Google Confidential and Proprietary

Chris O’Neill Managing Director, Google Canada May 12, 2011

Three Predictions for the Future of Retail & Brand Marketing

Google Confidential and Proprietary

Google Confidential and Proprietary

Agenda

DIGITAL REVOLUTION

THREE PREDICTIONS

Digital information in the world – videos, photos, music, texts, etc.

800 exabytes 2010

2020 53 zettabytes

Internet users worldwide 2010 1.9 B

2020 5 B

Mobile subscribers 2010 5 B

2020 10 B

Farmville 30M people using it every day;

an est. 800K virtual tractors sold daily at $3.33 each

ebay item purchased via mobile

every 2 seconds (sold $1.5B via mobile in 2010)

YouTube views Justin Bieber “Baby”: 500M+

iPhone App store 5B apps downloaded

Red Cross 20% ($23M) of donations for

Haiti in first week made via text message

Amazon 180 Kindle books sold for

every 100 hardcovers

Transformation of Consumers is Underway

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By 2012, Digital advertising spending will surpass Magazine/Newspaper

spending for the first time.

Source: Zenith Optemedia, April 2010; numbers provided to eMarketer by Starcom MediaVest Group, June 2010

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Three Predictions

ZMOT: The battle will shift to “Between Stimulus & Store”

MOBILE: Will be the key user interface

SHOPPER MARKETING: Will go digital

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1. ZMOT Becomes the Battleground

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According to P&G, shoppers make up their minds about a product in 3 to 7 seconds, just the time it takes to note a product on a store shelf.

This time lapse is called (by P&G) “First Moment of Truth” and it's considered the most important marketing opportunity for a brand.

– 2005 WSJ article

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The First Moment of Truth

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Winning is Tough at the First Moment of Truth

Traditional Brand Action Model

She sees a TV ad for your

product

She goes to her local store

She tries your

product

2nd Moment of Truth: (SMOT)

1st Moment of Truth (FMOT)

Stimulus

(R&D) (Sales) (Agency)

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More Decisions Made Before Entering Store…

Source: Longitudinal Economic Study Series, IRI Attitude Link, n = 1,000+ shoppers. CPG Purchase Decisions. IRI, 2009.

Where Purchase Decisions Are Made, % of Shoppers

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86% of Canadian consumers research products online before purchasing 86%

Source: Google/OTX Canada Retail Survey, April 2009 Q. Which of the following do you prefer to do when researching and purchasing <CATEGORY> products? n=5229

…fuelled by online research

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Online Research Forever Changed the Game

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+197% Local Searches

+246% Coupons

+94% Reviews

+187% Recipes

New Behavior Drives a Surge in Search Volume

Source: Google Internal data for a basket of category related queries for 2007 to 2010

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83%

Source: Google Touchpoints Consumer Survey, 01/09. “Online Consumer Reviews Significantly Impact Consumer Purchasing Decisions,” Opinion Research Corporation, 06/08

rely on trusted places like user ratings or product review sites (buyers read 4 to 7 reviews before feeling comfortable with a purchase)

Consumers are More Discerning Than Ever

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Ubiquitous Behavior Prior To FMOT

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Ubiquitous Behavior Prior to FMOT

Google Confidential and Proprietary Source: Google Keyword Tool, annualized using May 2010 volume, CAN only

The Sheer Volume is Staggering

recipes Annual Query Volume recipes chicken recipes healthy recipes chili recipes banana bread recipes

298,800,000 180,000,000

8,076,000 6,600,000 2,952,000

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Across categories and contexts there is a “Zero Moment of Truth”

to optimize for.

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83% of Moms search on a product after being exposed to a TV ad

Q: Have you ever seen a new brand or product advertised on TV, and then searched for more information on it later using an online search engine? (N =721) Source: BabyCenter Study on Google Search, Nov 2009

TV? It Prompts more ZMOT

Brand Action Model of the Future

She sees a TV ad for

your brand

She goes to her local

store

She tries your product…

SMOT FMOT Stimulus Zero Moment of Truth:

She goes online to read

reviews, find deals,

and locate your product

… and posts her reaction to 200 online friends

Which becomes the next person’s ZMOT

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The Winning Brands & Retailers will have plans to win the ZMOT

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Winning the Zero Moment of Truth

A FREE New eBook from Google We introduce you to a critical new point in the decision making process with personal stories, best practices and new research. Understand this shift in the marketing landscape and learn the strategies it takes to win. Due out late spring. Sign up to reserve your copy now!

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2. Mobile Becomes Key Interface

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Mobile is Transforming How We Live Our Lives

Digital life Physical life

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Mobile Connects our Digital and Physical Lives

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Mobile is ramping faster than any other technology we have seen in the past.

”

“ Mary Meeker Kleiner Perkins

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Smartphones Have Gone Mainstream

half of Canadians will have a smart phone

By end of 2014

Source: eMarketer, “Canadian Mobile Subscriptions to Climb 20% by 2014,” (June 2010).

The Mobile Web is Exploding

120

100

80

60

40

20

0

2007 2008 2009 2010 2011

4x Growth in past year

Source: Internal Google Data 2010, US Mobile Queries (Indexed)

Mobile usage complements desktop

Mobile search peaks on weekends, when people are on-the-go, away from their computers.

Source: US Google Internal Data, 2010

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Five Key Mobile Trends

1 Mobile Entertains Us

2 Mobile Is Immediate

3 Mobile Complements Other Media

4 Mobile Is Local

5 ... and the Ultimate Shopping Companion

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The Winning Brands & Retailers will optimize for Mobile

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3. Shopper Marketing Goes Digital

Target + Green Giant

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Cheers + Costco

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38

Digital End Caps Beginning to Appear

Promote Relevant SKUs Beyond the Flyer

Update Product Assortment, Pricing on the Fly

Source: ShopperTrack reports retail foot traffic drop for February. Retail Customer Experience, March 12, 2009. http://www.retailcustomerexperience.com/article.php?id=1009

Virtual SKU mix

40

Google Confidential and Proprietary 41

Drive Traffic with Google Maps

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The Winning Brands & Retailers will adopt Digital Shopper Marketing programs

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Three Predictions

ZMOT: The battle will shift to “Between Stimulus & Store”

MOBILE: Will be the key user interface

SHOPPER MARKETING: Will go digital

Google Confidential and Proprietary

Chris O’Neill Managing Director

Google Canada