ICT Business Outlook 2008_ Dr Dan

Web 2.0 and iN2015Web 2.0 and iN2015Web 2.0 and iN2015Web 2.0 and iN2015SiTFSiTF 2008, ICT Business Outlook Forum2008, ICT Business Outlook Forum

Dan Dan SteinbockSteinbockICT Research DirectorICT Research DirectorICT Research DirectorICT Research Director

India, China and America India, China and America Institute (Institute (ICAICA))[email protected]@gmail.com

Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008) 1

New York CityNew York City ShanghaiShanghai GuangzhouGuangzhou HelsinkiHelsinki

STRUCTURESTRUCTURESTRUCTURESTRUCTURE

1 The Dilemma1. The Dilemma

2. Media, Marketing and Advertising

3 h3. From the Internet…

4. … to Web 2.0

5. U.S. Presidential Election 2008

6 BRICS: Web 2 0 Opportunity6. BRICS: Web 2.0 Opportunity

2Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

“YOU”YOU• “And for seizing the reins of the global

di f f di d f i hmedia, for founding and framing the new digital democracy, TIME's ‘Person of the Year’ for 2006 is you.

• “Web 2.0 is a massive social experiment, and like any experiment worth trying, it could fail.

“ h b ld k d f• “This is an opportunity to build a new kind of international understanding, not politician to politician, great man to great man, but citizen p g gto citizen, person to person. “

SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 3

Silicon Valley Versus Madison AvenueSilicon Valley Versus Madison AvenueThe Challenge of Channel Proliferation

“500“500‐‐channel cable universe” channel cable universe” (digital compression)(digital compression)

“Why not 500,000 channels!”“Why not 500,000 channels!”(Internet)(Internet)(digital compression)(digital compression)

Speech by TCI’s CEO John Malone (1992)Speech by TCI’s CEO John Malone (1992)

(Internet)(Internet)

Speech by Intel’s CEO Andy Grove (1996)Speech by Intel’s CEO Andy Grove (1996)

Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

Globalization: New OpportunitiesIntelligent Nation 2015 Singapore’s InfocommMasterplanIntelligent Nation 2015, Singapore s Infocomm Masterplan

International Infocomm Rankings 2007

Accenture e-Government Leadership 1stpRankingInternational Institute for Management Development (IMD) Technology

2nd

Development (IMD) Technology Infrastructure Ranking World Economic Forum Global IT Report 3rd

E i t I t lli U it’ R di 6thEconomist Intelligence Unit’s e-Readiness Ranking

6th

Update on Singapore’s InfocommMasterplan( ll )


(Intelligent Nation 2015, iN2015)


11 The DilemmaThe Dilemma1.1. The DilemmaThe Dilemma

2.2. Media, Marketing and AdvertisingMedia, Marketing and Advertising

33 h b 2 0h b 2 03.3. From the Internet to Web 2.0From the Internet to Web 2.0

4.4. Case: U.S. Presidential Election 2008Case: U.S. Presidential Election 2008

5.5. Web 2.0: Rise of the BRICSWeb 2.0: Rise of the BRICS


Big Three: Direct, Broadcast TV, NewspapersBig Three: Direct, Broadcast TV, NewspapersUS Ad Expenditures ($ mil, 2006)US Ad Expenditures ($ mil, 2006)

LocalInternet

NationalLocal

Direct MailBusiness PapersOut of Home*

National

Spot (local)Radio

NetworkSpot (nat'l)Spot (local)

Yellow Pages

Spot (nat'l)Spot (local)

Syndication (ii)Cable

Cable NetworksSpot (local)

NewspapersNational

LocalMagazines

Broadcast TVNetwork (i)

7

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

p p

Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008) Source: Author (data: TV Bureau of Advertising)

No 1. Direct MailNo 1. Direct MailUS Behaviorally Targeted Online Ad Spending ($mil), 2005US Behaviorally Targeted Online Ad Spending ($mil), 2005‐‐20112011

$4,000

$3,000

$3,500

$2,000

$2,500

$1,000

$1,500

$0

$500

Source: Author (data: eMarketer July 2007)


2005 2006 2007 2008 2009 2010 2011

No 2. NewspapersNo 2. NewspapersDecline of US Daily Newspaper Circulation, In Mil (1993Decline of US Daily Newspaper Circulation, In Mil (1993‐‐2005)2005)

Between 1940 and 1990 about 267 papers shut down, due to

– TV news (which killed afternoon papers),

– the migration from cities to suburbs (costly delivery)

– geographic mobility (less interest in local dailies)

– a decline in civic engagement Source: Author (data: NAA)

9

g g(dating back to Watergate)


Only Strong Brands SurviveOnly Strong Brands SurviveFrom Wall Street Journal to New York TimesFrom Wall Street Journal to New York Times

• “It is not easy to change consumer behavior,” says Martin Nisenholtz, CEO yof New York Times Digital.

• “Media are complementary. Truly transformational changes are predicated

Copyright by Dan Steinbock 10Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

g pon dramatic innovation.”

Washington Post Co.Washington Post Co.Washington Post Co.Washington Post Co.

• Highest penetration in a top‐10 market. g p p

• The Post's daily circulation peaked at 832,000 in 1993.

• Circulation has dropped by 20% since even as the region's population has grown by 20%. g y

• Internet revenue is growing, but not as quickly as ad income is falling.

• The Post Co.’s main revenue source is education.

( )

11

Source: Author’s analysis (data: Fortune)


3. Broadcasting Versus Narrowcasting3. Broadcasting Versus NarrowcastingLongLong Term Total TV HH Share Trends (1985Term Total TV HH Share Trends (1985 2002)2002)LongLong‐‐Term Total TV HH Share Trends (1985Term Total TV HH Share Trends (1985‐‐2002)2002)

80Primetime (ABC, CBS, NBC)

Syndicated TV9%

50

60

70Ad‐Supported Cable

All Other Cable TV Sources

30

40

50

Broadcast TV56%

Cable TV35%

10

20

1Q 2007: $11.4 B0


Erosion of ViewersErosion of ViewersHHs Viewing HHs Viewing AvgAvg (2006)(2006)

18,000,000

12 000 000

14,000,000

16,000,000

8,000,000

10,000,000

12,000,000

4,000,000

6,000,000

0

2,000,000

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

13

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2

Source: Author’s analysis (data: TV Bureau of Advertising)Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

Embracing Fragmentation/GlobalizationAdoption of Infocomm Technology Across the Value Chain

d hTrends in the Digital Media and Entertainment (DME) Sector:

– Fragmentation f l h iof value chains

– Fragmentation of geographiesg g p

Digital Marketplace for Global Media and Entertainment( )


(iN2015)

TheThe BottomlineBottomlineThe The BottomlineBottomline

• Direct mail, newspapers, and broadcasting dominateDirect mail, newspapers, and broadcasting dominate U.S. ad expenditures, but each reflects internal erosion– Direct mail is migrating to the Web

– Newspaper circulation is declining

– Narrowcasting is substituting for broadcasting (and new revenue models)

– Traditional TV viewership is eroding– Traditional TV viewership is eroding

• Fragmentation and globalization of DME is an opportunityopportunity






4. … to Web 2.0




Annual Revenues Approaching $17 Annual Revenues Approaching $17 bnbnQuarterly Revenues (2000Quarterly Revenues (2000––2006)2006)

17

Source: Author (data: IAB Interactive)


U.S. Advertising Expenditures U.S. Advertising Expenditures % share % growth, 2006% share % growth, 2006

Direct Mail Internet

Newspapers

Broadcast TV

Direct Mail

CableDirect Mail

Out of Home

Yellow Pages

Radio

Cable

Grand TotalMiscellaneousTotal NationalBroadcast TV

Out of Home

Internet

Magazines

Total LocalYellow PagesMagazinesGrand Total

0 10 20 30

Business Papers

Out of Home

‐10 0 10 20

NewspapersBusiness Papers

18

0 10 20 30 ‐10 0 10 20Source: Author (data: TV Bureau of Advertising)


Internet TVInternet TVGrabbing Ad RevenueGrabbing Ad Revenue

• Most Internet TV content Broadcast TV, Internet* and Online TV** Ad Revenues Worldwide, 2006‐2011

will be free to users over the next 1‐2 years.

• Viewing will take place 190 60 102006

($ bil)

Broadcast TVOnline AdvertisingO li TVmainly on PCs and handheld

devices.

• Early adopters are already 160

190

325

60

0 4

10

2011

2006 Online TV

networking Internet TV to their main TV screens.

160 325 0.42011

Online TV Revenues

* Includes search, sponsored links, display and video** Includes video insertion, sponsorship and display

Source: Author’ (data: Understanding & Solutions, July 30, 2007)

10000

Worldwide, 2006‐2011($ millions)

19

Source: Author (data: Understanding & Solutions, July 30, 2007)0

2006 2007 2008 2009 2010 2011Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

Global VCs Global VCs Taking Advantage of Web 2.0Taking Advantage of Web 2.0

• The spreading international interest in Web 2.0 mirrors the evolution of the first wave of “dotcom” investing, which also expanded from its roots in consumer services in the San Francisco Bay area.

• Private investment in Web 2.0 companies more than doubled in Europe in the 1st half of this year to $51.5m, according to fi f O d &figures from Dow Jones VentureOne and Ernst & Young.


Value MigrationValue MigrationReorganizing the Value ChainsReorganizing the Value Chains

Direct MailDirect MailDirect MailDirect Mail

Broadcast TVBroadcast TV

NewspapersNewspapers

C blC blCableCableRadioRadio

Yellow PagesYellow Pages

MagazinesMagazinesO t f HO t f H

MobilizationMobilization

Out-of-HomeOut-of-Home

InternetInternet


Building Infocomm InfrastructureIntelligent Nation 2015 Singapore’s InfocommMasterplanIntelligent Nation 2015, Singapore s Infocomm Masterplan

• The Next Generation National Infocomm Infrastructure (NGNII) ill id i h i i i d bili fwill provide users with pervasive connectivity and mobility for

anytime and anywhere communications.

• The NGNII will meet the future demands of bandwidthThe NGNII will meet the future demands of bandwidth intensive applications such as digital media, IPTV and R&D.

• The NGNII will have two components, – the National Broadband Network or NBN (wired component)

– and the Wireless Broadband Network or WBN (wireless component).

• The NGNII will aim to be accessible and affordable so as toThe NGNII will aim to be accessible and affordable so as to facilitate innovation and enable new opportunities.





• U.S. Internet revenues close to $17BnU.S. Internet revenues close to $17Bn– Approaching magazines, yellow pages

• Relatively low share of U.S. ad expenditures, highest y p , gposition in terms of growth

• Toward the convergence of mass TV and the Internetg

• Global VC activities prompted by Web 2.0

• Value migration: From Old Media to IP and Mobilea ue g a o o O d ed a o a d ob e

• NGNII may provide disruptive opportunities






4. … to Web 2.0




Web 2.0 MediaWeb 2.0 MediaNew Media Formats by Top TV NetsNew Media Formats by Top TV Nets Effective New Online Media by US Ad ExecsEffective New Online Media by US Ad Execs

E‐Mail Alerts Search

Mobile

Podcast (audio)

Blogs

Social Networking

Online Video

Games

RSS

Mobile

Podcasts

Video GamesVery Effective

Most Effective

Podcast (video)

MySpace

Viral video (sharing …

Blogs

Mobile

0% 20% 40% 60% 80% 100% 120%

YouTube

Podcast (video)

0% 20% 40% 60% 80%

RSS

August 30, 2007 (MTV 3) Copyright by Dan Steinbock 25

Emerging Media Formats Implemented Most by Top TV Select New Online Media that US Ad Execs Consider Networks in the US, Q1 2007 (% of top TV networks) Most Effective or Very Effective, 2006 (% of respondentsSource: 360i, March 2007 Source: American Advertising Federation (AAF), Nov 2006

SearchSearchSearchSearch

50 35

US Paid Search Ad Spending As a % of Total Online Ad Spending, 2000‐2011

US Online Ad Revs at Top‐4 Portals as % of Total Online Ad Spending, 2004‐2007

35

40

45

50

25

30

35

GoogleYahoo!AOL

15

20

25

30

15

20

25

0

5

10

15

5

10

0

2004 2005 2006 2007

Source: Author (data: eMarketer 4/2007, company

26

reports


Online VideoOnline VideoRise of Online Video Viewers and Ad Spending

200

US Online Video Viewers, 2003‐2010 (millions)

50

100

150

200

0

50

2003 2004 2005 2006 2007 2008 2009 2010

US Online Video Ad Spending, 2001‐2011 ($ millions)US Online Video Ad Spending, 2001 2011 ($ millions)

3000

4000

5000

0

1000

2000

3000

27

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: Author (data from

eMarketer, 6/2007)Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

Social NetworkingSocial NetworkingSocial Networking Ad Spending RisingSocial Networking Ad Spending Rising

3000

2000

2500 ROW

US

Oth

MySpace

1000

1500

Facebook

Others

500

1000

Niches

0

2006 2007 2008 2009 2010 2011 0 200 400 600

28

Source: Author (data: eMarketer, May 2007)


MySpaceMySpaceTop 10 Social Networking Sites among US Internet UsersTop 10 Social Networking Sites among US Internet Users

Ranked by visits, Dec 2006-Dec 2007 (% market share and % change)

Source: Hitwise as cited in press release, Jan 16, 2008


The Mobile Revolution (2005)The Mobile Revolution (2005)

Copyright by Dan Steinbock 30Copyright by Dan SteinbockSiTF 2008 ICT (IDA, 2/19/2008)

Great Potential, Uncharted TerritoryGreat Potential, Uncharted TerritoryHigh Potential, Low Use

• More than 3/4 of US /marketing professionals surveyed think that social media marketing—Webmedia marketing—Web 2.0—can give them a competitive edge ( / )(Coremetrics, 11/07)

• The same respondents said that only 7 75% of theirthat only 7.75% of their online marketing spending went to such tactics.


AsiaAsia‐‐Pacific: Highest Growth MarketPacific: Highest Growth MarketSize of the Global Media and Entertainment MarketSize of the Global Media and Entertainment Market

Digital Marketplace for Global Media and Entertainment


Digital Marketplace for Global Media and Entertainment(iN2015)


• Web 2.0 by U.S. ad execs and TV networksWeb 2.0 by U.S. ad execs and TV networks– Search dominates ad spending and is maturing (e.g., Microsoft/Yahoo/

News Corp.)

Online video accelerating since 2005– Online video accelerating since 2005

– Social networking exploding since 2006

– In social networking, MySpace has dominant share, but FaceBook hibi hi h hexhibits highest growth

– In mobile revolution, cutting‐edge developments in Asia and northern Europe, not in the U.S.

• Marketers aware of the potential of Web 2.0, but the implementation has barely begun

• The opportunities of Web 2 0 may be highest in Asia Pacific• The opportunities of Web 2.0 may be highest in Asia‐Pacific






4. … to Web 2.0




Using Web 2.0Using Web 2.0U.S. Presidential Election 2008U.S. Presidential Election 2008


Youthful Early AdoptersYouthful Early AdoptersWhere People Got MOST of Their Election NewsWhere People Got MOST of Their Election News

(Age Groups / Connection Speed)(Age Groups / Connection Speed)

Source: Author (data: Pew)


Friends MatterFriends MatterPresidential Candidates & MySpace CampaignsPresidential Candidates & MySpace Campaigns

Obama

M C i

Clinton

Huckabee

McCain

0 50,000 100,000 150,000 200,000 250,000 300,000

HuckabeeMySpace Impact on June 21, 2007

MySpace Impact on February 10, 2008

Copyright by Dan Steinbock 37

New TechnologiesNew TechnologiesU.S. Presidential ElectionsU.S. Presidential Elections

• 1948: Broadcast TV

• 1968: FM Radio

• 1982: Cable TV

• 1992: Laptops

• 1996: Internet

• 2008: Web 2.0



• Historically, U.S. presidential elections have beenHistorically, U.S. presidential elections have been accompanied by the introduction of new media technologies, from mass TV (1948) to Web 2.0 (2008)

• Typically, early adopters are youthful demographics– Expect spillovers over time

• From online video to other social media, Web 2.0 has been adopted by the leading candidates to “reach and touch”






4. … to Web 2.0




Marketers: New Skill Sets and CapabilitiesMarketers: New Skill Sets and CapabilitiesMarketing Outlook 2008 (CMO Council)Marketing Outlook 2008 (CMO Council)

• Marketers reported significant p gagency turnover in 2007 with advertising (41%), web design (38%) and PR (26%) firms most(38%), and PR (26%) firms most frequently changed in 2007.

• While spend is tracking upwards, the allocation of dollars is moving away from advertising and PR towards customer‐facing and lead andcustomer facing and lead and response generation spend in 2008.


From Market Share to Mind ShareFrom Market Share to Mind ShareFrom Advanced Economies to Emerging EconomiesFrom Advanced Economies to Emerging Economies

Customer needsCustomer needsCustomer needsCustomer needssatisfiedsatisfied

Relationship marketing/Relationship marketing/Mind shareMind share

E i E iE i E i

Advanced EconomiesAdvanced Economies

Traditional/marketingTraditional/marketingM k hM k h

Emerging EconomiesEmerging Economies

Customers reachedCustomers reachedMarket shareMarket share


The Rise of Large Emerging EconomiesThe Rise of Large Emerging EconomiesBRICs BRICs vsvs G6, 2000G6, 2000‐‐E2050E2050

43SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock

Toward Mobile MediaToward Mobile MediaRise of Heavy Users in Emerging EconomiesRise of Heavy Users in Emerging Economies

• Pay attention to new trends in the ymost advanced markets (pen.>100%)

• … especially business models in large hi h th k t ti l lhigh‐growth markets, particularly BRICs (China, India, Russia, Brazil).

•• … Users in emerging economies lead … Users in emerging economies lead g gg gthe world in every category of the the world in every category of the survey, from using advanced survey, from using advanced applications to plans to buy powerfulapplications to plans to buy powerfulapplications to plans to buy powerful applications to plans to buy powerful multimulti‐‐function devices. function devices.

Global Mobile Mindset AuditGlobal Mobile Mindset Audit

44

Global Mobile Mindset AuditGlobal Mobile Mindset Audit

SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock

Social NetworkingSocial Networking75% of Social Networkers Outside North America75% of Social Networkers Outside North America

Source: Network World, Oct 2007


,

An Intelligent Nation, a Global Citypowered by Infocomm

• Innovation: The capacity to create… will have to be a key p y ydifferentiating capability of Singapore’s economy of the future ‐> the role of infocomm.

I t ti S i th f t ill d d th bilit t• Integration: Success in the future will depend on the ability to harness resources and capabilities across diverse organization and geographies ‐> the role of infocomm

• Internationalization: As a small country, Singapore needs to be well plugged into the globalized economy.





• In advanced markets, a transition from market shareIn advanced markets, a transition from market share toward mind share

• Due to mismatch of skills and demand, marketers ,report substantial agency turnover

• In the large emerging economies (‘BRICs’), market g g gpenetration is the most pressing task

• As the rise of mobile indicates, momentum is now in the emerging markets

• Rise of large emerging economies in Asia offers great opportunities in Web 2.0 and to Singapore


THE ENDTHE ENDTHE ENDTHE END
