Outlook 2014: Data-Driven Marketing in an Omnichannel World

Outlook 2014: Data‐Driven Marketing in an i h l ldOmnichannel World

Bruce Biegel DMA Annual ConferenceSenior Managing Director Chicago, IL•October 15, 2013

About Winterberry Group

• Corporate Strategyp gy

• Marketing System Engineering

• M&A Due Diligence Support

• Market Intelligence

• Investment Banking through• Investment Banking, through

The Trends 2013

P i Th f Primary Themes for 2013‐2014:• Omnichannel Customer Engagement• The Rise of Programmatic Marketing

Our First Look at 2014

Here They Go Again

A d It’ B d f th U S E ( d t )

Sources: Business Insider

And It’s Bad for the U.S. Economy (and us too)

GDP and Traditional Media Growth Slow – No Elections Olympics or World Cup Soccer Elections, Olympics or World Cup Soccer

2013E U.S. “Measured Media” Spending: $122.7BB

Outdoor:% $7.1BB

Radio:

2.0%Cinema:$0.6BB

4.3%

Television:

Radio:$16.1BB1.5%

2.8%Television:

$66.4BBMagazines:$13.7BB

‐1.9%

0.9%

Newspapers:$18.8BB

‐4.8%$18.8BB

Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect expected percentage change in spend, by channel, from 2012 levels

Digital Captures New Budgets, Money from Print; Traditional Direct Slightly Down

2013E U.S. “Direct & Digital” Spending: $132.5BB

Print; Traditional Direct Slightly Down

Insert

3.2%Other:$3 2BB

Media:$0.8BB

Other Digital:$5.4BB

22.7%‐5.0%

3.2%$3.2BBDisplay:$17.6BB18.9%

(Includes Mobile & Desktop)

‐0.9%Direct Mail:$44.8BBSearch:

$19 6BB

4.4%(Includes Mobile & Desktop)

Teleservices:

$19.6BB10.1%(Includes Mobile & Desktop)

Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect percentage change in spend, by channel,from 2012 levels; Insert Media includes FSIs and statement inserts; Display and search reflect spending on desktop and mobile

$41.1BB 1.0%

Its Really, Really The Year of Mobile Devices

S i l T h l

2013E U.S. Digital Advertising Spending: $42.7BB

O h 32.1%

Social Technology and Services¹:

$2.8BB

Other Mobile2 :$.35BB

29.6%

Email:

7.0%Lead Gen &

AffiliateServices:

Email:$2.0BB11.1%

$0.3BB

15.6%Display:$17.6BB18.9%

Search:$19.6BB 10.1%



Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect expected percentage change in spend, by channel, from 2012 levels¹Excludes social display and social search spend2Excludes mobile display and mobile search spend

Direct Mail Flat: It’s About USPS; And Mobile

U.S. Direct MailMarketing Spend ($BB)

• Wherefore Art Thou O Postal Reform Act? The PMG needs your

$43.8 $44.9 $45.2 $45.2 $44.8

$40.0

help – exigent rate hike requested to “help” save the USPS

• Catalog mailers facing a 5.9%

$20.0

$increase – volume has to come out to make the math (analytics) work

• Credit Cardmailers return, Telecoms

$0.0

Credit Card mailers return, Telecoms up as competition increases, and standard class (ad mail) grows while first class decline continues

2009 2010 2011 2012 2013E• QR Codes and Augmented Reality adoption and interaction accelerates across the mobile landscape

Direct Mail CAGR .57%

Source: Winterberry Group, Oct. 2013

across the mobile landscape

Search: Accounts for ~46% of Digital Spend; Mobile Drives New Growth

U.S. Search Marketing Spend, 2009‐2013E ($BB)

Mobile Drives New Growth

• Spending overall rises with l ll f th i i

$0.7 $2.2 $4.4$14.6 $15.6

$16.9 $17.8$19.6

2009‐2013E ($BB)nearly all of the gain coming from the doubling of mobile search

$15 6 $16 2 $15 6 $

$• Desktop searching declines for the first time as consumers engage more deeply on mobile

$14.6 $15.6 $16.2 $15.6 $15.3engage more deeply on mobile devices

• Tablet CTRs are rising (62% over

2009 2010 2011 2012 2013EDesktop search Mobile search

S h

last year) and the cost‐per‐click is higher than on desktops

SearchCAGR 7.64%CAGR measured from 2009-2013E

Source: Winterberry Group, Oct. 2013

Display: Expected to Rise to $17.6BB, Driven by Improved Audience (Re)Targetingby Improved Audience (Re)Targeting

• Focus on audience targeting, primarily through programmatic RTB

U.S. Display Marketing Spend, 2009‐2013E ($BB)primarily through programmatic RTB

solutions with retargeting and 3rdparty digital data

$1.9$3.8

$12 3

$14.8

$17.62009‐2013E ($BB)

• RTB is expected to account for $3.34BB in spending in 2013, a 73.9% rise, reflecting 20% of all display media transacted $13 8

$0.6$1.9

$8.4$9.9

$12.3

display media transacted

• Rich media and video format spending growing by an expected

$8.4 $9.9$11.8 $13.0 $13.8

21.7% from 2012 to 2014, bannersdecline by 3% 2009 2010 2011 2012 2013E

Desktop display Mobile display

Sources: IDC, eMarketer, ComScore

CAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013

* Includes social display, video, rich media and banner ad formats, as well as ad sponsorships

Display CAGR 20.3%

Social: Social Tech & Services Spend is Expected to Reach $2 8BB in 2013Expected to Reach $2.8BB in 2013

• 68% of CMOs say they are underprepared to deal with the

Spending on Social Media Tech and Related Servicesunderprepared to deal with the

impact of social media—yet 82% plan to continue increasing investment in social media technology $2 1

$2.8Tech and Related Services

($BB)

social media technology

• Mobile devices fast becoming the platforms of choice for social i t ti

$1.6

$2.1

interaction

• Social sites focus on easing on‐boarding of advertisers, campaign

$0.7$0.9

management and measurement

• Data driven social targeting beginningto challenge search for ROI

2009 2010 2011 2012 2013E

Social Tech/Services

Source: IBM CMO Survey; BIA/Kelsey; eMarketer; Nielsen Wire; Bizo, Pew Research

g Social Tech/Services CAGR 41.4%


Mobile: Total Spending to Reach $8.5BB, Up From $4 4BB in 2012 From $4.4BB in 2012 • Fastest growing channel—spending nearly doubles YOY—reflecting

Mobile Marketing Spend Breakdown 2011‐2013E ($BB)

marketing’s attempt to keep pace with consumer engagement with email, social and shopping

$0.4$8.5

Breakdown, 2011‐2013E ($BB)

• M‐Commerce is booming: transactions on mobile devices are expected to reach $41.6BB in 2013,

$

$3.8

$0.3$4.4

p ,growing 68% over last year

• Mobile targeting and measurement handicapped by a lack of unique $0.7

$2.2$4.4

$0.6

$1.9

$0.3$1.6

handicapped by a lack of unique identifiers (UIDs), a variety of solutions are on the horizon

2011 2012 2013EMobile search Mobile display Other mobile


Mobile CAGR 130.5%

Source: eMarketer

E‐mail: Steady Growth; Driven by Cost‐Effective Targeted Marketing ChannelEffective, Targeted Marketing Channel

U.S. Email Marketing Spend, E ( BB)

• Mobile design is key—half of all emails are opened on a mobile device

$$1.8

$2.0$2.0

2009‐2013E ($BB)emails are opened on a mobile device

• Marketers begin to mature with respect to audience segmentation for email seek more sophisticated

$1.2$1.4

$1.6

$1.0

email—seek more sophisticated analytics capabilities to improve use of the channel

$0 0

• More robust email lists presents opportunity to link to CRM and other customer engagement approaches

$0.02009 2010 2011 2012 2013E

Email CAGR 13.6%

• Consolidation and new releases provide enhanced cross‐platform capabilities

Source: Epsilon, Return PathCAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013

3

The Trends 2013



Three Evolving Dynamics Are Changing Marketer ThinkingMarketer Thinking

The fragmentation of media—making it harder for marketers to engage

valuable audiences

The challenge of retrofitting legacy The challenge of retrofitting legacy marketing infrastructures to

manage interactions driven by data & technology rather than by media The growth of “customer‐centric” marketing—

channelg f g

driven by consumers who manage information, consideration and purchasing on their own terms

“Omnichannel” Originated in The Retail Segment—To Address a Range of ChallengesSegment To Address a Range of Challenges

P&LCustomerExperience

P&LOptimization

MerchandisingManagement

“Omnichannel” Goes Beyond Integrated Marketing, It’s an Approach to Empower MutualValue Between

k dMarketers and Consumers

But What ReallyMakes It Different?

Driven by Made possible Aimed at drivingDriven by enterprise business

objectives—not

Made possible only by recent

advances in data, technology and

Aimed at driving informed customer

engagementtactical marketing requirements

media delivery

And It’s Very Much About Driving Profitable Interactions with the BrandInteractions with the Brand

Which of the following do you believe are the likely benefits of adopting an “omnichannel” customer engagement strategy?

HeightenedHeightenedBrand

Awareness

ImprovedCustomer Revenue Growth

70% 75% 80% 85% 90% 95%Percentage of panelists who agree

CustomerResponse Rates

Percentage of panelists who agree

Source: Winterberry Group, “Taking Cues From the Customer,” 2013

Not Surprisingly, Interest in Omnichannel is Surging Across All VerticalsSurging Across All Verticals

83% of panelists said their company would likely invest in “omnichannel” approaches in

the near f t rethe near future

92% agree there is “real value” to be gained from pursuing an to be gained from pursuing an omnichannel approach to customer engagement

Source: IAB‐Winterberry Group White Paper, Omnichannel Audience Engagement, June 2013

What's Required for Successful Adoption?

Customer Analytics & Multiplatform Attribution

Rich Content—Optimized for Context & Strategic Intent

Operational Infrastructure Geared to the Needs of Customer Engagement

Cross‐Platform, Audience‐Driven Media Placements

I t ti f D l E i Y t Eff ti l Integration of Deeply Engaging—Yet Effectively “Disconnected”—Media

Elevation of the “Omnichannel Strategist” as a Senior Elevation of the Omnichannel Strategist as a Senior Role

The Trends 2013



Once Upon A Time, Buying and Placing “Media” Was a Manual Negotiated PracticeMedia Was a Manual, Negotiated Practice

And Then Came Search, Giving Us Auctions for Media Inventory and Audience ImpressionsMedia Inventory and Audience Impressions

Behavioral Algorithms

Machine‐driven biddingMachine driven bidding & price optimization

Workflow Automation

But When It Came to Display, The Proliferation of Formats Made Buying More Complexof Formats Made Buying More Complex

Complexity that the Ad Tech Market Set Out to Solveto Solve

• Massive investments in the development ofmedia• Massive investments in the development of media and marketing automation followed

• Harnessing of “Big CRM” and online behavioral data would be deployed to identify and message unique individuals with relevant content and offers

• Decisioning engines and machine driven analytics• Decisioning engines and machine‐driven analyticsmoved beyond “trigger” marketing and into biddable auctions and optimization models

And “Programmatic” Marketing Solutions Began to EmergeBegan to Emerge

ContentOptimization

Audience Insight/ Media Operations Segmentation Execution

Auction BasedAuction‐BasedMedia Buying

To Date, the Programmatic Value Proposition Has Been Closely Linked to “Auction”

What does “programmatic” mean to you?

Has Been Closely Linked to Auction

Machine‐driven Automation

A ti b d h t di b i

0% 20% 40% 60%

Auction‐based approach to media buyingReal‐time Bidding

(RTB)

Percent of panelists who mentioned each in their “top 3”

WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263

And a New Lexicon Has Emerged Around Programmatic Media BuyingProgrammatic Media Buying

…Yet More Marketers Are Coming to Realize Substantial Benefits of Driving EfficiencySubstantial Benefits of Driving Efficiency…

My organization is interested in programmatic because of the ability to…

Effi i l V l f y

Efficiently Value & Transact

Digital Media

T t di it l diImprove Operational

0% 20% 40% 60%

Target consumers across digital mediaEfficiency

Percent of panelists who mentioned each in their “top 3”


So Programmatic Approaches Are Becoming A Real Priority

Has your organization pursued a programmatic approach to the following use cases? Are you likely to do so within two years?

A Real Priority

64%

85% 81%

58%years

years

Automation of Back‐end A dience Insight De elopment

Today

In tw

o

Today

In tw

o

ProcessesAudience Insight Development


And Programmatic Solutions Are Going to Continue to Evolve Across ChannelsContinue to Evolve Across Channels

Today Tomorrow

R diSearch Radio

Display TV

Direct mail d il

Printand e‐mail

Resulting in “Programmatic” as a Foundation for Sophisticated Data‐Driven Marketingfor Sophisticated Data‐Driven Marketing

Cookies will recede as the fundamental programmatic “control point” as the mobile device assumes a central role as the

audience touchpointaudience touchpoint

The programmatic approach is growing addressable to all media types—paid, owned and earnedtypes paid, owned and earned

Data is the “fuel” that powers audience‐centered programmatic efforts heightening its importance and valueefforts, heightening its importance and value

Which will lead to a major wave of innovation focused re‐engineering and optimization of business processes andengineering and optimization of business processes and

organizational design

And the complex ecosystem of Ad Tech vendors will evolve into a p yset of programmatic “stacks”

The Trends 2013



2014 Will Balance Increased Activity With Increased ScrutinyIncreased Scrutiny

• The economy will continue to recover fueling higher GDPrecover— fueling higher GDP growth—and as a result marketing budgets will expand

• Increasing utilization of digital data for customer engagement and Washington getting to “normal”, will combine to re focus attention on thecombine to re‐focus attention on the regulatory agenda

• Scrutiny will be most acute in the first half of the year, prior to the midterm elections

More Slow Growth in Traditional Channels

2014E U.S. “Measured Media” Spending: $123.7BB

O td Cinema:Outdoor:$7.3BB

Radio:

2.0%Cinema:$0.6BB3.5%

Television:

Radio:$16.4BB1.7%

3.3%Television:

$68.5BBMagazines:$13.5BB

‐1.5% 0.8%

Newspapers:$17.3BB

‐8.2%$17.3BB

Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect expected percentage change in spend, by channel, from 2013E levels

Data Driven Marketing Continues To Take Share and Growth Accelerates

2014E U.S. “Direct & Digital” Spending: $139.5BB

Share and Growth Accelerates

Insert

6.2%Other:$3.4BB

Other Digital:$6 4BB

18.5%

InsertMedia:$0.8BB

1.0%

Display:$20.6BB17.0%

$6.4BB

5.3%Direct Mail:

$45.2BB1.0%(Includes Mobile & Desktop)

Teleservices:$41.5BB 1.0%

Search:$21.6BB

7.4%


Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect percentage change in spend, by channel,from 2013E levels; Insert Media includes FSIs and statement inserts

$

And Digital Spend Chases Digital Adoption

Social Technology Lead Gen &

2014E U.S. Digital Advertising Spending: $48.5BB

22.5%Social Technology

and Services¹:$3.4BB

7.4%Lead Gen &

AffiliateServices:$0.3BB

bil $0.3BBMobile2 :$.44BB25.7%

Email:Email:$2.2BB10.0%

13.6%Search:$21.6BB

10.2%


Display:$20.6BB17.0%


Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect expected percentage change in spend, by channel, from 2013E levels¹Excludes social display and social search spend2Excludes mobile display and mobile search spend

7 for ‘14: Content ‐The King of Relationships

60% of Corporations are doing content marketing –

1doing content marketing –they will finally define it in 20142014

Mobile content marketing strategies will lead the way in-store to see the ROI

Director of Content becomes a marketing jobg j

Source: Jayson DeMers, Forbes

7 for ‘14: Social Everywhere

Social interactions on mobile devices continue to increase

2devices continue to increase

Social targeting on Facebook, g gTwitter, Instagram outperform branded sites - and is very measureable

No one can make a decision No one can make a decision without crowd sourcing opinionsp

7 for ‘14: The Continuing Evolution of Loyalty

From points to engagement, loyalty programs begin to add

3loyalty programs begin to add new incentives (currencies) –whether social causes, health whether social causes, health or lifestyle rewards

Loyalty goes mobile, so you CAN take it with you–carry it or wear it!or wear it!

The question: When does qloyalty start?

7 for ‘14: TV and Video Platforms Evolve

“Second screen” tablet adoption combines with “smart”

4combines with smart connected TVs and game consoles—fueling cross platform id d i ivideo advertising

Programmatic delivery and g yviewing data propels growth in this key channel for consumer

tengagement

TV’ t d t th I t t t d t h 759MM bTV’s connected to the Internet expected to reach 759MM by 2018, up from 307MM for 26.4% market share (Digital TV Research)

7 for ‘14: Cycle Times Shrink

Consumer expectation: “I want it now”

5now

Marketer expectation: “I need to respond/react faster”respond/react faster”

Reality: Campaign and interaction cycle times from planning to execution continue to shrink –pressuring suppliers to be more pressuring suppliers to be more agile - from development to delivery

7 for ‘14: Data Utilization Accelerates

Programmatic display, omnichannel demand drive

6omnichannel demand, drive digital data use cases

Databases become more sophisticated repositories of online and offline data

Technologies to activate the Technologies to activate the data mature along with the talent to use it

BIG DATA STAYS BIG….

7 for ‘14: Consolidation, IPOs and Digital Stacks

2013 has seen lower deal volume (-16% YOY) but

7volume (-16% YOY) but increased value - up 36%, led by a few blockbuster dealsa few blockbuster deals

Valuation remains high driven by IPO comps by IPO comps

Will a return to more normal valuation bring more PE players back to a market dominated by cash heavy strategic buyers?cash heavy strategic buyers?

Source: PPLLC data on enterprise software M&A transactions 2009-2013

Questions?

Bruce Biegel www.winterberrygroup.comgSenior Managing [email protected]

yg p@WinterberryGrp

Outlook 2014: Data-Driven Marketing in an Omnichannel World

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