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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:$19.6BB 10.1%
(Includes Mobile & Desktop)
(Includes Mobile & Desktop)
Source: Winterberry Group analysis of multiple sourcesNote: Arrows reflect expected percentage change in spend, by channel, from 2012 levels¹Excludes social display and social search spend2Excludes mobile display and mobile search spend
Direct Mail Flat: It’s About USPS; And Mobile
U.S. Direct MailMarketing Spend ($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%
CAGR measured from 2009-2013E, Source: Winterberry Group, Oct. 2013
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
CAGR measured from 2011-2013E, Source: Winterberry Group, Oct. 2013
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
P i Th f Primary Themes for 2013‐2014:• Omnichannel Customer Engagement• The Rise of Programmatic Marketing
Our First Look at 2014
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
P i Th f Primary Themes for 2013‐2014:• Omnichannel Customer Engagement• The Rise of Programmatic Marketing
Our First Look at 2014
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”
WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263
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
WG and IAB “Programmatic Everywhere” white paper, Nov 2013; survey N=263
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
P i Th f Primary Themes for 2013‐2014:• Omnichannel Customer Engagement• The Rise of Programmatic Marketing
Our First Look at 2014
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%
(Includes Mobile & Desktop)
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%
(Includes Mobile & Desktop)
Display:$20.6BB17.0%
(Includes Mobile & Desktop)
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