Turning COGS

Anthony Rhind

Thursday, 9th June 2011

Business environment is challenging ... heightened by economic crisis

Ultra Competition In a world of cheap interaction, entry

barriers are few & firms must compete

with a larger set of global rivals

Uncertainty Difficult to predict market change;

where tomorrow’s consumer,

competitor or category innovation will

come from

Complexity When interaction with everyone in

real-time is possible, decision-making

becomes significantly more complex

Fragility Interaction shifts the balance of power

away from firms, to consumers,

governments & other stakeholders

Crisis has created a challenging

advertising environment

... but a digital opportunity

Certainly consumer „connection‟is extending very rapidly

2 billion internet users worldwide

(Internet World Stats)

4.6 billion active mobile „phones

worldwide(UN Telecommunications Agency)

Smartphones WW

Symbian 36.6 (44.6)

Android 25.5 (3.5)

iPhone 16.7 (17.1)

Blackberry 14.8 (20.7)(Gartner Q3 2010)

500+ million active Facebook users worldwide

(Facebook)

517 million digital TV households

(Informa Telecoms & Media)

1 million Kinect units sold first 10 days. 5 million expected by

Christmas(Microsoft)

7.5 million iPads sold in 6 months

(Apple)

72% of teens have become a brand "fan" or "friend“ on a social

network

4 million Foursquare registered users

(Twitter)

190 million Twitter registered users

(Twitter)

62% of European shoppers consult

online forums before buying

... & capital stakeholders are confident

6/16/2011 :: 7

$8.5 billion10.5x revenue

$575 million2.6x revenue

$9 billion capTrading $95 vs. $45 IPO price

€750 million reported acquisition fund

6/16/2011 :: 8

So digital inherits the (advertising) earth ... ?

Something isn‟t working ...

Supply & demand market disconnect

Source: Cisco Visual Networking Index: 2009–2014

Audience is over supplied& growth areas under valued

...

Fixed cost entertainment

Growth in low cost advertising markets

Driven by social

Impactful, innovative, mobile ... hard to measure ROI

Familiar trading paradigm?

„Price‟ & „value‟ not the same ... but price is an optimisation lever

Auditing is a fact of life ... it‟s scope will increase

6/16/2011 :: 14

Source: Cisco Visual Networking Index: 2009–2014

Digital content value destruction ... „publisher‟ &

„media agency‟business model

stress

Cluttered consumer experience

Advertising poor, generic, annoying

Digital „tonnage‟ ... advertising commoditisation

Cluttered consumer experience

Advertising poor, generic, annoying

Low publisher sell-through / yield

Stressed content business model

Agency margin stressed by commission

model, complexity & operational scale

Digital „tonnage‟ ... advertising commoditisation

Cluttered consumer experience

Advertising poor, generic, annoying

Low publisher sell-through / yield

Stressed content business model

Agency margin stressed by commission model,

complexity & operational scale

Advertisers perceive digital as low

value

Digital „tonnage‟ ... advertising commoditisation

6/16/2011 :: 18

...must ad(d) value

Less inventory is a requirement ...

scarcity & certainty drive value

6/16/2011 :: 19

Better consumer experience ...

Better advertiser experience …

Better publisher margin

6/16/2011 :: 20

“The next phase of media will be after the page & after the site. Media can‟t expect us to go to it all the time. Media must

insinuate itself into our steams.” Jeff Jarvis

“1 billion impressions, 0.5% CTR”

... mustn‟t forget they are PEOPLE !!!

1963

6/16/2011 :: 21

The consumer isn't a moron; she is your wife. You insult her intelligence if you assume that a mere slogan & a few vapid adjectives will persuade her to buy anything. She wants all the information you can give her.

Reflect person‟s many selves ... reflect person‟s inter-related devices

PERSON

PARTICIPANT

CONSUMER

COMMUNITY

CUSTOMER

PRODUCER

USER

Content & advertising ... authorised, user generated ...

peer to peer conversations

thebrand.com

I talk WE talk THEY talk

What the

company says

What the consumer

experiences (interactions &

conversations)

What others

say about the

company

Touchpoints paid, owned, earned

& outcomes talk, think, trust

23

TALK THINK TRUST

6/16/2011 :: 24

Executionmust better exploit:

technology, data,

automation,

programmatic - segmentation, trading,

& „experience‟

Hype,hype, hype, hype, hype, hype

6/16/2011 :: 25

Believe it!

Today is only the dawn ...

6/16/2011 :: 26

Adoption inevitable,

opportunity significant

... move first!

6/16/2011 :: 27

* Crunchie Awards: January 2010

User level real-time data must enrichdigital planning & buying & creative

Privacy no longer a “social norm”*

Live „listening‟ to design

contact strategies is critical

New planning tools to balance

all touchpoints locally ... globally

6/16/2011 :: 29

User-based Optimization

• Cross-channel digital reach & frequency

• Display influence on search activity

• Keyword attribution and learning model

Planning Guidance

• Pricing benchmarks

• Reach & frequency estimates

• Daypart synergy with offline

Display Campaign Benchmarks by Client Industry, CTR (Left) and CPC (Right)

Timeframe: January-December 2007

Tailored Data Management

• Integration of sales & engagement activity

• Tailored KPIs

• Customized dashboard

reporting

Real-time execution based on

integrated consumer data-sets

6/16/2011 :: 31

Impression level „audience‟ & „domain‟

optimised programmatic buying

Clashing cultures: Creativity & intuition vs. technology & mathematics

6/16/2011 :: 32

“Dangerous primacy of mathematics over

psychology ... in business thinking &

decision making”

“Philosophy is dead. Philosophers have not kept up with modern

developments in science.”

... whilst also enforcing RESPONSIBLY

Digital marketing must balance

„art‟ & „science‟

6/16/2011 :: 33

“Re-tooling talent”

6/16/2011 :: 34

All levels & disciplines, especially management

Radical reinvention doesn‟t happen overnight

6/16/2011 :: 35 130 years ... unfinished

6/16/2011 :: 36

Thank you!

Obrigado!

Gracias!

Merci!

Grazie!

Arigatô!

Vielen Dank!

Terima Kasih!

谢谢您!