored results account for 64.6% of clicks 35.4% for high commercial intent keyword searches

64.6% On average, the top 3 spots take 41.4% of the clicks. Sponsored ads on high commercial intent keywords take up 85.2% of the above-the-fold pixels. 35If an advertiser buys ads for+65 keywords they already rank for organically, 89% of traffic generated by search ads is paid Ad new traffic outside of organic reach.

On average, the top organic listing gets just 8.9% of the clicks. 35+65

• PPC is better for high commercial intent Keywords: searchers who are ready to buy something organic

• SEO is better for question and informational Keywords: searchers who want to learn

Can you tell the difference paid Ad organic between paid and organic? 45.5% of people couldn’t identify paid ads on search engine results pages if there wasn’t a shaded box.

Timing Matters Pay Per Click Search Engine Sample Visitor Traffic for SEO & PPC Campaigns (Assuming Identical Budgets) • Near-domination of search Optimization results for commercial 1200 keyword searches • Incredibly dominant for low-value information 1000

• New, engaging ad formats keyword searches 800 drive very high click-

through rates and ROI • Difficult to measure Visitors 600 and execute • Control over 400 advertising message • Costly to execute 200 PPC • Unpredictable results SEO • Difficult for beginners 0 1 2 3 4 5 6 7 8 9 10 11 12 Months

Source: WordStream Why Big Data is Just a Fad How to Leverage Marketing and Web Analytics Will Programmatic Kill Off Buying Specialists? Automation The Analytics & Data Game

How Smarter Data Systems are Reshaping Business Intelligence.

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State of Media • 67 The ‘Big Data’ Fad How Information Should (and Will) Change

Fad’s Beginnings The data world began to change back when people started sharing information via social networks. Over the course of the last year and a half, the term Consumers were increasing their use of smartphones “Big Data” has been carelessly slung around the and tablets while simultaneously gaining the ability marketing, media and technology world. So what is it? to store multiple gigabytes and terabytes worth of Big Data comes in many forms including TRPs, GRPs, information inexpensively. This adoption of new print circulations, media mixes and sales data. In reality, consumer behaviors happened very quickly. there have always been large amounts of data sets which are all used in a myriad of ways. So what makes To put this change in perspective, studies that analyzed today’s Big Data different than yesterday’s “Not-So-Big” human evolution found there was approximately one data? The answer: the term is simply a marketing fad. exabyte of information produced from the dawn of man to the year From a media 2000 (an standpoint, There was approximately one exabyte exabyte is one Big Data of information produced from the dawn quintillion encompasses bytes). In elements such of man to the year 2000. In 2012, one contrast, as digital during performance exabyte of data was created per day. the year information, 2010 alone, that same amount of data was targeted audience segments, conversion information, generated. And In 2012, one exabyte of data was Client Relationship Management (CRM) systems and created PER DAY. This increase in data production even weather patterns sweeping across the Great Plains. is tantamount to a Big Bang of information and It is the amount of video that has been uploaded and is continuing to expand at breakneck speed. subsequently consumed on a network, or the number of ads served to consumers walking by a retail shop. Taming the Flow Outside the media world, Big Data can originate Like the development of most marketing and technology in unstructured information from a document’s lingo, coining the term Big Data was an easy way for contextual keywords or readings from health industry individuals to discuss the incredible amount indicators placed inside human bodies. Hence, of information being generated daily. It began when Big Data includes every imaginable information advertisers saw potential in increasing data sets, causing set, and it isn’t just big—it’s MASSIVE. agencies to begin reporting on more data points.

68 • Vol. V • ksmmedia.com Over the course of the question by hiring gurus, Current vs. Future Impact of last 15 years technology statisticians, database Big Data Analytics, 2013 has changed the way managers and tech % of respondents (US Marketing Executives) everyone manages their junkies. Organizations everyday life. In the leaning on data scientists SEO/SEM/email/SMS marketing marketing and advertising are looking for golden 58% 42% world, the growth of information nuggets in the Customer segmentation digital has created many sea of disorganized chaos. 49% opportunities including Thankfully to help in their 46% advancements such as the cause, tools like Hadoop Marketing strategy birth of search engines and (a data management 41% search engine marketing, software framework), 54% the ability to network have emerged which help Loyalty/ retention programs across multiple sites to break down data into 36%

46% serve ads en masse, ad more digestible chunks. exchanges where digital Social media analysis While many believe these 35% marketers can bid for data scientists are here 26% display placement across to stay, the reality is that Brand strategy multiple web locations, 22% and the development of a growing number of 23% Demand Side Platforms emerging technologies Social media outreach (DSPs) to manage to should help ease the need 18% manage real-time bidding. for so many data experts. 18% In the end, this reality will Non-digital advertising With each subsequent more than likely cause 14% technological the demise of Big Data 16% breakthrough, more and in turn bring about Product/ service development 14% data was created. These the rise of “Smart Data.”

30% advancements were often Customer service developed due to real Smart Steps 13% or perceived gaps in the Smart Data will be less 18% technology of that time. ambiguous hype and Public relations/crisis awareness However, each subsequent instead encompass more 5% system enhancement 4% strategy. Intelligent failed to evolve based upon Other technologists and data discoveries from 5% companies will soon 4% the previous generation’s be able to see the technology. Thus this Source: Spencer Stuart, “CMO Summit entrepreneurial Survey Results,” April 1, 2013 Current Future lack of data-based opportunities of collecting, development has brought organizing, reporting and about mismanaged predicting possibilities. Eventually vendors started departments. It became platform growth offering solutions that the most overused and Algorithms will grow that’s largely absent of increasingly sophisticated attempted to further misunderstood term since strategic thinking. organize and consolidate “The Cloud.” So what does and the speed of this information. the term truly mean? It’s The industry now has processing will decrease. more appropriate to think a very clear problem: This will all culminate in After the moniker was of it as a popular trend How does it tame this an organization’s ability first uttered, it continued rather than an understood inordinate amount of to customize its outputs. to grow into mythical entity, and the trend data? Companies have Still, the missing piece proportions until it was all needs serious revision. started to solve this the rage across marketing to this data puzzle is

State of Media • 69 organization. Companies through technology in distributed to marketing In this future of smart are struggling to clean a strategic, actionable departments rather than and organized data, more up information, causing and organized way will being funneled towards strategic observations a crippling inability allow companies to take the traditional IT and will lead to greater to use it predictively the first step towards development sectors of coordination between and productively. As a intelligent data usage. a business. Nevertheless, corporate departments. result, companies have companies will still need The use of data will finally encountered the similar The advent of Smart Data to outline their plans and help to break down the issues—jumbled reports will mean many beneficial determine what success current blockades of in Excel, actionable things to businesses. It looks like before starting departmental paralysis takeaways lost in will help marketers and any campaign or initiative. instead of contributing PowerPoint decks or a data analysts steer overall to overall confusion. database containing totally marketing strategy Despite the complexity Ultimately, if managed well, unrelated information sets. conversations within of Big Data, its historical the use of Smart Data will Yet while organization and the business community. performance information bring about the dawn of access is a big problem, It will also mean that can still be used to leverage new business intelligence. bringing data together budgets for managing and decisions in benchmarking. organizing data will be

Smart and organized data means that more strategic observations will lead to greater coordination between corporate departments. 70 • Vol. V • ksmmedia.com Marketing & Web Analytics Combine for Strength / Divide for Weakness

Understanding the Level of Experience with Data & Analytic Tools Among difference between Marketing Teams According to US Marketing Executives marketing analytics % of respondents (2013) and web analytics, Sophisticated/leading edge and how they work 11% Proficient together, is the first 44% Basic step to a well-rounded 33% digital ad campaign. Just Underway 11% Unfortunately and to their Don’t use big data analytics tools detriment, many advertisers do 1% not differentiate between the Source: Spencer Stuart, “CMO Summit Survey Results,” April 1, 2013 two disciplines and often restrict each by placing them in separate silos so that neither performs continued growth and success. analytics allow companies to to their expected capabilities. Actions resulting from these recognize user patterns on analyses can include adjusting particular pages and determine Marketing analytics is the analysis search keyword groups, reworking what content or calls-to-action may of digital advertising metrics creative, or modifying SEM bids be engaging or repelling visitors. constructed during the strategic to maximize ranking potential. formation of a campaign. A Independently, marketing analytics small sampling of these metrics Website analytics, on the other hand, and website analytics are both includes Cost Per Acquisition measure user behavior as potential effective for illustrating what is (CPA), Click-Through Rates (CTR) customers pass through advertiser- potentially working and what is not and impressions. They represent owned environments, like branded as a campaign progresses. However, the benchmarks by which digital websites. As visitor data is collected they each only tell one side of the marketers measure success. each time a user enters the website, story. For instance, if a user sees Data collected over the course that data subsequently passes to and clicks a search ad, that click of a campaign prove previously tools such as Google Analytics is associated with the keyword, agreed-upon goals were met and or Adobe SiteCatalyst. It includes creative material and ad group add valuable post-campaign metrics such as pageviews, visits, from a marketing analytics point insights that allow teams to visitors, average visit duration, of view. If that click does not result further optimize projects for bounce rates and more. Website in a conversion, web analytics data

State of Media • 71 if marketing analytics are dictating optimizations based on performance without referencing web insights gathered on end users, the campaign could be severely handicapped.

must be investigated to understand Challenges in Increasing the Use of Data & Analytics what caused the loss of a customer. for Marketing According to US Marketing Executives Beyond the click, web analytics % of respondents (2013)

help to focus attention on what the Lack of investment in technology user may not be seeing. The call-to- 58% action could be difficult to locate, or 44% perhaps the landing page was not Availability of credible tools for measuring effectiveness

truly in line with the messaging 31% of the ad or keyword. That said, if Ability of senior team members to leverage big data tools marketing analytics are dictating for marketing programs and decision-making optimizations based on performance 30% without referencing web insights gathered on end users, the campaign Availability of data scientists/data analysts could be severely handicapped. 29%

Advertisers’ marketing analytics Availability of relevant external data

and web analytics pieces are often 28% managed by different agencies, and without careful cooperation Availability of internal data brands can become a disconnected 25% picture of both performance and Organizational barriers to sharing data optimization. Organizational 20% marketing has begun to rely more heavily on the use of multi- Cultural resistance to relying on data for decision-making dimensional data to make informed 15% decisions that drive success. Concerns about information privacy

Companies cannot afford to ignore 8% the benefit and value provided by Concerns about security combining marketing and website analytics. With a proper plan for 6% measuring success, benchmarking Lack of support from senior management

historical performance and best- 6% practice testing, companies will find themselves ahead of the pack. Other 9%

Source: Spencer Stuart, “CMO Summit Survey Results,” April 1, 2013

72 • Vol. V • ksmmedia.com Programmatic Buying Automation Marries Expertise

What is Programmatic Buying? most digital platforms, automating much of the process. Ultimately, less time spent focusing on Programmatic buying is essentially the use of big data these aspects allows media planners to transfer their and the application of artificial intelligence to bid on efforts towards deeper insights and optimizations. advertising inventory in real time. In a remarkably short period, real-time bidding (RTB) and programmatic The technology powering programatic buying offers buying have revolutionized the way media is bought unprecedented real-time optimization capabilities. and sold within the online advertising industry. For To meet campaign goals, RTB uses algorithms and clarification’s sake, RTB is contained underneath adaptive learning to optimize audiences, content, the greater umbrella of programmatic buying’s inventory and tactics. These automations are applied infrastructure. By 2016, US digital display ads purchased instantly to programmatic buying on an individual using RTB are expected to account for more than one impression basis. It would be impossible for human in four display ad dollars, worth roughly $7.42 billion. digital buyers to manually duplicate these granular adjustments with the same response speed. The What Are the Advantages of sophistication of RTB technology, data collection Programmatic Buying? This method effectively cuts out the need for as much US Real-Time Bidding (RTB) Digital human reaction and analysis time. By letting teams Display Ad Spending, 2011-2017 configure computer intelligence to respond based on millions, % change and % of total digital display ad spending one or thousands of computational factors, online ad campaigns can increase efficiency and achieve goals faster and more accurately. Programmatic $8,493.4 buying achieves optimization beyond anything digital advertising has seen. Site-direct digital buys $7,419.2 are expensive with limited reach, and ad networks 149% $5,966.5 can charge a significant markup on the real media cost. Conversely, programmatic buying can achieve $4,561.1 98% savings from fewer markup costs, pricing transparency $3,362.9 and, through RTB, no pre-negotiated price. 36% $1,947.5 73% Programmatic buying also cuts the amount of time 31% 28% 29% $986.0 agencies need to invest for buys. When digital media 19% 22% 25% 24% 8% 13% 14% is bought through traditional methods it often 2011 2012 2013 2014 2015 2016 2017 involves time-consuming vendor meetings, research, planning time, RFPs and insertion orders. With RTB digital display ad spending % of total digital display ad spending % change programmatic buying, agencies can leverage their Note: includes all display formats served to all devices partners’ RTB technologies to reach consumers on Source: eMarketer, March 2013

State of Media • 73 and analysis not only make all of this a reality, it also eMarketer provides insights, successes and opportunities. recently forecast The targeting abilities of programmatic buying are that programmatic data driven. Advertisers can leverage their own first- party data along with third-party data from vendors buying will make up to aggregate Internet users into highly targetable audience segments. A learning algorithm identifies 25 percent (roughly millions of signals and attributes for each impression $6 billion dollars) of to determine the optimal situation to serve ads to users. Time of day, location, webpage, device type display advertising and price are just a few elements that are evaluated when deciding whether to buy an impression. spend by 2015.

As RTB plays a bigger role in the media plan, agencies are proactively adopting in-house strategies to best Does Programmatic Buying Eliminate the manage and control advertisers’ campaign budgets. Need for Digital Planners and Buyers? Forward-thinking groups are mastering the current There is a misconception within the industry programmatic buying platforms, creating processes that RTB is solely a form of artificial intelligence and best practices in order to prepare for the future. which discredits the continuous efforts and eMarketer recently forecast that programmatic strategic thinking of the programmatic buying buying will make up 25 percent (roughly $6 billion specialists. That is not the case since a machine dollars) of display advertising spend by 2015. This is only as proficient as its given instructions, and presents multiple benefits for agencies to create their is dependent upon the operators to define client own trading desks and cultivate in-house expertise objectives and program the technology properly. to manage all real-time bidding efforts internally. RTB and programmatic buying simply ease the process Managing programmatic buying themselves allows of sorting through big data and highly fragmented agencies greater efficiency, flexibility and transparency. audiences in order to determine where best to allocate Transparency is particularly important because of resources. As algorithms continue to become more the recently heightened scrutiny of display inventory sophisticated and provide vast economies of scale, quality. eMarketer revealed that currently three in ten having the machine analyze data points at a rate that is display ads go unseen by Internet users. As a result, beyond human capabilities allows planners to draw more agencies will be accountable for generating higher return meaningful campaign insights and improve KPI metrics. on advertising spend by holding the responsibility The end result achieved is optimal client ROI gained of getting better placements with less waste. through the efficiencies of RTB and strong planning goals.

Leading Concerns About Programmatic As advantages to exchange-based media unfold daily, the historical stigma that the exchange inventory is Trading Among Publishers in North remnant or low in quality will continue to disappear. America, Feb 2013 Agencies that are preparing for this in advance are best % of respondents (2013) poised to survive when programmatic buying encompass Controlling CPM/Pricing by advertiser or segment a larger portion of digital spend. Agencies currently 75% adopting the technology, creating best practices Maintaining direct relationships with buyers and measuring success will gain greater efficiencies, 67% stretching client dollars further. As the media evolution Controlling ad quality continues these marketers will be at the forefront, 66% ready to anticipate the next wave of technology.

Source: Digiday and OpenX, ‘Programmatic + Premium: Current Practices & Future Trends,’ March 27, 2013

74 • Vol. V • ksmmedia.com Cookies & Privacy

What is a Cookie? by recognizing a returning groups of people with similar online user without requiring login behaviors rather than individuals. A “cookie,” also known as a Web information and personalizing cookie, HTTP cookie, or browser page content based on their past Shortcomings of cookie is a piece of tracking data activity. Tracking cookies can allow downloaded from a website that Cookie-Targeting advertisers to communicate with is stored in a user’s Web browser Many argue that relying solely on sites on a mass scale to understand upon visiting a website. This is cookies as a method of targeting consumers’ Web activity and usually done automatically and most may not be the most appropriate serve relevant online ads based consumers are unaware of tracking approach due to weaknesses in on individual habits and interests. efforts. When returning to the same the technology and methodology Most importantly, cookie-tracking website later on, the data stored for segmenting consumers. While makes it possible for advertisers in the cookie can bwe retrieved to cookie-targeting is substantially to group consumers into segments report on the user’s prior activity. more accurate than previously- that are identifiable by similar used targeting methods, demographic and psychographic Collected information can include weaknesses can detract from attributes. This allows online where a user navigated to on a campaigns. Drawbacks include: site and what actions they took advertising to be scalable while also while there. Websites use cookies being relevant. In spite of consumer Segmentation Inadequacies: to enhance user experiences fears, this segmentation process Behavior is not always the best means that advertisers are targeting

State of Media • 75 indicator of intent. Audience its segmentations are true to label reported that 59 percent of adults models are built on browsing and that several actions have have said they can tell they are histories gathered through cookies solidified consumers as members of being targeted by advertisers and and audiences are targeted with a particular segment. If consumer 68 percent of consumers do not like advertising relevant to these segments aren’t maintained or having their activity tracked and histories. However, a 15-year old contain inconsistencies, they will not analyzed. Tracking consumers did girl who has an enthusiasm for perform well in a given campaign. not start online; retailers have been sports cars may visit all of the using loyalty cards and credit cards same sites as an in-market shopper, Due to the drawbacks, comScore to track purchases for years. But just for very different reasons. has reported that cookie-targeted unlike offline financial tracking, campaigns can have wildly varying online tracking monitors users over Cookie-Gathering Interruptions: accuracy rates—between 14 a much broader span of actions If cookies are cleared from a user’s percent and 96 percent. As an and behaviors in order to develop a browser, frequency caps, purchasing relevancy, and historical browsing information are deleted as well. Building ad relevancy without As an advertiser, cookie- historical information defeats the purpose of cookie-targeting. targeting can get you close Multi-Platform/Multi-User Gaps: to your audience but it is Despite today’s multi-platform usage norms, cookies act in a silo. Users interacting with tablets, laptops, and not an end-all solution. smartphones over the course of a single day are treated as separate advertiser, cookie-targeting can consumers rather than in aggregate. highly-customized profile. Due to get you close to your audience the often personal nature of online This means planned-for frequency but it is not an end-all solution. caps and reach numbers are not research and lack of consumer necessarily reflected accurately in understanding regarding the depth Opposition to of behavioral targeting, many say post-campaign reporting. The same Cookie-Targeting inaccuracies apply when attempting they would prefer to keep this to account for multiple users sharing As cookies and their ability to track history private rather than see it devices in a single household. user data have become more well- used for the purposes of advertising. Identifiable browsing characteristics known to the public, cookie-tracking can be skewed by multiple users has been placed under scrutiny. At Addressing the with wildly varying demographics, present cookies can be manually Importance of Privacy deleted, but some browsers like thereby creating unavoidable errors Two major steps are being Mozilla Firefox plan to set their in the segmentation process. taken in an attempt to ease defaults to automatically block consumers’ concerns and Vendor Information this type of tracking. As a result, protect their privacy: industry Inaccuracies: Close inspection consumers would be required to self-regulation and consumer of vendor partner data is required manually change their browser browser “Do Not Track” options. when running campaigns utilizing settings to “turn on” the ability to cookie technology. Vendors should allow cookies. If this happens, the Organizations made up of online be updating their cookie pool efficacy of online advertising and advertising companies, such as the at regular intervals to ensure the search for digital advertising Network Advertising Initiative and consumers are reflecting desired relevancy will be at risk. Digital Advertising Alliance, have browsing habits and are still in- developed self-regulatory principles The majority of consumer objections market for relevant products. Each supported by the FTC. Of the seven to cookie-based targeting are vendor’s data collection processes main principles, two have the most rooted in the issue of privacy. It is should be scrutinized to ensure visible effects on the consumer—

76 • Vol. V • ksmmedia.com Attitudes to Companies’ Tracking of Individuals’ Online Activities (% share of American adults, indicating what circumstances companies should be able to track individuals browsing the web or using online services. Jan., 2013)

4%

8% Companies should never be allowed to track an individual’s online activities

Companies should be allowed only after an 28% individual specifically gives the company permission to do so

Companies should be allowed only if the individual gets something in return

Companies have the right to do this whenever an indivudual goes online 60%

Source: Ipsos and marketingcharts.com transparency and consumer control. companies kept tracking software process of developing standards “Enhanced28+ notices” required by in place even after users opted60+84 out. for “Do Not Track” headers. the Transparency Principle offer consumers the ability to exercise All browsers currently have “Do In light of the current issues with choice regarding the collection and Not Track” headers that allow the self-regulatory practices and use of data for Online Behavioral consumers to permanently opt the lack of widely-accepted industry Advertising (OBA). Links to out of OBA. However, clicking tracking standards, various consumer notices are provided on the opt-out on the header simply parties have argued self-regulatory sites collecting data and icons are placed on online advertisements Mozilla’s Firefox team announced alerting consumers that these ads are using behavioral data. Under that in June 2013, the Firefox browser the Consumer Control Principle, will by default block tracking cookies clicking on the link allows consumers the option to opt-out of such as those set by ad networks. online tracking for OBA purposes.

Although these self-regulatory sends that consumer’s request programs have been ineffective principles are in place, some to multiple online advertising and somewhat misleading for question whether online advertising companies, who are then left to consumers. In February 2013, the companies are choosing to decide how to interpret the request. Do Not Track Online Act of 2013 implement the practices. A 2011 This has led the World Wide Web was re-introduced, with its backers’ study by Stanford University’s Consortium, a group of computer primary argument being that the Center for Internet and Society scientists, industry representatives ad industry doesn’t honor browser- showed that half of the 64 and privacy advocates to begin the based do-not track headers. Instead participating online advertising of automatically shutting off

State of Media • 77 tracking once the consumer clicks the option in their browser, the Consumers have not been browser only sends the request to educated on how cookie the online advertising companies. targeting really works, and It’s still up to the online advertising companies to ultimately turn off lack of understanding has bred the tracking, which doesn’t always happen. As a result, browsers suspicion among lawmakers no longer want to rely on online advertising companies to turn off and consumer advocacy groups. the tracking. Mozilla’s Firefox team announced that in June 2013, the is important for consumers to agencies and brands should be Firefox browser will by default block understand that tracking data is aware of in the near-term. tracking cookies such as those set by made up of anonymous identifiers The usage of registration data ad networks. Firefox currently holds and any personal information has (information provided at time of approximately 20 percent of the been stripped out. Sites collecting registration on a particular website), desktop browser market and other key personal data are required to contextual targeting (serving an ad browsers will certainly follow suit. disclose the exact purpose and intent for collecting this data. within relevant content) and first- party data (serving ads post-visit to The Implications of Do- What’s Next for Cookies? those who visited your site) are all Not-Track Enforcement recommended additions to a well- Should the do not track online bill Cookie-based targeting is how rounded campaign. Other targeting and widespread browser cookie- many online advertising companies options, like IP targeting, are already blocking go into effect, there would make money and boost technology supplementing the use of cookies. likely be strong implications for platforms, product benefits and Some IP targeting companies online advertising, the industry as service differentiators in the are also able to pair offline sales a whole, and the overall Internet marketplace. We have yet to see data with online advertising to experience for the consumer. how the industry and potential geographically pinpoint IP addresses government involvement will play in areas with a higher likelihood Both the Interactive Advertising out regarding privacy and protection for purchase. Because IP targeting Bureau (IAB) and online advertising of consumers’ online activity, but uses no Personally Identifiable agencies are strongly opposed we’re not off to an auspicious Information (PII) at any point to Mozilla’s proposal for cookie start. In spite of attempts to play in during ad tracking, it is less blocking. They claim users will be by standard rules, the online ad threatening to the general public exposed to a “giant spam machine” industry is not aligned with self- and consumer advocacy groups. instead of a more controlled online regulation. Additionally, consumers experience currently available have not been educated on how If eliminated, cookie-based targeting with cookie targeting. Frequency cookie targeting really works, and will most likely be replaced with capping and analytics tracking lack of understanding has bred more accurate and less threatening will be impossible to maintain suspicion among lawmakers and technologies, but the ad industry in the manner that advertisers consumer advocacy groups. has a ways to go before targeting is have become accustomed to and perfected. Expect browsers to make websites receiving their primary In the meantime, arguments against attempts to cut off the cookie flow revenue flow from advertising will the efficacy of cookie-targeting that advertisers have been utilizing be forced to institute paywalls in are becoming stronger, and the to this point. Vendors with advanced, order to maintain their content. In industry is struggling to find non-cookie based targeting addition, a move toward default viable alternatives. While there technologies will rush to fill the cookie blocking and tracking are no current technologies that gap in the landscape but confusion prevention automatically removes can completely replace cookies, will reign for those unprepared to choice for the end consumer. It there are other targeting options adapt to the changing marketplace.

78 • Vol. V • ksmmedia.com Mobile Market Share: Who’s Gaining Ground? Are Tablets Truly “Mobile”? Targeting the New Mobile Consumer Mobile Nation

Mobile Marketing Continues its Aggressive Growth.

State of Media • 79 The Mobile Landscape Mobile Market Share: Who’s Gaining Ground?

Smartphones At the end of 2012 many than put a phone in every session as opposed to 30 believed that Microsoft’s U.S. consumer’s hand. minutes on tablets and 39 Advertisers have eagerly Windows phone was poised In addition, Android’s minutes on PCs. However, anticipated the mass to wipe RIM off the map. open operating system their role in consumers’ adoption of smartphones Though it’s still in a distant places it in a far better path to purchase is crucial for several years. In 2012, third place in the battle space for growth and and will undoubtedly these desires were met for share, all signs would innovation by third-party prompt an ad segment when wireless subscribers seem to indicate that the owning smartphones Windows operating system surpassed the 50 percent Percent Share of Smartphone Sales has replaced RIM. That mark for the first time. It by Operating System said, the Windows OS is was a watershed moment still fairly complex and as that not only made 3 mo. ending April ‘12 3 mo. ending April ‘13 a result devices that use it sophisticated mobile US Market 100% 100% are being priced in the mid- advertising a reality, but iOS 39.1 41.4 to high-end range. Though also allowed for brands to Android 50.3 51.7 predictions at launch-time fill the out-of-home digital RIM 5.3 0.7 has the Windows phone advertising gap. Now, poised to grab market Windows 3.8 5.6 smartphone ownership share quickly, the software Symbian 0.6 0.3 has grown to 57 percent of giant is late to the party Other 1.0 0.3 wireless subscribers (about and has a long road ahead Source: Kantar Worldshare U.S. Smartphone Panel, April 2013 125 million customers) and to compete with the iOS is expected to surpass 60 and Android platforms. programmers versus explosion over the next percent by the end of 2013. Apple’s closed system that two years. These factors Although Google’s mobile Mass adoption and more requires internal approval indicate that cross-device operating system gained provider options have for app development. campaigns can greatly 1.4 percentage points prompted some shake-ups benefit from search- year-over-year, both Apple Aside from individual in the handheld market. centric mobile creative and Microsoft have seen market share strategies, Google’s Android and since many consumers higher gains: iOS was up a quick look at overall Apple’s iOS now dominate are utilizing their 2.3 percentage points and smartphone usage the U.S. smartphone smartphones to quickly Windows Phone grew an provides an interesting landscape and boast over a access search information additional 1.8 percentage blueprint for how 90 percent share. Research on the go. For more usage points. In spite of this, it advertisers are making in Motion’s Blackberry, insights, see this section’s is widely understood that the most of these devices. once a longtime “Mobile Consumer Apple’s intention is not smartphone leader, has all Engagement” article. to own U.S. market share Smartphone usage time but disappeared from the in the future. Instead, its clocks in fairly low when Tablets overall market share. Major highly profitable niche compared with other web- technology missteps have is to build beautiful, enabled devices. The public Since 2010, tablet adoption basically destroyed RIM’s innovative products rather uses smartphones an levels have surpassed chance for a comeback. average of 17 minutes per all expectations. At the

80 • Vol. V • ksmmedia.com April 2013 Update - Tablet Usage Share

90% 81.3 80%

70%

60%

50%

40%

30%

20% 7.4 4.7 1.6 10% 0.9 0.9 0.6 0.6 0.5 0.4 0.4 0.4 0.2 0.1 Share of US & Canadian Web Tablet Traffic

All ipads Acer Iconia HP Touchpad Google Nexus Toshiba Thrive Motorola Xoom 81+8+5+2+1+1+1+1+1+1+1+1+1+1+Samsung Galaxy Asus Transformer Microsoft Surface Amazon Kindle Fire Blackberry Playbook Other Android TabletsBarnes & Noble Nook Unidentifiable Android Source: Chitika

iPad’s launch, it was at varying price points • College graduates highest levels of ownership. not initially understood are expected to expand (49 percent) This suggests that adoption how tablets would fit ownership demographics within lower income, into the media device beyond the older, affluent • Parents with young lower educated target landscape or how many segment that currently children living at segments has a ways to go people would actually owns tablet devices. home (50 percent) and these consumers still purchase these expensive, However, studies show Because these devices need to be convinced of “ancillary” devices. that even with the are used primarily for tablets’ value proposition. However, as consumers recent emergence of entertainment and do have experimented with competitively-priced In terms of share, Apple not perform necessary owns the tablet market tablets and incorporated Android and Kindle day-to-day functions in them into their daily usage options, tablets are still in the U.S. and it will the way smartphones take more than a year habits, tablets have found primarily relegated to do, it is assumed that a primarily entertainment- older consumers with to make a dramatic price point will remain a dent in its leadership focused niche. higher incomes and major factor in adoption higher education levels. position. However, it’s As of June 2013, the levels. Though growth is important to note that Pew Research Center Four target segments are steady, and could even be Apple’s worldwide share reported that 34 percent of most attracted to tablets: considered explosive when dropped from 58.1 percent Americans own a tablet of compared to historical in the first quarter of some kind (iPad, Samsung • Households making device adoption, Pew found 2012 to 39.6 percent Galaxy Tab, Google Nexus, $75,000+ per year that the greatest tablet in the first quarter of or Kindle Fire). Higher (56 percent) ownership percentage 2013. This marks the interest in ownership point increases this year first time Apple’s global • Adults 35-44 were actually within the and the increasingly (49 percent) share has dropped below broad selection of devices demographic segments 50 percent and may be that already showed the foretelling of future Android tablet growth.

State of Media • 81 Mobile Consumer Engagement

The mobile industry has grown favorite activities on the device to mobile devices that are being at a staggering rate over the and fueled the delineation between used in homes. Apple devices are past three years. Its growth is tablets and smartphones. As responsible for more than one-third attributed to both the mass consumers continue adapting to new of all streaming audio and video adoption of smartphones and technology, they are increasingly on North American fixed access the rapid expansion of tablet seeing mobile devices as media networks, and the device devouring users. In 2012, 121.4 million distribution hubs rather than simply the most real-time entertainment people used smartphones in the instruments for communication. traffic is the iPad at more than U.S. Now that number has already In fact, audits of upstream and 10 percent of total bytes. In light grown to 140 million and is downstream internet traffic show of this data, it is essential that projected to continue expanding. unprecedented mobile device access advertisers not only understand levels far beyond those of voice the varying impact of exposure While tablet usage permeated or text communications. Today, on tablets versus smartphones, only about 10 percent of the U.S. but also know what they can consumer market in 2012, it has expect from user interactions. tripled in 2013 to 34 percent (69.5 Tablet usage million consumers). During the Local Search tablet revolution’s onset, the ad industry hastily assigned tablets has tripled The mobile search category is to the “mobile” category due to where tablets and smartphones their portable size and internet- in 2013 to show the most similar usage connected mobility. Even as the 34 percent activity. In theory, smartphones are industry wondered if widespread devoted to task-related activities tablet adoption was possible, it (69.5 million such as sending text messages or became almost immediately clear reading and responding to emails. that consumers had found a niche consumers). Outside the home, smartphones for their tablets that was entirely also effectively allow consumers separate from smartphones. Does to accomplish quick actions like smartphones and tablets account for price checking or finding a store this make the initial addition of 20 percent of the traffic on North tablets to the mobile category a location. Tablets on the other American fixed access networks: a hand, are considered facilitators misnomer, or have they actually significant gain from the 9 percent earned a place in this landscape? of more leisure-related shopping reported in the first half of 2012. and entertainment activities inside Certainly Apple played a large part What’s more, these devices are the home. However, regardless in envisioning uses for its iPad— not being used exclusively while of location, search actions the first tablet on the market in consumers are on the go. More across tablets and smartphones 2010. Ultimately though, it was the than one-quarter of total streaming are actually quite similar. consumer who determined their audio and video bytes are delivered

82 • Vol. V • ksmmedia.com used after consumers percent of smartphone Types of Content Streamed by US have gathered background users read reviews, 71 Mobile & Tablet Video Streamers information and are percent compare prices and % of respondents (Jan 2013) closer to the bottom of 57 percent scan QR codes. the purchase funnel. Movies The mobile shopping 34,9% Shopping category is clearly 28.1% divided into in-store User generated content (e.g., YouTube) It is estimated that in experiences dominated 24.3% 2013, U.S. consumers 33.8% by smartphones and will spend $24 billion at-home online shopping TV Shows shopping on their tablets 23.4% facilitated by tablets. This compared to $13.44 billion 14.9% clear delineation is backed News on their smartphones. by Adobe’s latest digital 10.1% The larger screen size index showing that the 11.2% of tablets makes them proportion of web traffic Music Videos ideal for expensive and coming from tablets has 3.7% high consideration items. surpassed smartphones 7.8% Additionally, consumer for the first time ever. Personal (e.g., video of family vacation) comfort with clicking 2.1% Consumers enjoy the and a high likelihood 2.5% larger screen and easier for tablet sessions to be Web Shows (e.g., Funny or Die) functionality of tablets, 1.4% conducted while at home, and since 74 percent of 1.7% mean that shoppers visit their time spent on tablets 70 percent more page Tablet Mobile Phone is actually in the home, sites on tablets than on Note: numbers may not add up to 100% due to rounding. they also have access to Source: Rovi Corporation, “Consumer Mobile Streaming Survey,” Feb 2013 smartphones. As a result, quicker and more reliable Adobe Systems estimates home internet connections. By the end of 2012, Recently, huge locally- tablet conversion rates at comScore found that focused mobile search 2.2 percent versus only 0.7 Applications nearly 86 million volume has also raised percent on smartphones. people had searched for questions about conversion. Mobile analytics vendor information on local eMarketer found that 77 More smartphones are Flurry reports that businesses via tablets and percent of people who used in-store than tablets mobile users now spend smartphones. The findings conducted a local business to enhance shopping an average of two hours indicated more tablet and search on a mobile phone experiences. Only 36 and 30 minutes engaged mobile phone consumers or tablet went on to make percent of tablet owners with their smartphone look for ready access to an in-store, online, or say they’ve accessed the and tablet devices. Of this business ratings, reviews, over-the-phone purchase internet on their device time, approximately 80 promos and online with that business. When while shopping in a brick- percent is spent within discounts on local search compared with 59 percent and-mortar business. mobile applications sites when compared with conversion for the same Additionally, searching for and only 20 percent is traditional PCs. Because searches on a PC, the and redeeming coupons spent on the mobile web. of this, advertisers power of mobile is clear. are currently one of the The most popular apps must see the potential This contrast also brings most popular uses of are related to gaming, of “quick searchers” and up questions about the smartphones: 41 percent of monopolizing 67 percent add readily-available search path. Studies show mobile shoppers say they of time spent on tablets info directly to search that the majority of PC use coupons at grocery and 39 percent of time ads for more convenient, searches tend to happen stores, 41 percent at spent on smartphones. one-click access. at the beginning of the department stores and 39 Not surprisingly, social research phase while percent at clothing stores. networking apps are tablets and phones are At electronics stores, 73 now the second most

State of Media • 83 popular destination for In line with consumption each day mean that app in public and outside all mobile users, and patterns seen in other sales are healthy and here of the home prevents Facebook dominates time categories, users interact to stay in the long term. parity of use across both spent for all users. Since with more apps on tablets and phones. many Facebook users smartphones than on Video access entertainment in tablets, but they spend Investigating current In the video space, there Netflix streaming levels the form of video and more time with each app are prominent differences web links through the on tablets. As mobile on smartphones is an between smartphone excellent gauge for the Facebook portal, the apps became increasingly and tablet usage. Based Facebook mobile app popular, there was concern type of video enjoyed “on on a survey conducted the go.” Netflix use on controls even more tablet that their dominance by the Rovi Corporation, and smartphone time would not withstand cellular phones currently respondents agreed that accounts for only 4 percent than it might without the test of time and the they used their mobile consumers’ enthusiasm for marketplace would reach a of total downstream devices to watch movies internet traffic, as opposed entertainment sharing. saturation point. Constant and user generated content innovation and creativity to Netflix’s traditional In terms of total app usage, like YouTube videos or TV streaming which totals will prove this ridiculous shows. However, content time spent with apps on assumption incorrect. 33 percent of all North the iOS platform (iPhones varied widely across American internet traffic. Flurry’s analyses have devices. Tablet users prefer and iPads) exceeds time found that consumers used Consumers still prefer spent with apps on the to watch more long form short-form video outside just under eight apps per content such as feature Android platform. iOS day in 2012 as opposed of the home and enjoy users are far more active length movies or TV shows, streaming raw HTTP video to just over seven on while smart phone users in the app world due average in 2010. Steady and content on Facebook to several factors. The choose to watch more user- on their small smartphone growth, constant churn generated content, music single device production within the app market, screens. On the other requirements at Apple videos and news content. hand, comScore found and the consumer habit Here again, screen size and have given their devices of using different apps that tablet users were an advantage (Android the use of smartphones almost three times more devices span many manufacturers, making apps difficult to build Time Spent on iOS & Android Connected Devices for the entire platform). Opera Mini, 2% Android Other, 2% As the first smartphone Native, 4% device designed for Browser entertainment, leisure 20% Safari, 12% and business use, the iOS Games, 32% platform also enjoyed lead time in the app App space prior to Android’s Other, 6% 80% development. In addition, Apple consumers most Productivity, 2% News, 2% often purchased their

devices specifically for Social Networking, 6% application capabilities, Facebook, 18% rather than receiving them Utility, 8%

as a free incentive with Entertainment,8%

a new telco package, as App Browser was the initial case with Source: Flurry Analytics, comScore, NetMarketShare many Android devices.

84 • Vol. V • ksmmedia.com likely to watch video on entertainment hub. ownership and consumer purposes in-home their device compared to It is more likely that adoption increases. and while traveling. smartphone users. Tablet smartphones will continue users were also more likely as the support device for In the meantime, mobile While smaller screen sizes to watch videos habitually, communication and quick devices as a whole (tablets and lighter tablets are in with almost 19 percent research. At the same time, and smartphones) play an development across all of tablet users watching tablets will continue to act increasingly significant manufacturers in order video at least one time as a viable in-home third- role both in-home and to compete with the iPad per week and 9.5 percent screen and are poised to out-of-home. Smartphones mini, it remains to be seen watching video nearly daily. overtake the desktop in are always within reach whether more of these the near future. Currently, of US consumers (75 smaller devices will be Habitual long-form 56 percent of online percent of users report used outside the home. viewing is not currently videos are started on a bringing them into the Due to their primarily prevalent on smartphones, smartphone, while 48 bathroom!), and their at-home functions, tablets nor will it be in the near percent are carried over utilitarian communication cannot be considered future. Screen size and to a PC and 8 percent functions make them vital “mobile” in nature, but environment play too are continued on a for everyday users. At the consumers have created a strong a role in video tablet. It is expected same time, it is expected hybrid niche for them that consumption to allow that the continuation on that tablets will retain is definitely here to stay. for a massive shift away tablets will increase as their hold as a third- from the living room screen for entertainment

State of Media • 85 62% of smartphone users Over 70 million immediately grab their Americans own phones after waking up a tablet device

Over the weekend, 43% of US adults say that they’d be willing to give up beer for a month if it smartphone users meant they could keep accessing the internet on their smartphones; 36% said check Facebook they’d be willing to give up chocolate more than they text

95% of smartphone users looked up local information Mobile 48% use their smartphones at the gym More than half of all Americans carry a smartphone (57%) fast facts 1 in 3 people of adults have mobile phone would rather give 91% within arm’s reach 24/7 up television than 50% of smartphone be deprived of their users check Facebook smartphones in movie theaters

Mobile share of ad spending is predicted to grow from 1.5% in 2013 to over 5.5% in 2016 Mobile video ad spend Mobile search isn’t going Mobile spend on banners is predicted to reach anywhere; it already stands at and rich media is expected $293 Million this year more than $2.1 billion this year to reach $1.5 billion in 2013

Sources: IDC Research and Facebook’s “Always Connected” report and HubSpot’s “50 Amazing Facts About Mobile Marketing” (latter compiled by Jeanne Hopkins, CMO of SmartBear Software and Jamie Turner, Founder and Chief Content Officer at The 60 Second Marketer).

86 • Vol. V • ksmmedia.com 42% of tablet users report 9 out of 10 using their device while mobile searches watching TV on a daily basis lead to action; 70% of smartphone users frequently over half lead visit Facebook—more than half to purchase of them check it every day 81% of smartphone owners 46% of smartphones have used their device to users check Facebook conduct product research while shopping or and 50% have used it running errands to make a purchase 95% of smartphone users looked up local information 48% use their smartphones at the gym

Time spent on mobile apps is largely Mobile dominated by games and social networking (49% and 30% respectively)

90% of text messages are fast facts read within three minutes 78% of smartphone users check email on their devices

37% of those checking Mobile coupons receive 10 times higher in on a service like redemption rates than print coupons Foursquare did so from an Android, and There are as many cell phones 34% from an iPhone in the world as there are PCs

Within the first 15 Smartphone users on average visit minutes of waking up, Facebook 13.8 times throughout 79% of smartphone users the day, spending two minutes and look at their phones 22 seconds on it during each visit

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88 • Vol. V • ksmmedia.com