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Haas & Deloitte Partnership Advertising in a Changing Media Advertising in a changing media landscape: The role of consumers as players in the game of advertising Patricio Simpson March 18, 2010 Copyright © 2010 Deloitte Development LLC. All rights reserved. You may view, copy, print, and distribute this document only for educational purposes and informational use (and not for commercial purposes); provided that any copy of this document or portion thereof must include this copyright notice in its entirety. Today‟s topics • Changing customer needs are driving interactivity – Trends toward increased customer empowerment – Demands for ease of use, personalization and choice • Traditional media is finally catching on – Repositioning and growing new media propositions – Growth of alternative approaches and mediums • New world of media and advertising – New business models – Class Discussion Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 1 Customers are taking control Power shift: Consumers are seeing more and remembering less – and they have taken control of when, where, and how they interact, via Web channels, interactive media and on-demand devices • Ninety-four percent of shoppers conduct research online before purchasing a product1 • More than half of consumers’ buying decisions are more influenced by What They Want consumer reviews and ratings than any other type of online advertising2 • A Web search for “Product Review” generates roughly 500 million pages of results • Almost all consumers want to block unwanted ads, online and offline3 • Sixty-six million U.S. digital cable subscribers will have video on demand by the end of 20154 • Forty-two percent access the internet via their phone, an increase of 36% in the When They Want It past year5 • The mobile web isn’t just about phones - the Apple iPad is predicted to exceed all-time sales of the popular Amazon Kindle during its first 3 months on the market6 1 Compete Online Shopper Intelligence study – 2010 2 “State of the Media Democracy” 4th Edition. Deloitte (2010) 3 Forrester study with Intelliseek (May 2004). 4 Magna Global (January 2010) 5 “State of the Media Democracy” 4th Edition. Deloitte (January 2010) 6 FBR Capital (March 2010) Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 2 Talk about vying for attention! Westin St Francis – San Francisco’s Union Square becomes Zen garden with 25 tons of rocks Starbucks – coffee cup hitches a cab ride and fools Boston motorists Nike – ball squashes BMW!! Thailand Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 3 Consumers value personalization and convenience and are driving new commercial opportunities and more content choices Ease of Access Personalisation Proliferation of Supply Supply of content proliferates, Ubiquitous IP networks will allow The personalisation dimension consumer choice and commercial for hub centric content delivery, adds complexity to the traditional opportunities expand, and the and content access cross- content versus distribution powerful customer sits at the platform competitive struggle centre of all this Fragmentation Three dimensions of More choice, more opportunities to of the value chain competition in exploit content on more platforms, and the digital age ultimately more consumer power Platform Cross specific platform Hub centric Content Content delivery Retail delivery delivery Providers Providers TV Terminal Subscription Traditional Device Services Radio Struggle Suppliers Internet Service Providers Aggregation (Infrastructure) Middleware & Wireless Networking Solution Aggregation Aggregation Providers 1996 2010 2014 Aggregators Platform Ubiquitous IP owners as Evolution networks Distribution Transaction “gate– over time Personalisation Application keepers” Settlement Processors Providers Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 4 …and shifts towards enriched and interactive consumer experiences Enriched consumer experience and greater interactivity Media Media Media companies companies companies Push Push + Provide Push + + Pull Pull Customers Customers Customers 1996 2005 2014 Low interactivity High interactivity Evolution over time Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 5 These shifts are driving towards a media environment where the consumer is a powerful decision-maker Evolution of the market – conceptual journey Ubiquitous IP network „VANILLA‟ Aggregation Consumer Power Sources of competitive advantage: Sources of competitive advantage: • Trusted brand • Access to general and premium • Access to exclusive premium content providers content • Archive/searching functionality • Archive/searching functionality • Responsiveness to changing Ability to partner effectively consumer demand and consumer • Knowledge of target consumer insight needs Time Platform Power Service Provision Sources of competitive advantage: Sources of competitive advantage: • Ownership/access to platform • Consumer relationship management • Access to exclusive premium (fulfilment, assurance and billing) content • Ownership/access to platform • Responsiveness to changing consumer demand • Ability to attract communities Platform owners as “gate-keepers” Time Time Low interactivity High interactivity Source: Deloitte analysis Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 6 Consumers also increasingly create and „broadcast‟ content… • People (especially Millennials and Xers) are increasingly creating their own entertainment • Not only are they creating entertainment for themselves, but nearly one-in-three consider themselves to be “broadcasters” of their own media – Nearly half of Millennials feel this way too Summary of Agree Strongly/Somewhat 1st Edition 2 nd Edition Millennials Xers Boomers Matures % % % % % % I am increasingly making my own entertainment through editing my own 40 54 69 62 45 30 photos, videos and/or music. With all the technology available to me today, I actually consider myself to be -- 32 46 38 23 10 a "broadcaster" of my own media. Generational Comparison by Survey Edition (Summary of Agree Strongly/Somewhat) Millennials Millennials Xers Xers Boomers Boomers 1st Edition 2nd Edition 1st Edition 2nd Edition 1st Edition 2nd Edition % % % % % % I am increasingly making my own entertainment through editing my own 56 69 46 62 31 45 photos, videos and/or music. Q. Please indicate how much you agree or disagree with the following statements Source : State of the Media Democracy, 2nd Edition. Deloitte Development LLP. 2008 Copyright © 2010 Deloitte Development LLC. All rights reserved. 7 And „consume‟ content created by other users… • There continues to be significant DEMAND for non-traditional media content – and it is growing • Content creation also continues to grow Internet Activities (Summary of Frequently/Occasionally) 1st Edition 2 nd Edition Millennials Xers Boomers Matures % % % % % % Watching/listening to content created by others (Web sites, photos, videos, music and blogs) 52 69 86 73 64 40 Creating personal content for others to see (web sites, photos, videos, music and blogs) 34 45 70 48 33 17 Q. How often would you say you are doing the following online activities in a typical 7-day week? Source : State of the Media Democracy, 2nd Edition. Deloitte Development LLP. 2008 Copyright © 2010 Deloitte Development LLC. All rights reserved. 8 Class discussion What are some examples of business models built on customer input and interactivity? Wikimedia Foundation Digg this del.icio.us Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 9 Today‟s topics • Changing customer needs are driving interactivity – Trends toward increased customer empowerment – Demands for ease of use, personalization and choice • Traditional media is finally catching on – Repositioning and growing new media propositions – Growth of alternative approaches and mediums • New world of media and advertising – New business models – Class Discussion Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 10 Traditional media companies, internet, and technology players are positioning/repositioning Ubiquitous IP network Viewer Power Traditional Linear Media Platform owners as “gate-keepers” Low interactivity High interactivity Source: Deloitte analysis Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 11 „Old‟ media is catching on… example of traditional content being aggressively exploited across channels Official/ Unofficial spin off What’s Next? Video DVD game E-reader / TV iPad editions $700 million + B.O. TV Movies Official Website Unofficial Related Internet Websites Travel and Tourism User Generated Content Blogs, Groups, Discussion Books Other books Audio Audio books 4.5 million copies in UK Sound track The original IP rarely receives all the revenue his/her idea generates today Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 12 Major media entities are responding by establishing new business units and growing/acquiring new media propositions Motivations: Challenges: • Exploit existing IP • Org structure • Extend brand/ attract • Incentives eyeballs/ customers • IT systems (CRM, • Generate additional IPRM, Billing etc.) revenue • Processes • Multiple platform ad • Content and bundling repurposing • Be seen to be doing • Cultural – B2B to something! B2C Copyright © 2010 Deloitte Consulting LLP. All rights reserved. 13 Internet will soon become the second most important advertising medium • All consumers rate TV advertising as the most impactful • Overall, online advertising is now in a virtual tie for #2 with magazines – Leading
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