October 3, 2008 1 Hot Trends:

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October 3, 2008 1 Hot Trends: Social Networks, Mobile Marketing and Online Video October 3, 2008 Debra Aho Williamson Senior Analyst eMarketer Inc.

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Transcript of October 3, 2008 1 Hot Trends:

Page 1: October 3, 2008 1 Hot Trends:

October 3, 2008 1

Hot Trends:

Social Networks, Mobile Marketingand Online Video

October 3, 2008

Debra Aho Williamson

Senior Analyst

eMarketer Inc.

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What’s On Tap Today

Internet Ad Spending TrendsSocial NetworkingMobile MarketingOnline Video

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Internet Ad SpendingInternet Ad Spending

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Internet: Approaching 10% of Worldwide Ad Spending

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Source: eMarketer, August 2008

$25B in US Online Spending in ‘08

US Internet Ad Spending (billions)

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Faltering Economy is Impacting US Ad Budgets

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Why Will Online Advertising Thrive in a Difficult Economy?

Online ads are more measurable than other media, making them increasingly appealing to advertisers

The Internet audience is huge, so the simple process of advertising following eyeballs will lift spending

Internet ad prices are rising, thanks to targeting and other techniques, which can push up overall spending

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Advertisers are Committed to Increasing Online Spending

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Social Networks, Mobile and Online Video: THE GOOD

High penetrationEnviable user demographicsElusive “buzz” factorEngaged audience

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Social Networks, Mobile and Online Video: THE BAD

Few standardized ad formatsConsumers who are disengaged from

adsQuestionable ROIMeasurement challenges

"If a certain kind of spending

hasn't been in your [advertising]

budget for three straight years,

you'll likely cut it when things

get tougher.”--Russell Fradin, president, Adify

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And of Course, the Ugly

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Social NetworksSocial Networks

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Source: Universal McCann

Social Networks: Only One of Many Types of Social Media

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Is This Your Image of Social Networking?

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Social Network Growth Markets: Mideast, Europe and Latin America

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58% of Worldwide Internet Users Have Created a Profile

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US Usage Is Still Growing

Unique Visitors to MySpace and FacebookAugust 2007-August 2008 (thousands) 75.5

million (up 10% from ‘07)

41 million

(up 21% from ‘07)

Source: comScore Media Metrix

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But Is It a Fad That’s Losing Steam?US visits to social

network sites are down 17% year-

over-year vs. August 2007

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SN Ad Spending Growth Slows in 2009 and Beyond

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US Spending Still in Flux

Source: eMarketer, 2008

+55% +27%+15% +13%

+11%

12/07: $1.6B

12/07: $2.7B

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News Corp. Acknowledges This

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“Social networking has gotten a disproportionately lower share of digital advertising budgets. If you

compare the amount of traffic and the amount of users we have with the portals, most of those guys have been putting 50%, 60% of their budgets in portals, and 10%

of their budgets against social network sites.”-- COO Peter Chernin at Merrill Lynch presentation, Sept. 2008

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Social Network Ad Experiments Continue

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MySpace home page takeovers• Reach 40mm+ people/day• Popular with movie studios

• “Dark Knight”: Trailer streamed

70mm times

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What About HyperTargeting?

Banner-ad targeting based on information people provide in their profiles

Updated in real-time Half of all ad insertions now include some form

of HyperTargeting Major brands: General Motors, Coke, Red

Bull, Target Double eCPMs vs. untargeted ads

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- Comment directly on

an ad

- Become a fan of a

brand without leaving

the page you’re on

- Send a virtual gift to

a friend

Facebook Continues to Experiment With Viral Marketing

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New Ad Features “Facebook has always tried to push

the envelope. And at times that means stretching people and getting them to be comfortable with things they aren’t

yet comfortable with. A lot of this is just social norms catching up with what

technology is capable of.” Mark Zuckerberg, New York Times,

September 2008

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On the Other Hand, Too Much Targeting is Never a Good Thing

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Mobile MarketingMobile Marketing

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2008: The First Year Ad Spending Tracks Ahead of Subscribers

Worldwide Mobile Ad Spending and Subscribers 2006-2012 (millions)

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Mobile Usage Facts

Over 85% of people 18-49 have a mobile phone (Pew Internet & American Life Project, August 2008)

In two years, the average number of text messages we send every month has grown nearly 500% (Nielsen Mobile, September 2008)

39% of teens believe the mobile is the only type of phone they will own (CTIA, Harris Interactive, September 2008)

68% of consumers say the mobile Internet is an important factor in their next mobile phone purchase (AKQA/dotMobi, June 2008)

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Why Mobile Advertising Trails Mobile Subscribership

“Lack of awareness of the audience size, complexity of the mobile marketing ecosystem and a lack of trust

among advertisers in the mobile advertising investment.”

Privacy Privacy IntrusivenessIntrusiveness

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Do Consumers Accept Mobile Phone Advertising?

Source: Nielsen Co., September 2008

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Where is the Money?

Mobile Search Mobile Display Ads

Text Messaging

Or Here?

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Or Here?

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Google AndroidGoogle Android

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Messaging Dominates Ad Spending

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US: 36% of 2008 Mobile Spending

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BMW’s Snow Tire Campaign in Germany

Personalized MMS message to customers, showing image of their car with a recommended tire and price

Option to call dealer directly for appointment

30% bought tires from dealer during promotion

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Mobile Marketing: A Two-Way Street

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Take a photo, send

it in a multimedia

message

Receive a picture

of a customized

Nike shoe

Save as wallpaper, send to friends

Order personalized shoes directly

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The iPhone is Changing How Consumers Use the Internet

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iPhone App Store Stats (9/08)

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Mobile Phone Applications: New Advertising Medium

• 100 million apps downloaded in 60

days

• 700 games

• 62 countries

“The iPhone has changed users’

expectations of what is possible

in a mobile device and UI, and

the AppStore finally showed the

promise of mobile data applications.”--Kleiner Perkins VC firm

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Online VideoOnline Video

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The Digital Landscape Confounds Many in the Media Biz

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“We don’t know what’s gonna work. Predicting what the

media world is gonna look like in eight years is incredibly

daunting. I defy anybody to do that.”

-Jeff Zucker, president-CEO, NBC Universal, September 2008

“We don’t know what’s gonna work. Predicting what the

media world is gonna look like in eight years is incredibly

daunting. I defy anybody to do that.”

-Jeff Zucker, president-CEO, NBC Universal, September 2008

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Consumers Love Online Video

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Half of US Population Watches Online

Source: eMarketer, February 2008

US Online Video Users, 2006-2012 (% of population)

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71% of US Internet users watch online videos at least once a week

Source: Universal McCann, April 2008

% respondents,Mar. 2008

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Types of video content people watch monthly: short, short, short

Source: eMarketer, February 2008

Full TV shows =

27%

% total US video viewers, Feb. 2008

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Websites Love Video, Too

Average CPMs: $43 for video ads; $15 for display ads (Bain & Co. for the Interactive Advertising Bureau)

High sell-through rate: 90% for premium content creators (TV networks, etc.); 50% for content aggregators (YuMe and Collins Stewart LLC)

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Video Ads: 2.6% of Online Spend in 2009

Source: eMarketer, September 2008

1.5%2.0%

2.6%

3.4%

4.7%

6.8%

9.8%

US Online Video Ad Spending (millions and % of Internet total)

“Video is the growth format on the

Internet.” -- David Hallerman,

eMarketer

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But Video Won’t Challenge Search or Display -- Yet

US Online Ad Spending, by Format (billions)

2008 & 2013

Source: eMarketer, August 2008

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Factors supporting a (future) boom in online video spendingBroadband is reaching a “critical mass”

TV efficiency is declining yet still very expensive

Advertisers can replicate the sight, sound, motion – and emotion – of television, but with better measurability and targetability

There are vast opportunities for communication among consumers (aka, viral)

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But There Are Significant Hurdles

Can

consumer-

generated

video be

monetized?

What ad

formats

work

best?

Will

consumers

skip over

ads?

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Four flavors of video ads

1) Pre-roll (also, mid-roll or post-roll)

(the ad runs in-stream with video content)

2) Overlays (aka, bugs or tickers)

(the ad runs at bottom of video, not interrupting content)

3) Skins (aka, player skins)

4) (the ad runs surrounding video content window)

5) In-page banners

(the ad runs in a box, not connected to video content)

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In-Stream May Be Most Effective Ad Type

LiveRail*

• ~ 80% preroll completion rate

• 11.5% clickthrough rate

• 88% of all video ads

*provider of video ad technology

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YouTube Experiments with Overlays

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New:

Ad runs

post-roll (after clip) if

user doesn’t

click on overlay

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But Ads on User-Generated Video Trail Consumer Usage

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Source: The Diffusion Group, July 2008

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Zappos Gets Clicks for ItsVideo Ad Campaign

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Ad appeared on 50

sites targeted

to females

Video plays only after user clicks

on it

Simplicity: Ad served by same company that serves rest of Zappos’ ads

Result: 5% clickthrough rate (vs. just 0.3% for

banner ads)

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When It Comes to Video Ads, One Attitude Does Not Fit All

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67% Will See an Online Video Ad At Least 1x a Month in 2008

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The eMarketer View

Social networks are here to stay. Evolving ad models mean new opportunities to connect with consumers

Mobile: The iPhone and phones based on Google’s Android will be the new benchmarks for mobile content

Video: The time to start online video advertising is now; the audience has reached critical mass

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Thank you !

Debra Aho Williamson

Senior Analyst

eMarketer Inc.