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The Power of the Consumer
May, 2007
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Learn, Live and Hope
Learn from yesterdayLive for today
Hope for tomorrow.
The important thing is not to stop questioning.
Albert Einstein
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Today’s Discussion
• The Power of the Consumer– Choices– In Control– Important Consumer Segments
• The State of Mass Media
• What’s New in Digital?
• Conclusion
In Control and Making Choices
Shaping the Future of Media
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The Power of the Consumer
+ =
…and 15% Sales increase for Mentos Product
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(Marketer-Driven)
YESTERDAY
(Consumer-Driven)
TODAY
The World is Changing
Consumers were dependent
Marketers take direction
All Business Very Personal
Control was elusive Control belongs to the consumer
Yankelovich Monitor, 2007: US News & World Report Subscriber Study
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Time’s Person of the Year - YOU
YOU
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Ad Age Agency of the Year – The Consumer
• A Brand has only been as good as consumers’ experiences of it
• The 2006 Advertising Age Agency of the Year was “The Consumer”
There are lessons to be learned from the consumer, and agencies need to learn them
quickly Broad Reach Broad Reach
Precision Targeting Precision Targeting
Talk AT Talk AT
Talk WITH Talk WITH
Exposures Exposures
Engagement Engagement
Old Way
New Way
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Being satisfied with my life 63% 80% 86%
Being in control of life 63 76 80
Having a good marriage 62 70 76
Having a balance betweenwork and family life NA 57 72
Being able to take a day off 42 51 57
Early90s 2003 Today
* All data among consumers age 16+
What really matters to consumers?
Owning an expensive car 35 23 13
Having a large, expensive home 25 19 13
Yankelovich Monitor, 2007: US News & World Report Subscriber Study
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The World of “I”
• The “i” Generation– Individual– Independent– Inquisitive– Internet
• iGoogle: Google’s enhanced personalized homepage services– Allows users to share their own creative work– Personalizes web page view based on search history and geography
The new world must surround the “i” consumer and fulfill their individual needs and desires
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Choice and Control
• The average consumer gets between 254 and 5,000 commercial messages each day.
• The consumer is in control & choosing media that allows them that control– Satellite Radio & Personal Media Players
– DVR
– On Demand Programming
– User-Generated Content
– You Tube
– Podcasting
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Second Life
• Called the “Future of the Internet”
• 7 million users– $1.5 Million U.S. dollars exchanged daily
– 40 Hours spent per month
• Users by Country– 45% North America
– 38% Europe
– 11% Asia
– 6% Latin America
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Multi-Tasking or Interrupted?
• The brain can only handle one task at a time
• Multi-Tasking is not always effective or efficient
• 61% of middle/high school students multi-task while doing homework– Time Spent Multi-Tasking 1999 to 2006: 16% to 28%
• Study by UC Irvine of Investment Group employees showed:– Spent 10.5 minutes per project at a time
– Spent 2 minutes per document or device
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Simultaneous Media Usage
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Watching TV Listening to Radio ReadingNewspapers
Surfing theInternet
Percent of People Who Use Other Media While…
Advertising messages are competing not only against clutter, but against simultaneous media vehicle usage.
Connect with the RIGHT consumer at the RIGHT time with the RIGHT message!
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The Open Source Revolution
• “Open Source”: any creative work that is not treated as proprietary by its originators
• Consumers have a lot to say, and advertisers are putting the consumers in control so they can listen
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The Media Re-Evolution
• New and emerging media vehicles
• Endless programming choices
• The people choose how they want to “interact” with media
• There is a TWO-WAY flow of content between media and consumers
Important Consumer Segments
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Understanding Consumers
• For any successful marketing plan, we must first understand the target consumer.
– What is this consumers’ mindset?
– What is important to this consumer?
– How does the consumer interact with media?
– How can we build a relationship with this consumer?
– How can we get the consumer to interact with our brand/product?
– How can we create loyalty with our consumers?
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Baby Boomers
• 78.5 million consumers born 1946 – 1963– 44 – 61 Years Old
• Used to be considered “undesirables” by advertisers, but they have enormous Spending Power– $2 trillion spent annually on goods and services
• Smart Consumers– 80% of Boomers use the internet to research products/services
• Life isn’t Over Just Yet– Empty Nesters going back to school, taking on new jobs,
relocating, pursuing new hobbies, staying healthy while aging
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Generation X
• 50 Million Population born 1964 – 1980– 27 – 43 Years Old
• All about “ME”, the Individual
• Most educated generation, Affluent– However, they are starting to save for retirement
later – they live in the “NOW”
• Getting married/having children later in their lives
• Enjoy life experiences, work-life balance, humor, quality
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Alpha Moms
• First Soccer Moms, then Yoga Moms, now ALPHA MOMS– 5.6 Million Stay-at-Home Moms
• 18-39, HHI > $75,000
• Educated, tech-savvy, Type A, multi-tasker, kid-centric, hands-on
• “A Hip Mom who wants to be involved in her childrens’ lives but who doesn’t want to give up her identity”
• High Social Networking Factor– Wired – Online 87 minutes per day
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Generation Y
• 81 Million Consumers, born 1981 – 2001– 6 – 26 Years Old
• The “Overstimulated” generation
• Loyal - Social Networking is the fabric of their lives– Strong bonds with family
• Strong need for instant gratification and immediacy
• Truly Connected – Linked by Technology
• Workplace Re-Evolution– As Boomers retire, companies are faced with changing the way
they treat the Gen Y workforce
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Hispanics
• Fastest growing population segment in the United States– 41.3MM Hispanics in the US (US Census, 2005)– Expected to double by 2040
• Top DMAs for Hispanic Advertising– L.A., Miami, NY, Houston, Chicago
• Hispanic Online Usage Growing Rapidly– Total number of Hispanics online grew 11% vs YA– 61% have broadband connection– Social Networking Sites usage up 200%
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What do these consumers mean to us?
• Baby Boomers
– Not the demographic to be ignored anymore• Spending power leads to increased advertising importance,
especially in Health and Beauty, Travel and Leisure, and Finance categories
• Increase reach by utilizing online media
• Generation X
– Continues to focus on the “Me”, but is now a stronger, more educated and affluent consumer group• Brand experiences and relationships are important to this
generation
• Word-of-Mouth is an extremely powerful medium
• Looking for relevancy and engagement in brand relationships that improve quality of experiences
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What do these consumers mean to us?
• Generation Y
– A “connected” generation that is changing the way that media is consumed• Multi-Media usage is the norm
• Online Media must be included in communications – no distinction between traditional and non-traditional media
• Traditional media vehicles are still impactful, but messaging needs drive engagement
• Hispanics
– The growing generation is starting to make an impact on various industries• Digitally connected to their communities
• Similar to Baby Boomers, spending power leads to increased advertising importance in the Automotive, Retail, Entertainment, Telecom and Finance categories
Mass Media
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Imagine a World without Mass Media
One man’s view of the future…Ad Age’s Bob Garfield• Over-the-air network TV is gone
• DVRs are in every household, as is a broadband connection
• CPM has been replaced by ROI, VOD, Engagement & Effectiveness
• Branded Entertainment burned out quickly due to consumer frustrations at blatant product placements
• Newspaper and Magazine print versions no longer exist
• Satellite Radio is just another “8-Track” story, replaced by free podcasting and HD Radio
• “Micro Media” and “Permission Marketing” are the new buzz words
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2005 vs 2006 U.S Ad Revenue
Revenue by Media 2005 v 2006
$0.00
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
Tele
visio
n
New
spap
ers
Mag
azin
es
Rad
io
Inte
rnet
Out
door FS
I
Medium
Sp
en
din
g $
(00
0)
2006 revenues
2005 revenues
• Advertising Revenues are up across most mediums– Newspaper saw a -2.4%
decrease in advertising spending
– Internet and Outdoor saw the biggest increases (17.3% and 8.6%)
– Spending in Spanish Language media is also up significantly
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Zenith Optimedia U.S. Spending Predictions
• U.S. ad spending for 2007 should be around $189.6 billion– Up 3.5% from YA
• Television will be up because of Olympics and Political Advertising
• The internet is expected to overtake radio by 2008
• Publishers are beginning to invest in online properties more than print– No growth expected for newspapers
– Minimal growth expected for magazines
Advertising Age, 4/2007
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Zenith Optimedia Global Spending Predictions
• Global ad spending expected to grow 5.2%, or $454.9 billion
– Television: $167.8 Billion
– Radio: $36.3 Billion
– Newspaper: $126.2 Billion
– Magazines: $56.4 Billion
– Internet: $31.3 Billion
• Internet expected to account for nearly 9% of global ad spending by 2009
• Olympics and European Football expected to boost spending
Advertising Age, 4/2007
The Digital Evolution
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The U.S. Internet User
Age
18-24: 21%
30-39: 18%
40-49: 20%
50-64: 22%
Male/Female: 48%/52%
Race
White: 75%
Black: 11%
Hispanic: 13%
Household Income
HHI < $25K: 19%
HHI $25K-$50K: 24%
HHI > 50K: 44%
Education
< High School: 47%
Some College: 27%
College Grad+: 25%
ZDNet Research, 2007
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Internet Usage by Country
Online Populations (Age 15+)
0
20
40
60
80
100
120
140
160
U.S.
China
Japa
n
Germ
any
United K
ingdom
South
Kore
a
Franc
e
Canada
Italy
India
Brazil
Spain
Use
rs (
000)
ComScore, March 2006
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Internet Usage by CountryOnline Populations (Age 15+)
0
20
40
60
80
100
120
140
160
U.S.
China
Japa
n
Germ
any
United K
ingdom
South
Kore
a
Franc
e
Canada
Italy
India
Brazil
Spain
Use
rs (
000)
Average Monthly Hours Online per Unique Vistor (Age 15+)
0
10
20
30
40
50
60
70
Isreal
Finlan
d
South
Kore
a
Nether
lands
Taiwan
Sweden
Brazil
Hong K
ong
Portu
gal
Canada
Germ
any
Denmar
k
ComScore, March 2006
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Who are the Internet Refusers?
• 29% of U.S. households do not have internet access at home– 44% Web of no interest– 22% Economic factors– 17% Don’t know how to use– 14% Have it at work
• Age is not necessarily a factor– 40% > 65– 30% 35-54– 13% < 34
Park Associates Study, 2007
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Top Online Activities
1.Used e-mail2.Obtained the latest news/current events3.Made a purchase online4.Paid bills online5.Used Instant Messenger6.Obtained financial information7.Obtained sports news/information8.Played games online9.Made personal or business travel plans10.Obtained medical information
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Top Sites by Category
• Automotive: eBay Auto
• News/Research: Yahoo Finance
• Career Services: CareerBuilder
• Entertainment (Music): Yahoo Music
• Entertainment (Movies): IMDB
• Health: WebMD
• Retail: eBay
• Social Networking: MySpace
• Classifieds: Craigslist
• Blogs: Blogger
• Sports: ESPN
• Travel: Expedia
• Personals: Yahoo Personals
• Gambling: PCH
• Games: Yahoo Games
• News/Information: New York Times
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What’s New In Mobile
• Cell phones have evolved from simple communication devices to into multimedia devices
• Consumers are now using their mobile phones to listen to music, watch television, and even to buy things
– Personal Media Player– Camera– Mobile Video– Mobile Web– Content Sharing (Videos and Photos)– A Payment Device– GPS Technologies
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Demographic Profile of Mobile Subscribers
• 215 million mobile phone subscribers in the US
• Gender: 48% Male/52% Female
• Age: 68% are 18-54
• HHI: 43% earn less than $50k year, 39% earn $75k+
M:Metrics, January 2007
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But what about Mobile Advertising?
0%
10%
20%
30%
40%
50%
60%
1 2 3 4 5 6 7
•Consumers’ willingness to watch Mobile ads is still low
•But there are some that are still undecided
Scale 1-7, 1 not willing at all, 7 very willing
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Mobile Advertising Revenue
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2006 2007 2010
WorldwideU.S.
Mobile Advertising in the U.S. is still behind the rest of the world, but ad spending here is expected to increase over 700% by 2010
What does this mean for us?
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Yesterday…
• Media Fragmentation change the way consumers used media
• Used to be a one-way flow of content
• Technology options were limited
• Push instead of Pull Marketing strategy
• Advertisers bought “eyeballs”
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Today…
• New Emerging Technologies like the Internet, Personal Media Players and DVRs are changing the way media is consumed
• Traditional consumption of media is changing
• Consumers are also content-creators
• Now a two-way flow of content
• Pull instead of push strategy
• Measurement Sources are scrambling to capture all media consumption
• Advertisers are starting to question the “quality” of the eyeballs
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Media’s Tomorrow…
• A successful advertising campaign needs to:– Blend the line between “traditional” and “non-
traditional” media• Consumers don’t differentiate between the mediums, so
neither should marketers
– Create a relationship with the consumer• Tell the brand/product story through multiple
touchpoints
– Break through the advertising clutter• Provide a relevant and engaging message for the
consumer, not an interruption
– Provide better measurement tools• Need to measure not only impressions, but things like
simultaneous media usage, engagement, relevancy, and return on investment
– One-to-One marketing• Marketers need to find a way to speak directly to their
customer – Precision Targeting –and eliminate wasted impressions
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What does this mean for Marketers?
• What can help improve marketing effectiveness?– Better communications with C-Level Peers to the
realities of marketing
– Expansion of role from one only directed to marketing objectives to one that understands vision of the overall company
– Bridge the gap between Strategy and Creativity• Help the agency understand the overall strategy of company
and the core Brand “DNA”
– Understand the Ecosystem of Consumer Demand• Understand the realities of consumers’ daily lives
• Explore consumer motivations
• Reframe the opportunity space
• Find the Sweet Spot
