PowerPoint Presentation
death of the advertising industrial complexScott Galloway |
Digital leadership academy | july 13, 2016@profgalloway
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December 4, 2014May 4, 2016Amazon Stock AppreciationAMAZON WILL
DECLINE IN VALUESource: Google Finance
JAN 20DLD Talk
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We get it wrong all the time.
The new order
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Then vs. now: The role of brands
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2007/8 2014/15USA, Top 5% by Household Income (HHI)Percentage of
Affluents Who Can Identify a Favorite BrandSun has passed mid-day
on brandSource: YouGov & Time Inc., April 2015.
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October 2015Percent of RespondentsUSA: Sources Used to Research
Products Prior to Purchasing In-StoreDue diligence weaponsSource:
Salesforce, 2015 Connected Shoppers Report, conducted by The Harris
Poll, November 2015.
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New path to discovery
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19982013USA Cable Prices vs. InflationRipe for disruptionSource:
FCC, Bureau of Labor Statistics.
Cost of Cable$27.88$39.851998 Cost Adjusted for Inflation Cost
of Cable$64.41
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Subscribe to Video Streaming Service Plan to Cut Cord Subscribe
to Cable/Satellite Servicen=30,000+ Online Consumers Across 63
Countries, Q3 2015TV and Video Subscription by Age GroupCord
cutters are youngSource: Nielsen.
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20142015Change in Viewership of Top 25 Cable NetworksViewership
is downSource:
Nielsen.HISTA&EMTVComedyUSATLCFXSYFYNANFAMTNTBRAVOSpikeTBSVH1ESPNLIFEDisneyFOODADSM
E!DISCHGTVAMCTOON
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Q2 2013 Q2 2014 Q2 2015 United States, 20092015Total
Subscribers, Cable Companies vs. Internet Video ProvidersAffluents
Pay And avoidSource: Pacific Crest.-1% CAGR30% CAGRSUBSCRIBERS,
MILLIONS
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Changing the game
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Offers Video Advertising
March 2015 Percent of Respondents Who Use On-Demand TV
ServicesON DEMAND REACH & GROWTHSource: Morgan Stanley Research
*Note: TV shows on free sites include network sites (ABC.com,
MTV.com, etc.)
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June 2016USA, n=1,200 Netflix UsersPercentage of Users Who Would
Cancel if Netflix Started Showing AdsWhy?Source: All Flicks, June
2016
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MeerkatPeriscopeEmbedded Video Player Removal of Tap-and-Hold to
Watch400 Hours of Video Uploaded Every MinuteMaximum Video Length
to 30 Seconds
360 VideoBoomerangYouTube Red2016Live Video Embedded in Twitter
FeedVideo Views CountsExtended Video Length to 60 Seconds
Facebook LiveEcommerce AdsVideo Carousel AdsPre-Roll Video Ads
on Instant ArticlesRemoved Pic/Video from Character LimitVideo
Comments on Video PagesAdvertising API
20142016 Video LaunchesSocial Takes on TV
2014Video Auto-PlayOur StoryLive Rail AcquisitionHyperlapse and
Promoted Video AdsVideo View CountsGoogle Preferred 2015Native
Video UploadDiscover
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20142015, in BillionsYOY Change in Media Ad Spending
WorldwideSHIFTING AD BUDGETSSource: eMarketer, 2015.
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20092015Monthly Active Users of Major Browser Ad Blocking
ExtensionsGlobal Ad Blocking GrowthAd blocking on the rise Source:
eConsultancy, 2015.
198M
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Advertising Revenue vs. Subscription Revenue, 2015% of Total
Revenues by SourceSurvival indexSource: Company Reports, L2
Analysis.CompanyAd RevenueSubscription RevenueViacom38%37%The New
York Times40%54%Time Inc.53%34%Gannett56%37%Scripps68%37%
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$50M15 Annual Revenue90MUnique MonthlyVisitors$0.55per User=
Spare meSource: Some facts about Business Insiders acquisition
by Axel Spinger, Mathew Ingam, Fortune, September 29, 2015.
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$198M15 Digital Ad Revenue75M15 Unique Global Monthly
Visitors$2.64per User=Spare meSource: Company Filings and
NYTimes.com
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Total Ad revenue 2015: $638,709,000Digital Ad revenue = 31% of
totalSo that would be: $197,999,790US unique monthly visitors: 62
millionInternational monthly visitors: 13 millionSo that would be
75 million unique global visitorsThe question -- how much ad
revenue are they getting per user?The equation:$197,999,790 / 75
million visitors / = $X / 1 visitorX = $2.64 (digital ad revenue
NYT is making annually per visitor to their site)Whereas a digital
subscription is $15 / month = $180 / year
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Ad revenue is low
$3.1M15 Avg Episode Ad Revenue7.2M15 Viewers$0.43per Viewer=
Sources: Nielsen Ratings and Variety.
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As tv viewership declines fewer places to get scale Prices keep
going upAnd effectiveness keeps going down
http://variety.com/2015/tv/news/tv-advertising-prices-football-empire-walking-dead-big-bang-theory-1201603800/http://tvbythenumbers.zap2it.com/2015/05/21/wednesday-final-ratings-survivor-survivor-reunion-modern-family-adjusted-up/406776/22
Price of freedom
The price of freedom is only $2.99
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response
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Who does this hurt?
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Advertising Industrial Complexvictims
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USATotal National Ad Spend as a Percentage of GDPAdvertising
growth businessSources: REDEF, The Economist, eMarketer. U.S.
Bureau of Labor Statistics.
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Auto Beauty & CPGTop 10 Advertisers by Spend, USASome things
never changeSource: AdAge Datacenter.Rank 19561999201020161General
Motors Co.General Motors Co.Procter & Gamble Co.Procter &
Gamble Co.2Procter & Gamble Co.Procter & Gamble
Co.AT&TAT&T3General Foods Corp (now Kraft Heinz Co.)Johnson
& JohnsonGeneral Motors Co.General Motors Co.4Ford Motor
Co.Philip Morris Cos.Verizon CommunicationsComcast Corp5Chrysler
Co. (now Fiat Chrysler)Ford Motor Co.American Express Co.Verizon
Communications6Colgate-Palmolive Co.PfizerPfizerFord Motor
Co.7General Electric Co.McDonald's Corp.Walmart StoresAmerican
Express Co.8Lever Bros. (now Unilever)Tricon Global RestaurantsTime
WarnerFiat Chrysler9National Dairy Products Corp. (now Kraft Heinz
Co.)DaimlerChryslerJohnson & JohnsonAmazon10Distillers
Corp.-Seagrams Ltd. (now Diageo and Pernod
Ricard)WorldComL'OralSamsung Electronics Co.
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GM Ford Procter & Gamble 19952015 USA Net Sales as a % of
USA GDP Pulling less weight Sources: Company Filings and World
Bank. Note: GM numbers are based on total North America sales.
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Apple SamsungAdvertising Expense as Percent of RevenueAPPLE VS.
SAMSUNGSource: Company Filings.
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Apple Microsoft BlackBerry Samsung HTC LG Lenovo+Motorola
Sony2010Q3 2015Global Smartphone Operating Profit ShareApple
dominatesSource: Canaccord Genuity, 2015.
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USD BillionsApple: Future Minimum Lease Payments Related to
Retail SpaceReallocation of capitalSource: Company Filings.*Note:
2016 reflects 10-Q reporting, as of April 2016.
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cpg
90%Lost share33%75%Trailing 12 months, June 2015Performance of
Top 100 CPG Brands in the USATRADITIONAL ADVERTISING successSource:
Catalina Marketing.68%Declined in Sales
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Top 100 CPG Brand Growth Category Growth52 Weeks Trailing, June
30, 2015Growth of Top 100 CPG Brands vs. Overall Category
GrowthFalLING GIANTSSource: Catalina Marketing.
BABYCANDY/SNACKCEREALCOFFEEDAIRYBEAUTYPET
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Startups Unbundling P&GUnder attackSource: CB Insights.
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Pampers Huggies Honest CompanyUSA Indexed Search Volume,
2004June 2016Google Trends: Search Popularity Over TimeHONEST
COMPANY > PAMPERSSource: Google Trends.
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Dollar Shave Club Gillette HarrysJanuaryDecember 2015Monthly
Search Volume for Brand TermGILLETTE ALREADY TRUMPEDSource:
Google.
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EV/EBITDA MultipleRecurring revenueSource: Yahoo Finance,
accessed June 16, 2016.
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"The brands that grew the most in 2014 were also very low
[advertising-and-promotion] intensive like Urban Decay, like
Kiehl's, etc. ...NYX has no media. Kiehl's has no media. Urban
Decay has no media.
Jean-Paul Agon, LOral
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Q1 2015 vs. Q1 2016Market Share Changes, Top 10 USA Premium
Makeup Wheres the growth?ELC Top 15 Makeup
BrandsMAC-1.5Clinique-1.1Este Lauder-0.6Bobbi
Brown-0.3Smashbox+0.1-3.4%
Top 15 Makeup IndiesAnastasia Cosmetics+1.5Tarte+1.0Too
Faced+1.0+3.5%
Other Makeup Top 15Urban Decay+0.7Lancme-0.6Benefit-0.2Bare
Essentials-1.3Chanel-0.4NARS0.0-2.5%
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SKINCARE MORE OF THE SAMEOF THE TOP 10 PRESTIGE SKINCARE BRANDS
ONLY ONE KIEHLs Gained SHAREThe Other NINE were down -2.9%
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Q1 2015 vs. Q1 2016USA Premium Skincare Market ShareLongtail
share growth in skincare*Other Tracked = Brands with >.1% Market
Share; OtherNot Tracked = Brands with
