Mass Media to ‘My Media’: Profiling the New ‘On-Demand’

Consumer

Greg Sterling Interactive Local Media

The Kelsey Group

What’s Going On? The ‘30K Foot View’

• Broadband Internet Adoption

• Proliferation of personal technology devices

• Younger audiences who are technologically oriented

• Fragmentation of audiences

= Disruption of traditional media and new challenges for marketers

Global ‘Top 10’ Broadband Countries (Total Number of Subscribers)

• US

• China

• Japan

• South Korea

• France

• Germany

• UK

• Canada

• Italy

• Spain

Source: Computer Industry Almanac (2005)

US Broadband: Growing or Slowing?

Nielsen (Growing):

• US Internet penetration: 74% of households

• 95.5 million US broadband users (growth 28% from 2005)

• Broadband: 68% of at-home users

The Skeptics (Slowing):

• Pew: 53% have home BB; growth flat (3% from 2004 to 2005); 32% of US adults not connected to Internet

• Parks Assoc.: 42% have home BB; Internet growth flat (1% from 2005)

• Forrester: 62% will have BB at home – in 2010!

• Yankee Group: Reasons for not getting home BB – (1) too expensive, (2) don’t want it, (3) dial-up sufficient

Source: Nielsen//NetRatings (2/06), Pew Internet & American Life Project (2005), Parks Associates (2/06), Yankee Group (2/06), Forrester Research (2005)

Broadband Growth: What’s at Stake?

Among other things:

• Internet growth for news, local search (at the expense of traditional media) and ecommerce

• Internet as a daily “utility” and general communication and entertainment medium

• Development of the market for online video (actual speeds an issue here)

• Development of the market for VoIP telephony and related services

Source: Nielsen//NetRatings (2/06), Pew Internet & American Life Project (2005), Parks Associates (2/06), Yankee Group (2/06), Forrester Research (2005)

Top Reason Spending More Time Online% Selected as Top Reason

(Among those spending “Considerably/Somewhat More” time on Internet today vs. a year ago)

Base: Kelsey Group (2005). Consumers who are spending considerable/somewhat more time on Internet Total (n=159), High Speed (n=101), Dial-Up (n=46)** Small base size; use caution when projecting dataLowercase letters indicate significant differences at the 95% confidence level

45%41%

8%6%

41%

3%5%

30%

45%

6%

51%b

18%a

Easier to go online givenadvances in technology

Information on Internet hasgotten better

As more people are online it'san easy way to connect

socially

None of these are reasons

Total High Speed Access at Home (a) Dial-Up at Home (b)

Source: Pew Internet and American Life Project (2006)

Internet Now Just Part of Daily LifeNumber of Americans for whom Internet was ‘crucial’ or ‘important’

0

5

10

15

20

25

30

35

Changed jobs orgotten addt'l

training

Dealt w/majorillness/condition

for self/other

Chosen school orcollege forself/child

Bought a car Made a majorfinancial decision

Found a newplace to live

Mill

ion

s o

f A

me

ric

an

s

2002 2005

Life Events: Jobs, Cars & Real Estate

• The Internet produced 51% of all new hires in 2005, while print newspaper classifieds were the source of only 5% of the new hires

• Online influences purchase decisions of 79% of would-be car buyers who are Internet users

• The percent of US homebuyers using the Internet as part of their housing search process went from 2% in 1995 to 77% in 2005. Internet is now the number one resource in the home-buying process

Source: DirectEmployers Association (2006), National Ass of Realtors (2005), JD Powers (2005), Compete, Inc. (2005)

Online Tops Newspapers with BB Users

Source: Pew Internet & American Life Project (12/05), n=3,011

News Sources

65

5052

41

26

12

38

43

17

57

49 49

0

10

20

30

40

50

60

70

Local TV National TV Radio Local paper Internet Nationalpaper

% o

f A

me

ric

an

s

Dial-Up Users BB Users

Local Shopping: Media Source Usage

Media Used in Past Year When Shopping for Products/Services in Local Area(Yes Responses)

70%

58% 59%

26%

13%

36%

73%

24%

18%

70%

62%

55%

27%

10%

39%

70%

22%18%

60%

75%

47%

24%20%

41%

73%

0

21%

Net: InternetMedia

PrintedYellow Pages

InternetSearchEngines

InternetYellow Pages

Verticals Direct Mail/E-Mail/Coupon

Books

Newspapers Localnewspapers

website

City GuideWeb Site

Wave 3 Wave 2 Wave 1

Source: The Kelsey Group (3/06)Base: Total Consumers, Wave 3 (n=500), Wave 2 (n=501), Wave 1 (n=1,006)

Proliferation of ‘My Media’ Devices

17.8m DVRs (US)

47.4m (2009)iPOD: 1b Songs

3+m Videos

Music Market: $1.5b (2005) to $10.7b (2010)

Source: eMarketer (8/05), In-Stat (3/06), Strategy Analytics (1/06), Burst Media (7/05), Pew Internet & American Life Project (1/06)

930m Units to Ship (2006)

36m Mobile Video Users (2009)

78.6m Mobile Gamers (2009)

$1.8b (2009)

PC: ‘Favorite Appliance’

94m Americans Online Daily

Disruptive Devices

Top Reasons for Owning DVRs:

• Time shifting (watch shows when I want)

• Avoid commercials

• Rewind or fast-forward during show

• Watch favorite shows faster by skipping ads

Source: Find/SVP (8/05), Sling Media (2006)

Slingbox:

• Enables TV to be viewed from a PC (and now mobile devices) – “place shifting”’

• “Every computer is now your TV”

Disruptive Devices

PC+ Internet: ‘All-Purpose’ Appliance:

• 65.2% use the Internet to connect with friends/family. Internet is now widely seen as a important communication tool to stay connected with our “social networks”

• 76.5% of users (24 and younger) listen to music online. 39.1% say the Internet is the primary way they listen to music

• 53.3 percent (24 and younger) watch video online

• 47.3% of online consumers use the Internet to gather news

• 86% of users say daily routine would be “disrupted” if home computer were taken away; 42.1% say disrupted "significantly"

Source: Burst Media (7/05) n=13,000 ages 14 and older; Pew Internet & American Life Project (1/06)

Disruptive DevicesMobile Phones:

• More mobile phones globally than landlines (incl. US). 2.5b wireless subs globally

• 400m mobile phones in China

• 15% of US users accessed Internet in 2005 (vs. 6% in 2004)

• Wireless now 1/3 of home phone minutes vs. 1/4 in 2004. 20% of US wireless users plan to drop fixed lines at home (esp. under 24 and <$50K)

But . . . Data may not be the salvation of industry:

• US: 75% not interested in video on mobile phones

• 69% not interested in music on mobile phones

• 43% would even pay for phones that prevent marketing messages!

• Other studies more bullish on wireless data

• Coming threat: cell+VoIP/Wi-Fi phones

Source: In-Stat (2005), Strategy Analytics (1/06), Chinese gov’t figures (2006), Royal Bank of Canada (2006), Forrester Research (2005)

Emergence of the ‘My Media’ Generation

Yahoo!-OMD Worldwide study of 5,000 in 13-24 age group in 11 countries (2005):

• Internet most important single medium, more popular globally than TV, as medium they “couldn’t live without”

• Internet has surpassed radio as the preferred medium for music in all 11 countries

• They “can’t recall a time before cell phones”

• They’re multi-taskers: perform 3-4 other tasks while online and 2-3 while watching TV

• Universally expect customization/personalization in media experiences: e.g., MP3s, ringtones, wallpaper, IM “avatars,” etc.

Source: Yahoo!-OMD Worldwide (9/05)

The ‘My Media’ Generation

• 87% of 12-17 year-olds use the Internet and 57% have created a blog, a webpage or posted content online

• 50% of 10-18 year-olds have their own mobile phone

• 50% of teens would rather have TV taken away than their mobile phone privileges revoked

• 66% of 13-21 year-olds rely on IM more than email

Source: Pew Internet & American Life Project (2005), GfK NOP Technology (2005), Itracks (2005)

US 12-17 Yr. Olds’ Top Online Activities/Sites by Time Spent (Reverse Order)

• Sports

• Community

• Gaming information

• Kids entertainment sites

• Auctions

• Online gaming

• Retail

• Discussion/Chat

• Email

• Instant messaging

Source: comScore (2/06)

• Viacom (Sports)

• Intuit

• Wells Fargo

• eBay

• EA Online

• Facebook.com

• MSN-Microsoft sites

• Yahoo! sites

• MySpace.com

• Time-Warner (AOL) sites

18-24 Yr-Olds Use More New Media

Those Who 'Regularly' or 'Occasionally' Use New Media

0

10

20

30

40

50

60

70

80

90

Blogs

Insta

nt Mes

sagin

g

MP3/

iPO

DS

Satelli

te R

adio

Pictu

re P

hones

Text M

essa

ging/S

MS

TiVo/D

VRs

Inte

rnet

Rad

io

% o

f U

S U

se

rs

Average of Other Age Groups 18-24 yr olds

Source: BIGresearch (6/05)

Reaching the ‘My Media’ Generation

‘New media’ much more influential than traditional media for this group:

• European youth (16-24) view the Internet as most favorable advertising channel. Online ads “most informative” form of advertising

• 50%+ of US college students have purchased a product or service based on an online ad; 34% said online ads were “most influential” way for them to learn more about a product or service

• US 18-24 year olds more influenced in purchase decisions by “new media” (Internet, IM, blogs, mobile phones, iPODs, text messaging, etc.) than any other age group

• But fundamentally it’s getting harder to reach this group

Source: MSN Europe-University of York (2006), Experience, Inc. (2/06), BIGresearch (6/05)

The New Media Universe

• Media consumption in the US now takes up more time on average (9 hours) than sleep or work

• US adults do an average of 3 additional things while online and 2.5 additional activities while watching TV

• TV remains the dominant medium in terms of minutes/hours of use, the computer is second

• Much more information is being consumed by users, from multiple media sources

• Result is diminished influence of traditional media or any single medium and the rise of more complex purchase behavior

Source: OMD North America (3/06), Ball State University (10/05), The Kelsey Group (3/06)

Time Spent with Media: 2005 vs. 2004

61%

25% 24%28%

21%

27%

37% 39% 40% 39%

9%

36%

30%27%

34%

Internet Television Newspapers Radio Magazines

More Time Unchanged Less Time

Source: BURST Media (2005) n=2,616

But What Is the Internet? A Tower of Babel

New Sites Proliferating Like Mushrooms

The ‘F-Word’:

• Consumers are using a range of media and information sources to make purchase decisions, depending in part on how much “consideration” is involved

• Consumers frequently start their research process at a search engine, but they very often end up at more specialized sites (e.g., verticals, directories, social nets)

• The vast majority of buying happens offline, locally with very little understanding by the seller/merchant of how the consumer actually got there

• More and more local buying is Internet influenced (think back: Jobs, Cars & Real Estate)

Fragmentation

Total US Retail

Offline Spending

97.5%

E-Commerce2.5%

Source: US Commerce Dept; Kelsey Group estimates, comScore (2006)

Local Buying vs. E-CommerceBut Internet Influences Offline Spending

Fragmentation: Consumers Using ‘3 or More’ Information Sources

31%

11%9%

6%

13%

35%

Wave 1 Wave 2 Wave 3 Wave 1 Wave 2 Wave 3

Professional Services Trade Services

Source: The Kelsey Group (3/06)“UserView III” (n=500)

Wave 1: October, 2003; Wave II: September, 2005; Wave III: March, 2006

Sources Used in Car-Purchase Decision

Most Influential/Important Sources% who identified

50%

40% 39%34%

23% 20%

9%

Search Consumerreviews

Third party sites OEM sites Dealership Friends/Family Newspapers orMagazines

Source: Yahoo! (2005)

Search ‘Intensity’ In Online Purchases

comScore studied (for Google) the impact of search on latent online purchase behavior and offline buying during US holiday 2005 season:

• The transactions that were tracked (25%) happened mostly locally, in physical stores

• Ecommerce buyers typically did not make a purchase in the same session

• The volume of searches per online buyer was striking:

Average searches per buyer across all categories: 65.1 Home & Garden: 70.2 Consumer Electronics: 88.0 Music, Movies, Video: 59.0 Toys & Hobbies: 46.2 Apparel & Accessories: 15.4

Source: comScore (3/06)

Local Search: Reach and Growth

• Internet now has an 84% local reach among online population

• 43% of search engine users are seeking a local merchant to buy something offline

•54% of search users have substituted Internet/search for the “phone book” mostly for specific local lookups

•92 of search-influenced purchases in CE category were offline

•There are 51.3 million users of mapping sites•Local is growing faster than general Web search

Source: Kelsey Group (2005, iCrossing (6/05), comScore (10/05)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

'Conservative': Explicit 'Expansive': Implicit

Se

arc

h V

olu

me

Source: Kelsey Group estimates, comScore (2005)

Current Local Search Volume(Major Engines Only)

Implicit Local: Users Often Have Local Intent Without Entering Local Modifiers

Commonly Searched Local Keywords

Source: comScore local keyword search report, qSearch (9/05)

0 10 20 30 40 50 60

Hotels

Wal-Mart

Restaurants

Hospitals

Attorney

Churches

Physician

Plumber

Dentist

Post Office

Millions of queries

Snapshot of Local Search: 3 SN Sites, 3 Cities

Los Angeles:

• Google Local: 12.67%

• Yahoo! Local: 12.06%

Top Local Queries:

• restaurants • Banquet Rooms • Movie Theaters • Nail Care• bowling • hairstylist • car wash • Day spa• florist • Veterinary Medicine • Cosmetic Surgery

Source: Enquisite by Metamend (Jan-Mar, ’06)

San Francisco:

• Google Local: 16.36%

• Yahoo! Local: 9.87%

Top Local Queries:

• Nail Salons • Chinese medicine school • Barbers • Restaurants • Organic Food • Day Care• massage• clubs • bridal shops• pizza

San Diego:

• Google Local: 18.33%

• Yahoo! Local: 4.36%

Top Local Queries:

• Day Spas • Hair Salons • restaurants • Bowling • car wash • preschool • grocery store• Car Accessories • Fitness • animal care

Where Consumers Would ‘Turn to First’ for Local Business Information: All Groups

Search Engine, 12.5%

Print YP, 61.0%Directory Assistance

(DA), 11.8%

Online YP, 7.0%

Friend, 2.2%Don't Know (D/N) 1.6%Other , 1.5%

Source: Kelsey Group – Feb. 2006; U.S. consumers n =1,000

Print YP, 44.1%

Search Engine, 18.4%

DA, 20.4%

Online YP, 8.2%

Friend, 4.6%

D/N, 1.5%Other , 1.5%

‘Turn to First’: 18 to 34

Source: Kelsey Group – Feb. 2006; U.S. consumers n =1,000

‘Turn to First’: $75K+ Income

Print YP, 51.0%

Search Engine, 27.4%

DA, 6.1%

Online YP, 13.6%

Other , 0.2%

D/N, 0.3%

Source: Kelsey Group – Feb. 2006; U.S. consumers n =1,000

‘Turn to First’: College/Grad School

Print YP, 58.5%Search Engine, 19.7%

DA, 4.6%

Online YP, 13.2%

Friend, 0.8%

Other , 1.6%

Source: Kelsey Group – Feb. 2006; U.S. consumers n =1,000

Local Shopping: Media Source Usage

Media Used in Past Year When Shopping for Products/Services in Local Area(Yes Responses)

70%

58% 59%

26%

13%

36%

73%

24%

18%

70%

62%

55%

27%

10%

39%

70%

22%18%

60%

75%

47%

24%20%

41%

73%

0

21%

Net: InternetMedia

PrintedYellow Pages

InternetSearchEngines

InternetYellow Pages

Verticals Direct Mail/E-Mail/Coupon

Books

Newspapers Localnewspapers

website

City GuideWeb Site

Wave 3 Wave 2 Wave 1

Source: The Kelsey Group (3/06)Base: Total Consumers, Wave 3 (n=500), Wave 2 (n=501), Wave 1 (n=1,006)

Implications for Marketers

• It’s more and more challenging to reach/engage consumers (esp. 18-24 year-olds)

• No local medium has the “monopoly” it once did

• Search hasn’t replaced traditional media either

• Online behavior is complex, convoluted; it’s hard to know where the consumer is in the buying cycle

• Tracking/capturing the influences on consumers is challenging

Thanks