Consumer Behavior and Trends 2011

Media and Advertising Snapshot

Troy K. Centazzo

Print Advertisements in Newspapers and Magazines; Short and Long-Form Commercials and Sponsorships on Radio and Television; Billboards and Signs; Public Relations; Direct Mail and Catalogs; Tiny Classified Ads;

Network Marketing; Trade Shows and Conferences

The Ad Universe (Pre-Internet)

The Digital Ad / Marketing Universe (circa January 2011)

Enormous innovation: companies now have thousands of new tools to communicate

A result of robust, early stage sector investment

and capital efficient business models

Emerging Advertising /

Marketing Business Models

Data, Analytics, Optimization

Ad Networks (Currently Hundreds Exist)

Ad Exchanges

Ad Serving / Rich Media

Performance Advertising

Data Sources, Aggregators

Demand Side Platforms

Publisher Side Platforms

Mobile / Video Ads

Verification / Attribution

Media Buying Platforms

Consumers and “Traditional” Media – Drifting Apart?

Change in Average Time Spent Per Day with Media Types by US Adults

2009: -13.2%

2010: -9.1%

2009: -12.0%

2010: -9.1%

2009: -3.9%

2010: -2.0% 2009: +5.1%

2010: -1.1% Flat Over Last 5 Years

Source: eMarketer, Dec. 2010.

Includes Video

So What Are Those Consumers Spending Their Time Doing?

The Rapid Rise of Cell Phones (and now Tablets) in the US and Around the World

Sources: ITU World Telecommunications; Forrester Research, Inc.; Nielson; Forrester Research, Inc.

US = ͠͠100%

US = ͠͠45%

0%

10%

20%

30%

40%

50%

60%

Q4, 2008 Q4, 2009 Q4, 2010 Q4, 2011(E)

US Smartphone Penetration

Mobile Subscriptions per 100 Inhabitants (2000-10)

Projected Growth of Tablet Sales, US Adults

So What Are Consumers Spending Their Time Doing?

For the first time, Americans now spend as much time on the Internet

as they do watching TV (13 hours per week)*

Share of Time Spent on Internet (2010)

(on PCs and Laptops)

Social Networks / Blogs:

22.7%, up 43% from 2009

Games:

10.2%, up 10%

from 2009

Email:

8.3%, down

28% from 2009

* Note: A recent meta-study by eMarketer concluded that US adults spent 40% of their time with media watching TV and 24% on the

Internet. Sources: The Nielson Company; eMarketer (2010).

Up 121% Over Last 5 Years 45% Have a DVR

So What Are Those Consumers Spending Their Time Doing?

Time spent on mobile devices – increasingly smartphones and tablets –

is rising the fastest compared to other media

Sources: eMarketer (2010); Falaki, Hossein et al. 2010. Diversity in Smartphone Usage. MobiSys’10

21.9% 28.2% 40.0%

2009 2010 2011 (E)

Change in Time Spent Using Mobile Devices Over Prior Year

Share of Time Spent on Smartphones (US & UK)

Research Has Shown Much Diversity:

• 50% of time spent keeping in touch with

others (email, text, phone calls)

• 20% - media (music, videos, pictures)

and games)

• 12% browsing the internet

• 2% on “productive” activities

What the %$#* Just Happened?

Newspapers in

Distress (2008-10)

Double digit

revenue declines

projected in 2011

Freedom

Communications

(dozens of papers)

Bankruptcy, 2009

Philly Daily News; LA

Times, Chicago

Tribune

Bankruptcy, 2009

Rocky Mountain News Closed, 2009

Seattle Post-

Intelligencer;

Minneapolis Star

Tribune

Bankruptcy, 2009

Boston Globe Distressed sale

process, 2009

McLatchy (29 papers)

Severe cost cuts

Magazines in

Distress (2008-10)

Country Home,

Hallmark, Travel

& Leisure, Best

Life, Blender,

Vibe, Domino

Folded

613 magazines

folded in 2008;

383 in 2009; and

127 in Q1 – Q3,

2010

Radio in Distress

(2008-10)

Atlantic, Regent,

Air America

Bankruptcy, 2010

Citadel,

NextMedia

Bankruptcy, 2009

Tribune Bankruptcy, 2008

TV in Distress

(2008-10)

NBC Univ.; Gems

TV

Sale, 2010 ;

Bankruptcy

Equity Media;

Young;

Bankruptcy, 2009

Pappas; Tribune Bankruptcy, 2008

Misc. Media in

Distress (2008-10)

Blockbuster Bankruptcy, 9/10

Affiliated Media Bankruptcy, 1/10

American Media Bankruptcy, 11/10

Local Insight Media Bankruptcy, 11/10

SuperMedia Bankruptcy, 2009

Recent Carnage Across the Traditional Media Industry

Source: Media Finder, Growthink research.

Advertisers Have (Partially) Responded to These Rapid Changes

• 2010 brought a recovery to the advertising and public relations sectors, which is

expected to continue through 2011

• $300 billion in US and $500 billion worldwide (5% growth in 2011)

• 2/3 of PR agencies reported double digit growth in 2010

• Online increased to $25.8B, equaling spend on print for the first time

• Facebook ad spend equaled $1.86B ($1.2B in US and $.65 outside US)

52%

24%

23%

1%

US Ad Spend (2010)

Television

Online

Newpaper

Print

Sources: eMarketer (Dec, 2010);

About the Author

Troy is an Engagement Partner at GT Securities/Growthink, where he leads investment banking and consulting engagements for the firm’s clients. He focuses on convergence media. Troy brings to GT more than 20 years of experience advising corporations at all stages of development, from start-up firms to Fortune 500 companies.

Troy joins Growthink’s Los Angeles office after serving as the founding Principal of MBL, an advisory and investment firm that assisted clients in all areas of business, including developing their strategies and raising capital. Also a seasoned entrepreneur, he helped found, manage and invest in several start-up companies, primarily in the consumer products, technology and New Media sectors while at and before MBL. Troy additionally worked as an Associate in the Investment Banking and Merchant Banking Divisions at Donaldson, Lufkin & Jenrette (DLJ, now CS First Boston). His first job after college was serving as the founding Director of the RI Enterprise Zone Program. Education • JD, Law School; MBA, Darden School, University of Virginia (Winner, The Faculty Award; Raven Society) • BA, Brown University (Honors; Class Co-President)

Troy Centazzo Engagement Partner

Digital Media Expert

Contact:

Cell: (202) 369-2188

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