Marketing & Media Ecosystem 2010 Survey

2010MME

Marketing& MediaEcosystem 2010

February 25, 2008IAB Annual Meeting

Phoenix

Christopher VollmerLeader, US Media and EntertainmentBooz & Company

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2010MME

75

37

25

13

127

0102030405060708090

100

Newspaper Radio BroadcastTV

Cable TV Online

Online Advertising Has Been On A Tear Online Advertising Has Been On A Tear Years to Reach $20B in Ad Revenue

(US Only)130

Source: Universal McCann, IAB Internet Advertising Report, Booz & Company Analysis

More Consumer Time

Addressing Marketers’desire for:– Accountability– Interactivity– Relevance

Growing even faster outside the US (e.g., UK)

2010MME

But The Industry Is At An Inflection Point But The Industry Is At An Inflection Point

Online Is No Longer Experimental –It’s Part Of The Media Mix

Massive Audience Fragmentation: More Choices than Ever for Consumers and Advertisers

Search and Ad Networks Have Been Key Growth Drivers

Video and Social Networks Undermonetized

Most Major Marketers Have Not Shifted “Significant” Dollars

2010MME

-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%

Marketers Get It: They Need to Catch Up Marketers Get It: They Need to Catch Up To Where The Consumer IsTo Where The Consumer Is

% of Respondents

DigitalMobilePREventsDirect MailTVPrintOut of HomeRadio

Increase SpendingDecrease Spending

Two-way

One-way

Source: Marketing & Media Ecosystem 2010 survey and Booz & Company analysis

2010MME

Marketers Taking Many of the Marketers Taking Many of the Necessary StepsNecessary Steps

Consumer Insights and Behavioral Targeting top Consumer Insights and Behavioral Targeting top their list of their list of ““must havemust have”” capabilitiescapabilities

They want to understand how consumers use digital They want to understand how consumers use digital for information, entertainment and communityfor information, entertainment and community

The importance of media is being elevated The importance of media is being elevated –– ““itit’’s the new creatives the new creative””

““LeadersLeaders”” are moving to put in place:are moving to put in place:–– Metrics, capabilities to assess the impact of digital mediaMetrics, capabilities to assess the impact of digital media–– Dashboards to measure ROIDashboards to measure ROI–– New positions to interface with media partnersNew positions to interface with media partners

2010MME

They Do However Need Help to Move FasterThey Do However Need Help to Move Faster

62%57%

52%

26%

0%

10%

20%

30%

40%

50%

60%

70%

Inability to measurethe effectiveness is

a barrier

Creative, strategicand media buyingcapabilities should

be rebundled

Partnerships withMedia companies

are important

Marketers believetheir organizations

are digital savvy

% o

f Res

pons

es

Marketer View of the Ecosystem


2010MME

So, what do media companies need So, what do media companies need to do to accelerate this transitionto do to accelerate this transition……

HARDERHARDERFASTERFASTER

BETTERBETTERSTRONGERSTRONGER

2010MME

Five Themes Emerged From Our Media StudyFive Themes Emerged From Our Media Study

Digital Media DNADigital Media DNA

The Education & Metrics ImperativeThe Education & Metrics Imperative

Managing Digital ComplexityManaging Digital Complexity

The Ecosystem RedefinedThe Ecosystem Redefined

Value Through Consumer InsightValue Through Consumer Insight

2010MME

70%

56%45%

40%

84%

0%10%20%30%40%50%60%70%80%90%

100%

ContextualTargeting

BehavioralTargeting

PerformanceMarketing

E-mailMarketing

LeadGeneration

Digital Redefining Media Company Digital Redefining Media Company ““DNADNA””%

of R

espo

nden

ts

Media Services Offered Today


2010MME

90%

82%

79%

78%

66%

40% 50% 60% 70% 80% 90% 100%% of Respondents

Increasing focus on talent, recruiting, and training

Restructuring our advertising sales team

Developing more sophisticated technical capabilities

Understanding what marketers want to measure

Changing the way we work with marketers

Many Priorities for Capability Building Many Priorities for Capability Building Key Changes to the Media Sales Organization in the Past 3 Years


2010MME

73%

45%

40%

38%

36%

0% 20% 40% 60% 80%

Existing online advertisers shifting more of their overall ad budgets online

Existing online advertisers spending more online because they are spending more

overallNew national advertisers entering the

online ad marketer

Price increases for online inventory

New smaller or local advertisers entering the online ad market

% of Respondents

Big Focus On Growth Via Existing ClientsBig Focus On Growth Via Existing ClientsDrivers of Online Growth


2010MME

39% 38%

86%

0%10%20%30%40%50%60%70%80%90%

100%

Top 200 National Advertisers

Top 50 National Advertisers

Local Advertisers

% o

f Res

pond

ents

More Headroom in Top 50 and LocalMore Headroom in Top 50 and LocalOnline Advertising Revenue is Generated From …


2010MME

More Education, Better Metrics RequiredMore Education, Better Metrics RequiredPerceived Barriers to Online Spending

Lack of experience/education with new media platforms

Lack of senior organizational supportat the advertisers and agencies

Metrics are not comparable to traditional media

Insufficient ability to measure effectiveness

Complexity and cost of creating online campaigns

Perceived risk associated with consumer generated media

% of Respondents

59%

51%

44%

62%

45%

44%

81%

79%

74%

59%

49%

48%

0% 20% 40% 60% 80% 100%

Media Co’sMarketers


2010MME

13%

87%

0%

20%

40%

60%

80%

100%%

of R

espo

nden

ts

Very Important/Important

Not Important

Marketer Education Is CriticalMarketer Education Is CriticalNeed for the Ad Sales Team to Educate Marketers and Agencies

70 % of Media Co’s Will Expand Their Education Capabilities By 2010

70 % of Media Co70 % of Media Co’’s Will Expand Their s Will Expand Their Education Capabilities By 2010 Education Capabilities By 2010


2010MME

61%

68%

73%

75%

78%

98%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

% of Respondents

Lack of standardization inhibits spending

Need to understand what marketers want to measure

Relevant metrics vary by industry

Measurement/analytics are very important for an ad sales department

Lack of single metric is a major barrier

Marketers are unfamiliar with digital metrics

Greater Clarity Needed Around MetricsGreater Clarity Needed Around MetricsMedia Company Perspective on Metrics


2010MME

94%

62%

57%

54%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Reach

Engagement

Action

ROI

Media CoMedia Co’’s Moving Beyond Reachs Moving Beyond Reach

% of Respondents

Metrics Currently Tracked


2010MME

67%

67%

66%

63%

47%

0% 20% 40% 60%

Dramatically changes inventory availability and inventory management

Increases the need for supply chain management capabilities in media companies

Increases the need for new partnerships across the value chain

Significantly complicates the supply chain

% of Respondents

Concentration of online ad spending in the top few sites will decrease by 2010

More Ecosystem Complexity ExpectedMore Ecosystem Complexity ExpectedImpact of the Changing Media Landscape


2010MME

Issues Go Beyond Inventory Supply Issues Go Beyond Inventory Supply

50%

66%

73%

0% 50% 100%

% of Respondents

Inventory management is a problem for your sites

currently

Inventory management challenges will get worse

as ad spend and demand increases

Labor spent on integrated solutions takes up a

disproportionate amount of sales staff time

Complexity Challenges: Today and Tomorrow


2010MME

67%75%

0%

20%

40%

60%

80%

100%

70%61%

55%

76%

0%

20%

40%

60%

80%

100%

RichMedia

Video Display Search

% o

f Res

pond

ents

Behavioral targeting will gain significant

importance to marketers

Quality ofenvironment is as high as other media

% o

f Res

pond

ents

Confident Online Can Drive PriceConfident Online Can Drive PriceImportance of Targeting and

Quality of EnvironmentIncreased Prices Expected

For All Online Inventory


2010MME

52% 52%

27%

52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MediaCompanies

MediaPlanners

Comm.Planners

Agency of Record

Which Direct Partnerships Will Be More Important in the Future?

53% of 53% of mediamedia

Marketer Expectations Are ChangingMarketer Expectations Are ChangingMarketers Believe the Following Capabilities

Will Become More Important by 2010

respondents respondents expect to do more business expect to do more business

directly with marketersdirectly with marketers

% o

f Res

pond

ents

82%

80%

71%

66%

60%

59%

49%

0% 50% 100%

% of Respondents

Consumer Insights

Behavioral Targeting

Brand Strategy

Customer Marketing

Partnerships

PR

In-house digital production


2010MME

65%

91%

63%

0% 20% 40% 60% 80% 100%

MediaMedia’’s Response: More Agencys Response: More Agency--like Serviceslike Services

We are rethinking relationships we have with the advertising agencies

The development of agency-like servicesby media companies is causing

friction with agencies

Our company provides agency like services to clients today

Media Perspectives Vis-à-vis Agencies


2010MME

88%

88%

79%

76%

72%

70%

64%

66%

0% 20% 40% 60% 80% 100%

Campaign development and Idea generation

Target creative to the right audience

Creative development

Custom content

Cross platform integration and execution

Exclusive content

Consumer insights

ROI Tracking

% of Respondents

Media Offering Broader Range of ServicesMedia Offering Broader Range of ServicesMedia Ad Sales Team Provides the Following Services:


2010MME

72% 69%

56%52%

12%

32%25% 25%

16% 17%

76%

33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

CreativeProduction

CreativeDevelopment

CommunicationsPlanning

MediaPlanning

BehavioralTargeting

ConsumerInsight

ResearchAgency of Record

Media Do See a Key Role for AgenciesMedia Do See a Key Role for AgenciesResponsibility For Each Of These Functions Lies With…

% o

f Res

pond

ents

Media Company


2010MME

Media Strengthening Consumer Insights Media Strengthening Consumer Insights Media Companies Will Deliver

Consumer Insights by 2010Cutting Edge Consumer

Insights Require…

78%

76%

72%

71%

0% 50% 100%% of Respondents

Ability to track behavioral patterns

Ability to tie media behaviors to sales

Open channels for listening to customer

needs

Incorporating consumer insights into predictive

models

23%

77%

0%10%

20%30%40%

50%60%70%80%

90%100%

Yes No

% o

f Res

pond

ents


2010MME

Using Insights To Create DifferentiationUsing Insights To Create DifferentiationRespondents Agree…

87%

77%

62%

56%

40% 50% 60% 70% 80% 90%

Providing strong consumer insights to marketers creates a competitive advantage

Media companies need to have more granular data on their consumers to avoid

commoditization of their ad inventory

Providing aggregated consumer data to advertisers is a major priority for my company

Media companies use their research function to customize studies for advertisers

% of Respondents


2010MME

An Emerging Agenda for Digital Leadership An Emerging Agenda for Digital Leadership

Know What Drives Consumer BehaviorKnow What Drives Consumer Behavior555

TranslateTranslate Media Value into Marketer ROIMedia Value into Marketer ROI444

333 Provide Consultative Services for Key ClientsProvide Consultative Services for Key Clients

222

Emphasize OnEmphasize On--going Marketer Educationgoing Marketer Education111

Focus on Focus on the the Metrics Metrics thatthat Matter the Matter the MostMost


2010MME

Digital LeadersDigital Leaders……

Invest to help marketers Invest to help marketers ““get itget it””

Link metrics to marketer brand/business objectivesLink metrics to marketer brand/business objectives

DonDon’’t just sell ad space t just sell ad space –– they sell solutionsthey sell solutions

Prove It Prove It ---- more likely to measure ROI and more likely to measure ROI and link media behavior to saleslink media behavior to sales

Can Turn Consumer Insight into Marketer Foresight Can Turn Consumer Insight into Marketer Foresight


2010MME

Marketing& MediaEcosystem 2010

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Marketing & Media Ecosystem 2010 Survey