Lawrence BergenfieldBergenfield & Associates
February 2010
Digital Bridges into The Physical World‘enabling two-way interactive solutions’
Understanding Your Customer TodayUnderstanding Your Customer Today
Consumption: Whatever, Whenever, and HoweverConsumption: Whatever, Whenever, and However
Consider Marketplace ExamplesConsider Marketplace Examples
CLOUD CLOUD computing done at its best eReader - Kindle by Amazon - in less than 12 computing done at its best eReader - Kindle by Amazon - in less than 12
months has become a billion dollar industry.months has become a billion dollar industry. This past Christmas eReader books surpassed physical books on AmazonThis past Christmas eReader books surpassed physical books on Amazon
PLATFORMPLATFORM Android- Google’s New Mobile Phone Operating SystemAndroid- Google’s New Mobile Phone Operating System +30 different styles from many manufacturers will launch this year. +30 different styles from many manufacturers will launch this year. New game changing applications like Visual Search will drive new consumer New game changing applications like Visual Search will drive new consumer
behavior.behavior.
JOURNEYJOURNEY Apple - from the iPod/ iTunes evolution to Apple TV, iPhone, and iPad. Apple - from the iPod/ iTunes evolution to Apple TV, iPhone, and iPad. And, just when you thought it was over, came mobile applications. And, just when you thought it was over, came mobile applications. The new wave of cutting edge Applications focused on location-based The new wave of cutting edge Applications focused on location-based
services (LBS), Video, and Intelligence will morph into Networked services (LBS), Video, and Intelligence will morph into Networked Augmented Realities.Augmented Realities.
Television
Internet
Consumers say they spend as much time online as they spend watching TV, while consumers under the age of 35 spend more time online than on TV.
Where People Spend Their Time…
Where People Spend Their Time…
Television
Internet
But, they spend over 10 times as much time with TV and the Internet as they do with print media like magazines and newspapers.
Consumers say they spend as much time online as they spend watching TV, while consumers under the age of 35 spend more time online than on TV.
But Advertising Spend Doesn’t Match
Television
Internet
But Advertising Spend Doesn’t Match.
Newspapers garner nearly three times the expenditure of online, and advertisers spend four times as much on TV advertising as all online advertising.
Television
Internet
The Triumvirate of Marketing Today..
Television
Internet
Direct Email Opt-in
Banner AdsSearch EnginesPortals
Short CodesWeb Sites
StoreInformational
NewspaperRegionalLocalWeekly Inserts
MagazinesDirect Mail
NationwideBroadcast NetworksCable Networks
RegionalBroadcast NetworksCable Networks
LocalizedCable Networks
Average Costs: Direct Mail $0.25; Sunday Circular $0.12; Email $0.004
Digital Migration of Advertising
Television Internet Print
WebsiteShort Codes
“Interactive TV”
Incented Video
WebsiteText MessagesEmail MessagesIncented Video
Coupons
Digital Loyalty
2D BarcodesShort CodesWeb addresses
Coded Ads
“Crossing the Channel and Enabling the Two-Way Street”
Advertising, for the first time, can truly become a two-way (‘push/ pull’) communication between seller and buyer
Digital Green is the new commodity that allows advertisers to connect offers & rewards directly to the point of purchase
From our Youth….One Third Of U.S. 10-Year-Olds Have Mobile Phones
Last year, more than 35% of U.S. children 10 to 11 years old had mobile phones,
•Almost double the amount in 2005, according to Mediamark data
http://www.businessinsider.com/chart-of-the-day-us-children-who-own-mobile-phones-2010-1?utm_source=Triggermail&utm_medium=email&utm_campaign=SAI_COTD_011910
To America’s Most Important Demographic… MomsSocially Viral & Value Conscious
Yes, Boomers Have Found Social Media andover the age of 55 is the fastest growing segment
The main reason is the same as every other generation has adopted social networking:
•They want to be connected to friends, family and most importantly, grandchildren
•In fact, boomers are more open to meeting new people through social networks than any other generation
Social Virality Now Accounts for 1/3 of all Internet Traffic
Twitter is processing more than 1B tweets per month and is expected to have 100m users by years end;
Twitter has become the MOST real-time news source and now Tweets can be found when conducting search queries;
Facebook has passed Yahoo and is now the number 2 most frequently visited website, second only to Google;
The Average Facebook User Spends 7 hours per month on the website vs. Google at one and half hours per month AND now reports 100+ Million Active Mobile Users
SHARE------ Social Virality!
Share This Post:Share This Post:
The iPhone has redefined consumer experience
Edged out the Mac business ($4.5B) and iPod ($3.4B) for second quarter in a row and the third time ever.
During 4Q09, Apple reported $5.6B of iPhone-related revenue, up 90% year-over-year.
First time iPhone has beat Mac and iPod by >$1B each.
And this despite Apple missing Wall Street's expectations for iPhone sales, thanks to increased competition from Google Android and other smartphones.
What’s a Mobile Phone For Anyway?
Voice
Enterprise Mobility
Social Networks & Internet
Location Based Services
Financial Relationship, Presence & Identity
Video on Demand
Smoke & Mirrors or was the Applications and Screens
Digital Advertising +11% YTD, 2010 estimated spend $65 billion *
http://www.adweek.com/aw/content_display/news/digital/e3i87c96b4228796e1d5aa19258f0fb5703* WPP's GroupM September 2009**GroupM said, citing comScore data from March 2009. As usage grows, marketers will likely spend more in the sector.
Accounting for 15% of all measured media
In the U.S., digital advertising is expected to climb 7% next year to $24.4 billion, grabbing a 17% share of total spending, compared to 15.4% in 2009
Much of the U.S. growth will be fueled by sharp declines in traditional print advertising, particularly newspapers
Mobile advertising will rise 19% next year to $3.3 billion, accounting for 6% of all digital spending.
What are Companies Paying for Digital Exposure?
21
22
Perceived Benefits:Why big & small companies are becoming more & more digitally inclined
The 360 Degree Center Cross Channel View…
Website
Mobile
Social Networks
Print Media
Rich Media
What Problems are We Solving?
Decreasing customer acquisition costs
Increasing basket size, spend and store visits;
Streamlined checkout process;
Reduction in inventory hold time;
Increasing turnover;
Quantify relationship between offer & redemption and spend & loyalty;
Making loyalty personal!
A.R.M.I.
Acquisition
Register
Measure
Index
Video Values/ Rewards Closed Loop Case Study
Dramatically Decreased Customer Acquisition CostsIncreased Average Basket Size and Spend by close to 100%Increased Average Customer Trip Frequency by close to 300%Identified Top Segment of CustomersAverage Redemption Rates close to 30%Year over year participating vendors experienced approximately 20% unit increases and 25% sales increasesDrove millions into in store salesGarnered hundreds of thousands of fully viewed videos per monthApproximately 80% of customers come virally or from sources outside of the retailer’s websiteOver 100 leading brands have participated
Metrics Determine Future Performance and Direction
Site & AdPerformance
Web OptimisationAction Items
Web AnalyticsCustomer Insights
SitePersonalisation
CustomerAnalytics
Customer RetentionCustomer Acquisition
Increased Basket Size & SpendMeasurable Return on Investment
‘Food Chain Theory’ Five Rules to Unlock the Digital World
By: Lawrence BergenfieldFebruary 2010; Revisited
Originally Authored Summer 2008
Digital Advertising Search YTD Volume +19.2% vs. 15.5%; Measuring What?
$21.95 B Market Cap** $7.21B Gross RevenueMarketshare 17.0%
* Source: AFP February 10, 2010 ** as of February 18, 2010
$251.80 B Market Cap** $61.9B Gross RevMarketshare 11.3% *
$171.2 B Market Cap** $21.8B Gross RevenueMarketshare 65.4%*
Rule #1- Pay Attention to the ‘Tranquil Obviousness’ Peter Drucker
Digital Advertising Time & Resources are primarily focused on ‘Push’ (one-way communications) advertisements.
Fundamentally, today, monetization is derived via costs associated from pay per clicks, conversions, impressions, time and actions.
Physical World Business Operators (such as Retailers) will enable clear measurement of Digital Advertising expenditures at point of consumption/ point of purchase. This will establish a game-changing paradigm (‘food chain’) shift.
Physical World Business Operators Deployment of closed-loop ‘opt in’ solutions are the key to enabling measurement, segmenting, indexing and remarketing.
Rule #2- Recognize Substantive and Sustainable ‘Controlling Forces’ in the Value Chain
Who has the greatest clout to impact the value chain?
Are eyeballs, click or view through rates, and time spent more important than measureable outcomes or purchases at the electronic point of sale?
The future will illustrate that Physical World Business Operators will use their purchasing clout to exploit these very same digital advertising budgets;
Many of the largest physically located businesses operators (such as retailers) are also the largest buyers of there vendors products and services;
These same vendors also happen to have some of the largest global digital advertising budgets;
The choice is clear: Digital Advertising Dollars captured/ measured at the point of outcome/ electronic point of sale OR continue with yesteryears push style advertisements via Google, Yahoo, or Bing?
Is it more important for P & G to advertise on Google. Yahoo, Bing OR through a Retailers Digital Solution like CVS… who happens to be a top 5 global outlet for the sale of P & G’s products and could enable measurability at point of sale?
Rule # 3- Influence ‘The Pawn’s’ Next Move
Digital Advertising Agencies may appear as the supporting actors to Physical World Business Operators who endeavor to optimize digital advertising monies & exposure;
However, traditional Digital Agency roles and responsibilities will be forced into managed service (SaaS) business models for survival.
This will also include aggregation of technology solution providers that enable a focus and measurable means to decrease customer acquisition costs while providing rich data around: registrations, push/ pull feature functionalities, and superior segment and indexation capabilities;.
The Digital Advertising Agencies that adopt SaaS models will have a strategic and tactical edge in leveraging enormous value.
Accelerating and extending 360-degree consumer facing solution adoption will benefit the entire value chain, provoke these agencies to have new, more robust and comprehensive value propositions.
Rule # 4- ‘Practicality’ in 360 degrees
Today, the world wide web still highly values search, click, see through and conversion rates, email marketing, number of (unique) visitors/ traffic and time spent.However, Physical Operators have begun to deploy digital solutions with significant successes.
Consumer focused ‘push’ solutions offering coupons have seen redemptions significantly greater than traditional print coupons. Interactive ‘push/ pull’ solutions like video rewards; offer an inducement for participation and provide a means that the consumer earns coupons with each video viewed. This platform has experienced similarly high redemptions, drove incremental sales and extends and enhances loyalty. The high success rates validate rapid consumer adoption of and for Interconnected Digital Solutions that extend and enhance value;
The end effect will provide a greater benefit to all parties as coop dollars extend/ convert into digital dimensions.
Digital Solution features and functionalities that capture, connect & optimize traditional data to individual such as localizing data will create a new set of efficiencies around merchandising, loyalty, faster segmenting, indexing, and more targeted re-marketing opportunities.
Rule # 5- ‘It’s a Journey’ evolution does create revolution
NEAR: Physical World Business Operators Implementation of Consumer Facing Hyperlocalization will enable personalized content offers, plus significantly provide a superior means to measure trends, and effectively manage and market inventory;
CORE: Through Digital Solutions New Efficiencies and Associated Return on Investments will establish a path towards extending, enhancing, and interconnecting the enterprise marketing and advertising platforms with interconnected metrics.
INSIGHT: Ongoing successes and rapid consumer adoption will accelerate ‘TIPPING POINTS’ for all the below layered with “predictive analytics”:• Loyalty Shift (from Household to Individual)
• Mobile payments
• Digital Signage
• Convergence
“Get your ducks in line…”
Digital Bridges into a Physical World“Today, the consumer is the final arbiter and thus, today’s tipping point for
whatever, whenever, and however; communication and or content is consumed. The consumer is adopting new technology platforms at annual speeds in just 90 days compared to the last decade.
Marketing, advertising, and promotion can no longer be passive one-way conversations. Interactive digital-advertising will provide the consumer valuable, relevant, and hyper-localized content based on established preferences and future predictive analytics.
Ultimately, the entire value chain will monetize these communications through decreasing customer acquisition costs, while increasing basket sizes, spends, & trip frequencies. However, the ability to capture incremental sales will define the inflectionary growth point(s).”
Lawrence Bergenfield
Don’t Get Lost in Space
Executive Engagement
Needs Assessment/Analytics and the Science of ROI
IT Collaboration and Balance
Marketing
Operational Execution/Employee Engagement
Customer Care and Centricity
Strategic Digital Bridges