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FACTS & FIGURESInteresting titbits to intrigue and enlighten

Intro• Identify a theme to review

• Highlight key statistics & interesting facts

• Today’s theme: digital

60%60% of US users who sign up to Twitter who fail to return the following month

43%43% increase in traffic to Twitter thanks to the

Oprah effect

15%15% of 25 000

registered blogs in SA are active

43%43% of women in US

(18-75) would give up magazines for blogs

33 of top 5 of top 5 blogs in SA

are rugby related

bloggingblogging

SA ranks 44thth in Africain terms of internet usage

4242ndnd globally

online marketingonline marketing

Increased by 38% to R419mR419m from 2008 to 2009

Accounts for only 1%1% of total R34.18 billion ad spend in SA

65%65% of the SA online

population uses Google

500% 500% increase in brand

awareness for advertisers using

in-game advertising

twittertwitter

internet usageinternet usage

in-gamein-game advertisingadvertising

internet internet penetrationpenetration

24.8%24.8% LSM A

9.4%9.4% total SA

The question is no longer whether digital marketing works but rather

“How can digital marketing work for me?”

TRENDS

Trends • Product Elasticity, how resilient are products to cost cutting

• Advergaming, brands need to invest in mobile gaming

• Freeeconomics, focus on your core business and give the rest away for free

• Location, Location, Location, put your brand on the map

• Lipstick effect, because they worth it

• Staff Still don’t understand, dare to know what you don’t know

• Rent don’t own, scared of commitment?

• Recession guilt, hold that thought

• Importance of research, know your stuff

Product Elasticity It’s a consumer mind game as you hide your cost cutting efforts.

The question is how long till the elastic snaps?

Product Elasticity

“Big companies are protecting profits with subtle repackaging, putting a little less into boxes of cereal, containers of ice

cream, rolls of paper towels and other.”

Michael Bush

Product Elasticity • Companies are cutting costs and are doing so at the expense of their

customers - it is interesting to consider how far these cuts will go before consumers react negatively

• As manufacturers cut costs, the question arises as to how this will affect demand for the product

Shrinking Packs

Trimmed by 2 ounces Boxes shrank from 19 ounces to 18

32 ounces is now 30

17 to 15 sticks10% smaller

AdvergamingBrands are finding success in unusual places

Advergaming?

"People will play with your brand for hours; you cannot get better exposure. Advergames are a natural and increasingly

accepted evolution from print ads, TV ads and banners.”

Eberhard Schoneburg, CEO/Chairman, Artificial Life

Profitable & Effective?• Parks Associates estimated advertising in the game industry to be

$370 million in 2006, growing to $2 billion by 2012

• Young adults spend an average of six hours a week gaming. The casual online gaming audience is more “mainstream,” skewing female and 30-60 years old

• More traditional marketers, like McDonald’s, Adidas, Nike, Ford, GM and even Procter & Gamble are taking advantage of in-game advertising. It is also important to note that the majority of gamers (82%) have no problem with in-game ads

Gaming Examples

Hancock – PS3 – Pain P&G - Danica's Secret Mercedes BenzSecond Life

Modern & classic advertising sponsored mobile games

FreeconomicsYou can make money by giving something away for free

Freeconomics

• Until recently "free" was really just the result of what economists would call a cross-subsidy: getting one thing free if you bought another, or getting a product free only if you paid for a service

• Last decade saw a rise in free products to induce purchase of the line extensions (Energizer and torches)

• Enter the digital revolution– Apps that support a key offering

Ryanair – Making Money In Other Areas

Examples

Citizen Metro Supported by advertising

Radiohead gave fans the chance to pay what they

think "In Rainbows" is worth

Chris Andersons FREE book distributed digitally

Location Location LocationPut your brand on the map

Location Based Advertising• Location based marketing represents one of the fastest growing

marketing and advertising opportunities available in the world today

• Digital maps and personal navigation devices have become important customer communication tools as the world becomes more mobile. It offers daily communication with in-vehicle captive audiences, cellular phones and internet maps

Use Digital Maps To Locate Businesses• It is vital that your consumers can find you easily, through the medium of

their choice

• What you should do as a minimum– GPS co-ordinates– written directions– downloadable map to print

• Southern African digital maps have over 150 000 Points of Interest already that fall into 250 categories

Brands That Are Doing It

Trend Is Set To Grow• By 2010, up to a million people could be using ‘local search’ techniques to

locate goods and services in South Africa, to plan their trips, or to facilitate social and recreational activities

• Local sales of personal navigation devices reflect the explosive growth in this field; ownership – including GPS enabled Smart Phones – is expected to grow three to four fold by the end of 2007 - from 100 000 units at the beginning of 2007, to more than 300 000 by the end of the year

Lipstick EffectIn times of recession consumers are looking for smaller rewards

Lipstick Effect

“The evidence shows that when budgets are squeezed, people simply substitute large extravagances for small luxuries”

Dhaval Joshi, analyst with RAB Capital

The History Of The Lipstick Effect• The lipstick effect generally occurs during recessions when people are

looking to save money, the first to go is luxury items. The strange phenomenon is that lipstick sales soar during these times

• It's a phrase coined by Leonard Lauder, Chairman of Estee Lauder, who saw a huge jump in lipstick sales after September 11th, 2001

• The index also climbed during WWII, past recessions (such as in 1990) and depressions

Staff Still Don’t UnderstandThe importance of internalizing the brand message

Staff Still Don’t Understand• Staff within companies are not fully trained (you may think they are) or

aware of their employers products and services

• The most important area to consider is the first point of contact for the customer

• The easiest way to teach staff about your products and services is by letting them use and experience it themselves

The Reception Test

5 out of 12 transferred

2 out of 7 got it right

What Does Your Company Do?• Cathay Pacific: We are an airline, we sell tickets and carry passengers.• Foodcorp: We are head office for Nola and other companies. That’s what we do.• General Motors: Cars… we sell cars, engineering.• Hewlett Packard: IT, we sell Hewlett Packard equipment.• L’Oreal: OK well I’m temping for the day, ill put you through to the other receptionist > put on hold for 2

minutes > ummmmummm > (put onto someone else > Haircolour, fragrances and cosmetics; we manufacture and sell it to the retail.

• Merck: We a pharmaceutical company and chemicals. Well we sell products, certain products for diabetes, cardiac failure and high blood pressure.

• Mastercard: It does like Mastercard, you saw the brand you choose like Visa or Mastercard to pay. You use it for money.

• Microsoft: We give the support on Microsoft products and licensing information.• Nestle: Food company. We do milk, instant milk, cream, cremor, Nescafe, Milo, coco, cereal. A number of

them and also dog food and cat food.• SABC: We are the SABC TV license customer service. The SA broadcasting company. (Got very cross) Where

do you come from? Don’t you know what SABC does? Are you South African? That is what SABC is all about.• Telkom: We a landline operator for SA. We have different services that we provide. It all depends on the

clients needs so its hard to say.• UIP: Distribution company of movies. Please can I put you through to someone. This is just the switchboard.

So What?• There needs to be an ongoing program to train staff

• 10 – 15% of the marketing budget should be dedicated to internal marketing

• Knowledge and understanding needs to be tested as consumer awareness

• Never underestimate the power of a free T-shirt

Recession GuiltAffluent consumers may have money, but are they spending it?

MasterCard Research: July 2009

Black Tulip

Discreet ChicPrimarily a reaction to ostentatious, is propelled by the current downturn and an accompanying need for less flaunting and more restraint. Last but not least, environmental concerns are leading segments of wealthy consumers to favor the discreet.

In short, DISCREET-CHIC represents a more refined, timeless, understated and cultured display of wealth.

SLS Hotel, designed to move beyond interior design and approach the status of art

Importance of ResearchMarket research is becoming EVEN MORE important

during the recession

Importance of Research

"With the economy clouding the future, why throw away your flashlight when it could shine on intriguing consumer insights,

hot technology trends and market opportunities”

Geoff Ramsey, CEO of eMarketer

The Importance of Research• Six out of ten researchers have seen their budgets decline (only 1 in 20 has

experienced an increase )

• Research activity in most sectors is expected to experience a net decline, most significantly in the automotive and media sectors

• 48% of research companies expect to spend less on face-to-face research

• Web-based data collection will continue to increase, although at a reduced rate compared to previous years

Online software to create and manage surveys easily

Some Ideas

• Break away from traditional research formats

• Use a dipstick approach to identify research formats to focus on e.g. VoxPops

• Use the Internet: online surveys

Rent, Don’t OwnRenting is becoming the more popular option

Rent, Don’t Own• Consumers want less risk when purchasing luxury items, and are even

willing to pay more

• The rent-to-own industry has a history few retailers would envy but recent sales most would covet, e.g. Aaron's, the second-largest retailer in the $6.3 billion industry, plans to open 200 stores in 2010 on the heels of an 18% increase in same-store sales last year

Rent, Don’t Own

Rent to own, electronic products

Rent jewellery

Rent handbags

Rent Art

BT Games: console rentals

The Consumer Continues To Evolve

Thanks!insightexchange@mccann.com