Traditional to Digital to Performance - How Advertising as we know it has Changed.
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Transcript of Traditional to Digital to Performance - How Advertising as we know it has Changed.
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Augustine Fou- 1 -
Dr. Augustine Fouhttp://linkd.in/augustinefouMarch 12, 2013
From Traditional to Digital to Performance
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Augustine Fou- 2 -
Agenda• Background Stats
• Changes to Ad Supported Industries
• Audiences are Changing
• Consumers are Empowered and Savvy
• “Performance” is more than affiliate
• Towards a “Performance” mindset
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Augustine Fou- 3 -
Context of my thinking ...Marketing and Advertising
Chief Digital Officer, HCG (Omnicom)
Business StrategyMcKinsey Consultant
Technology / InnovationPhD, MIT Mat’l Science
Digital
Augustine Fou- 3 -
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Augustine Fou- 4 -
Background Stats
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Augustine Fou- 5 -
Internet Adoption
Source: Pew Internet, April 2012
On Average 78% use internet
Augustine Fou- 5 -
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Augustine Fou- 6 -
Smartphone Ownership
Source: PewJanuary 2012
Source: Pew Internet, Jan 2012
34-66% use smartphones
Augustine Fou- 6 -
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Augustine Fou- 7 -
Use of Social Networks
Source: PewFebruary 2012
Augustine Fou- 7 -
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Augustine Fou- 8 -
Top Online Activities
Source: Pew Internet, April 2012Augustine Fou- 8 -
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Augustine Fou- 9 -
Audience Shifts Change Ad Supported Industries
Augustine Fou- 9 -
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Augustine Fou- 10 -
Time Spent with Media
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Augustine Fou- 11 -
Newspaper Ads Declining
Classified ad revenue declining since 2000
Overall ad revenues fell off cliff (back to 1950’s levels)
Augustine Fou- 11 -
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Augustine Fou- 12 -
Newspaper CompaniesGannett Co., Inc. (GCI) - $3.4B market cap July 2012New York Times (NYT) - $1.1B market cap July 2012
Both off 70-80% since 2007 peak
Augustine Fou- 12 -
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Augustine Fou- 13 -
Magazine Ads DecliningCirculation declining
Ad prices pressured by online alternatives
Shift away from reach to performance
Augustine Fou- 13 -
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Augustine Fou- 14 -
Magazine CompaniesMeredith Corp (MDP) - $1.4B market cap July 2012Martha Stewart (MSO) - $235M market cap July 2012
Off 50% (MDP) and 80% (MSO) since 2007 peak
Augustine Fou- 14 -
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Augustine Fou- 15 -
Comparing Costs of MediaNormalizing (CPM) cost to reach 1,000 users or impressions
Augustine Fou- 15 -
Source: AP March 10, 2013
Elle MagazineCirculation 1.1M$156k /pgeCPM: $141
Superbowl 2013Audience 108M$4M /30seCPM: $37
Websites/DigitalTarget AudienceseCPM: $1’s of dollars
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Augustine Fou- 16 -
From Traditional to Digital
Source: IAB and Business Insider Oct 2012
Television is 42%Online is 38%
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Augustine Fou- 17 -
Audience Characteristics Are Also Changing
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Augustine Fou- 18 -
Users watch what they wantBroadcast
mass audience’80s-’98
Cable
niche audience’99-’12
Online Video
individuals’05-pres
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Augustine Fou- 19 -
When they want …
Nielsen (Dec 2010) estimates 44% of ads are not skipped– i.e. 56% of ads ARE SKIPPED
Tivo Research (Sep 2012)Finds up to 72% ads skipped
IPG/YuMe (May 2011) study found 63% of TV ads are avoided or simply ignored.
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Augustine Fou- 20 -
On whatever device …
Source: Google, August 2012 Multi-screen WorldAugustine Fou- 20 -
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Augustine Fou- 21 -
Users go where they want …Content Portals Major Blogs Facebook
audience size
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Augustine Fou- 22 -
Users share more online …HTML Coding Blogs Social Networks
only developers writers/individuals everyone‘90s 2000s ’05-pres
<!DOCTYPE html><html><body>
<h1>My First Heading</h1>
<p>My first paragraph.</p>
</body></html>
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Augustine Fou- 23 -
Users search more often
Users rely on search even more frequently.
Source: Pew Internet March 2012
Google reports more than 3 billion searches per day
Source: Business Insider 2012
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Augustine Fou- 24 -
Users search more savvy
Long tail terms imply users type longer phrases to get more accurate search results.
Source: Optify 2012 Source: Chitika, Jan 2012
• Users are searching longer terms• Average query word count is
greater than 4 words, in 2012
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Augustine Fou- 25 -
Search is more efficient...
… pay only for results (clicks).
Pay for impressions
CPM
CPCPay for clicks
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Augustine Fou- 26 -
From CPM to Performance
Source: IAB, PwC April 2012
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Augustine Fou- 27 -
Consumers Are Empowered and Savvy
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Augustine Fou- 28 -
Users have instant and …
…constant access to info
“no, that isn’t the ‘best price’ for this HDTV and the reviews aren’t even that good… ”
• 43% smartphone owners used device in-store• 15% checked prices in-store and
then bought from competitorSource: comScore 2012
Augustine Fou- 28 -
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Augustine Fou- 29 -
Users Avoid Display AdsSource: Banner Blindness
“The ads to the right are only noticed by 23% of the respondents, and they spend only half a second on the ads.” Source: Mashable 12/29/2011
Augustine Fou- 29 -
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Augustine Fou- 30 -
Users Ignore/Delete Email
“this is what gmail filters are made for!”
Source: Feb 24, 2012 “2012 Digital Advertising Attitudes Report” via @eMarketer
Augustine Fou- 30 -
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Augustine Fou- 31 -
Users Revolt in SocialForces BofA to rescind $5 monthly debit card fee
Augustine Fou- 31 -
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Augustine Fou- 32 -
Feb 2013 – Tesla Owners Refute Falsified NYTimes Report
NYTimes reporter seemingly deliberately ran down the battery and reported negatively on the Tesla S. Now owners set out to publicly refute the report.
Source: Gizmodo Feb 18, 2013
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Augustine Fou- 33 -
Feb 2013 – Maker’s Mark Reverses Decision to Water Down
Whiskey drinkers didn’t like the idea of their drink being diluted yet still cost the same price.
Source: Business Insider, Feb 17, 2013
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Augustine Fou- 34 -
Users Exert Their Power• 200 million phone numbers in the
National Do Not Call Registry
• 1 in 1000 direct mail pieces opened (estimated, ever wonder why they never publish actual results?)
• FSIs (free standing inserts) – performance unknown or estimated
Augustine Fou- 34 -
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Augustine Fou- 35 -
People search for productsPeople search for the products they want, not the brand in most cases
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Augustine Fou- 36 -
David Beckham vs H&M
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Augustine Fou- 37 -
Adriana vs Teleflora
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Augustine Fou- 38 -
Users look for context …
# of shares
378 reviews
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Augustine Fou- 39 -
Users trust peers most …
… and ads the least.
92% trust “recommendations from people I know”
47% trust “ads on TV”
29% trust “text ads on mobile phones”
33% trust “online banner ads”
Source: Nielsen, April 2012
November 26, 2012 39
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Augustine Fou- 40 -
From CPM to CPC to CPA
Augustine Fou- 40 -
10,000 impressions 100 clicks
1% CTR 1% conversion
1 purchase
$20 avg ticket, 5%
$1 rev share
(CPM) (CPC) (CPA)
$7 CPM means $70 ad spend on CPM basis$1 CPC means $100 ad spend on CPC basisCPA is lowest risk and most cost effective
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Augustine Fou- 41 -
Beyond Performance As “Affiliate”
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Augustine Fou- 42 -
ConversationsOffline conversations now online
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Augustine Fou- 43 -
Likes / FansBrands now have direct access to users
14 million fans
historic images
25,495 like the item1,168 comments
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Augustine Fou- 44 -
User ReviewsReviews from others who bought and used
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Augustine Fou- 45 -
Selecting Optimal WordsHow do we ensure our content is findable
“baby bedding” is the way more users search; 16x more than “infant bedding”
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Augustine Fou- 46 -
Some visitors are more valuable Visitors from display ads
Visitors from search
viewed the most p
ages
stayed th
e longest
lowest bounce rate
… site analytics show they stayed and engaged.
Source: Google Analytics Sample CPG client
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Augustine Fou- 47 -
What words to use?How do we describe LinkedIn to small biz cardholders
“Networking?”
“Business Networking?”
“ProfessionalNetworking?”
“ComputerNetworking?”
“SocialNetworking?”
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Augustine Fou- 48 -
Godaddy – Superbowl Ads
SuperBowl Ads NASCAR
Search volume rises with Superbowl ads and NASCAR sponsorship
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Augustine Fou- 49 -
Subway Footlongs
TV Ads started
Launched in early 2008, but waning interest
trendline
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Augustine Fou- 50 -
swine flu
h1n1
swine flu drove 1st peak
h1n1 drove 2nd peak
Purell demand and search volume lifted
Study Cause and Effect
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Augustine Fou- 51 -
Demand Planning
chocolate covered strawberries (Valentine’s)
See when users search for which products
chocolate covered cherries (Christmas)
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Augustine Fou- 52 -
Grandma with Harley
52
Harley would usually not advertise to her because
she is not in their typical demographic, but ...
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Augustine Fou- 53 -
Grandma with Harley
53
But .. when she comes online to search, our job as marketers is to make sure she can find the information she needs … and quickly get to the purchase.
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Augustine Fou- 54 -
Marketing in a Digital WorldTraditional Advertising
1. Who is our target customer?
2. What message do we push/shout at them?
3. Where do we stick the message?
Marketing in Digital World
1. What information does target user need?
2. Do we have that info available?
3. Is it optimized so they can find and use it?
storytelling performance
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Augustine Fou- 55 -
Traditional
Digital
Performance
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Augustine Fou- 56 -
Performance is …
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Augustine Fou- 57 -
Burberry – direct interactions
14 million fans
historic images
25,495 like the item1,168 comments
Augustine Fou- 57 -
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Augustine Fou- 58 -
HermesCartier
VersaceFendiPrada
ArmaniCoach
Calvin KleinRalph Lauren
Dolce & GabbanaChanel
Louis VuittonGucci
DiorBurberry 12.6M
7.8M7.6M7.3M6.5M5.3M4.9M4.0M3.3M3.1M1.7M1.6M0.8M0.7M0.6M
Source: Facebook, April 2012
A Direct Way to Interact
Augustine Fou- 58 -
Brands have more fans than top TV shows in viewership
Brands’ Facebook Top TV Shows
NCISDancing with the StarsPerson Of InterestBig Bang TheoryThe VoiceBlue BloodsUnforgettable60 MinutesSURVIVOR: ONE WORLDBody Of ProofCSI: NYTouchRules of EngagementDesperate HousewivesOnce Upon A Time8.4M
8.5M8.6M8.9M9.5M9.7M
10.0M10.1M10.5M10.7M12.0M14.0M14.6M18.0M18.6M
Source: TVByTheNumbers, April 2012
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Augustine Fou- 59 -
HermesCartier
VersaceFendiPrada
ArmaniCoach
Calvin KleinRalph Lauren
Dolce & GabbanaChanel
Louis VuittonGucci
DiorBurberry 12.6M
7.8M7.6M7.3M6.5M5.3M4.9M4.0M3.3M3.1M1.7M1.6M0.8M0.7M0.6M People
CosmopolitanGlamourSeventeenReal SimpleInStyleShapeFitnessSelfVogueVanity FairElleLuckyGQMarie Claire1.0M
1.0M1.1M1.1M1.2M1.3M1.5M1.5M1.6M1.7M2.0M2.0M2.4M3.0M3.6M
Source: Facebook, April 2012 Source: Wikipedia, 2H 2011
A Direct Way to Interact
Augustine Fou- 59 -
Brands have more fans than top magazines have circulation
Brands’ Facebook Top Magazines
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FREE
EXPENSIVE
… and more effective (comes from a friend)
10k Impressions
0.001% click-rate
People telling people can lead to the same 1 action for FREE
Share, recommend, comment, rate, etc.
Paid Advertising Social Actions
1 action (go to website)
Social Actions Are Free
1 action (go to website)
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Augustine Fou- 61 -
Timex – real-time insights
Augustine Fou- 61 -
Which styles are being searched for
What users spend time viewing on site
What users are buying
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Augustine Fou- 62 -
Starbucks – ideation/innovationLeveraged the community to source and prioritize ideas.
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Augustine Fou- 63 -
Netflix (b2c)Leveraged their Facebook fan base (1.6M) to do continuous customer research by asking questions and posting useful content.
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B2B Enterprise
Demo videos for IT Professionals, properly SEO’ed with technical terms
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Act of Loyalty
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Integrating “Long Lasting”..
…digital techniquespaid marketing campaigns sustained organic traffic
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Performance is … • A digital tactic (affiliate)• A business/pricing model• Speedy innovation• Efficient organization
• THE new mindset
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Dr. Augustine Fou – Agency Czar“I study trends and advise clients on optimizing their marketing mix as well as increasing efficiency and effectiveness of current tactics.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
ClickZ Articles: http://www.clickz.com/author/1151/augustine-fouSlideshares: http://www.slideshare.net/augustinefouLinkedIn: http://www.linkedin.com/in/augustinefou