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October 3, 20081 Hot Trends: Social Networks, Mobile Marketing and Online Video October 3, 2008 Debra Aho Williamson Senior Analyst eMarketer Inc.

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Presentation on theme: "October 3, 20081 Hot Trends: Social Networks, Mobile Marketing and Online Video October 3, 2008 Debra Aho Williamson Senior Analyst eMarketer Inc."— Presentation transcript:

1 October 3, 20081 Hot Trends: Social Networks, Mobile Marketing and Online Video October 3, 2008 Debra Aho Williamson Senior Analyst eMarketer Inc.

2 October 3, 20082 Whats On Tap Today Internet Ad Spending Trends Social Networking Mobile Marketing Online Video

3 October 3, 20083 Internet Ad Spending

4 October 3, 20084 Internet: Approaching 10% of Worldwide Ad Spending

5 October 3, 20085 Source: eMarketer, August 2008 $25B in US Online Spending in 08 US Internet Ad Spending (billions)

6 October 3, 20086 Faltering Economy is Impacting US Ad Budgets

7 October 3, 20087 Why Will Online Advertising Thrive in a Difficult Economy? Online ads are more measurable than other media, making them increasingly appealing to advertisers The Internet audience is huge, so the simple process of advertising following eyeballs will lift spending Internet ad prices are rising, thanks to targeting and other techniques, which can push up overall spending

8 October 3, 20088 Advertisers are Committed to Increasing Online Spending

9 October 3, 20089 Social Networks, Mobile and Online Video: THE GOOD High penetration Enviable user demographics Elusive buzz factor Engaged audience

10 October 3, 200810 Social Networks, Mobile and Online Video: THE BAD Few standardized ad formats Consumers who are disengaged from ads Questionable ROI Measurement challenges "If a certain kind of spending hasn't been in your [advertising] budget for three straight years, you'll likely cut it when things get tougher. --Russell Fradin, president, Adify

11 And of Course, the Ugly October 3, 200811

12 October 3, 200812 Social Networks

13 October 3, 200813 Source: Universal McCann Social Networks: Only One of Many Types of Social Media

14 October 3, 200814 Is This Your Image of Social Networking?

15 October 3, 200815 Social Network Growth Markets: Mideast, Europe and Latin America

16 58% of Worldwide Internet Users Have Created a Profile October 3, 200816

17 October 3, 200817 US Usage Is Still Growing Unique Visitors to MySpace and Facebook August 2007-August 2008 (thousands) 75.5 million (up 10% from 07) 41 million (up 21% from 07) Source: comScore Media Metrix

18 October 3, 200818 But Is It a Fad Thats Losing Steam? US visits to social network sites are down 17% year- over-year vs. August 2007

19 SN Ad Spending Growth Slows in 2009 and Beyond October 3, 200819

20 October 3, 200820 US Spending Still in Flux Source: eMarketer, 2008 +55% +27% +15% +13% +11% 12/07: $1.6B 12/07: $2.7B

21 News Corp. Acknowledges This October 3, 200821 Social networking has gotten a disproportionately lower share of digital advertising budgets. If you compare the amount of traffic and the amount of users we have with the portals, most of those guys have been putting 50%, 60% of their budgets in portals, and 10% of their budgets against social network sites. -- COO Peter Chernin at Merrill Lynch presentation, Sept. 2008

22 Social Network Ad Experiments Continue October 3, 200822 MySpace home page takeovers Reach 40mm+ people/day Popular with movie studios Dark Knight: Trailer streamed 70mm times

23 What About HyperTargeting? Banner-ad targeting based on information people provide in their profiles Updated in real-time Half of all ad insertions now include some form of HyperTargeting Major brands: General Motors, Coke, Red Bull, Target Double eCPMs vs. untargeted ads October 3, 200823

24 - Comment directly on an ad - Become a fan of a brand without leaving the page youre on - Send a virtual gift to a friend Facebook Continues to Experiment With Viral Marketing October 3, 200824 New Ad Features Facebook has always tried to push the envelope. And at times that means stretching people and getting them to be comfortable with things they arent yet comfortable with. A lot of this is just social norms catching up with what technology is capable of. Mark Zuckerberg, New York Times, September 2008

25 October 3, 200825 On the Other Hand, Too Much Targeting is Never a Good Thing

26 October 3, 200826 Mobile Marketing

27 October 3, 200827 2008: The First Year Ad Spending Tracks Ahead of Subscribers Worldwide Mobile Ad Spending and Subscribers 2006-2012 (millions)

28 Mobile Usage Facts Over 85% of people 18-49 have a mobile phone (Pew Internet & American Life Project, August 2008) In two years, the average number of text messages we send every month has grown nearly 500% (Nielsen Mobile, September 2008) 39% of teens believe the mobile is the only type of phone they will own (CTIA, Harris Interactive, September 2008) 68% of consumers say the mobile Internet is an important factor in their next mobile phone purchase (AKQA/dotMobi, June 2008) October 3, 200828

29 October 3, 200829 Why Mobile Advertising Trails Mobile Subscribership Lack of awareness of the audience size, complexity of the mobile marketing ecosystem and a lack of trust among advertisers in the mobile advertising investment. Privacy Intrusiveness

30 October 3, 200830 Do Consumers Accept Mobile Phone Advertising? Source: Nielsen Co., September 2008

31 October 3, 200831 Where is the Money? Mobile Search Mobile Display Ads Text Messaging Or Here?

32 October 3, 200832 Google Android

33 October 3, 200833 Messaging Dominates Ad Spending

34 October 3, 200834 US: 36% of 2008 Mobile Spending

35 BMWs Snow Tire Campaign in Germany Personalized MMS message to customers, showing image of their car with a recommended tire and price Option to call dealer directly for appointment 30% bought tires from dealer during promotion October 3, 200835

36 Mobile Marketing: A Two-Way Street October 3, 200836 Take a photo, send it in a multimedia message Receive a picture of a customized Nike shoe Save as wallpaper, send to friends Order personalized shoes directly

37 October 3, 200837 The iPhone is Changing How Consumers Use the Internet

38 iPhone App Store Stats (9/08) October 3, 200838 Mobile Phone Applications: New Advertising Medium 100 million apps downloaded in 60 days 700 games 62 countries The iPhone has changed users expectations of what is possible in a mobile device and UI, and the AppStore finally showed the promise of mobile data applications. --Kleiner Perkins VC firm

39 October 3, 200839 Online Video

40 The Digital Landscape Confounds Many in the Media Biz October 3, 200840 We dont know whats gonna work. Predicting what the media world is gonna look like in eight years is incredibly daunting. I defy anybody to do that. - Jeff Zucker, president-CEO, NBC Universal, September 2008 We dont know whats gonna work. Predicting what the media world is gonna look like in eight years is incredibly daunting. I defy anybody to do that. - Jeff Zucker, president-CEO, NBC Universal, September 2008

41 October 3, 200841 Consumers Love Online Video

42 October 3, 200842 Half of US Population Watches Online Source: eMarketer, February 2008 US Online Video Users, 2006-2012 (% of population)

43 October 3, 200843 71% of US Internet users watch online videos at least once a week Source: Universal McCann, April 2008 % respondents, Mar. 2008

44 October 3, 200844 Types of video content people watch monthly: short, short, short Source: eMarketer, February 2008 Full TV shows = 27% % total US video viewers, Feb. 2008

45 October 3, 200845 Websites Love Video, Too Average CPMs: $43 for video ads; $15 for display ads (Bain & Co. for the Interactive Advertising Bureau) High sell-through rate: 90% for premium content creators (TV networks, etc.); 50% for content aggregators (YuMe and Collins Stewart LLC)

46 October 3, 200846 Video Ads: 2.6% of Online Spend in 2009 Source: eMarketer, September 2008 1.5% 2.0% 2.6% 3.4% 4.7% 6.8% 9.8% US Online Video Ad Spending (millions and % of Internet total) Video is the growth format on the Internet. -- David Hallerman, eMarketer

47 October 3, 200847 But Video Wont Challenge Search or Display -- Yet US Online Ad Spending, by Format (billions) 2008 & 2013 Source: eMarketer, August 2008

48 October 3, 200848 Factors supporting a (future) boom in online video spending Broadband is reaching a critical mass TV efficiency is declining yet still very expensive Advertisers can replicate the sight, sound, motion – and emotion – of television, but with better measurability and targetability There are vast opportunities for communication among consumers (aka, viral)

49 October 3, 200849 But There Are Significant Hurdles Can consumer- generated video be monetized? What ad formats work best? Will consumers skip over ads?

50 October 3, 200850 Four flavors of video ads 1) Pre-roll (also, mid-roll or post-roll) (the ad runs in-stream with video content) 2) Overlays (aka, bugs or tickers) (the ad runs at bottom of video, not interrupting content) 3) Skins (aka, player skins) (the ad runs surrounding video content window) 4) In-page banners (the ad runs in a box, not connected to video content)

51 October 3, 200851 In-Stream May Be Most Effective Ad Type LiveRail* ~ 80% preroll completion rate 11.5% clickthrough rate 88% of all video ads *provider of video ad technology

52 YouTube Experiments with Overlays October 3, 200852 New: Ad runs post-roll (after clip) if user doesnt click on overlay

53 But Ads on User-Generated Video Trail Consumer Usage October 3, 200853 Source: The Diffusion Group, July 2008

54 Zappos Gets Clicks for Its Video Ad Campaign October 3, 200854 Ad appeared on 50 sites targeted to females Video plays only after user clicks on it Simplicity: Ad served by same company that serves rest of Zappos ads Result: 5% clickthrough rate (vs. just 0.3% for banner ads)

55 October 3, 200855 When It Comes to Video Ads, One Attitude Does Not Fit All

56 67% Will See an Online Video Ad At Least 1x a Month in 2008 October 3, 200856

57 The eMarketer View Social networks are here to stay. Evolving ad models mean new opportunities to connect with consumers Mobile: The iPhone and phones based on Googles Android will be the new benchmarks for mobile content Video: The time to start online video advertising is now; the audience has reached critical mass October 3, 200857

58 October 3, 200858 Thank you ! Debra Aho Williamson Senior Analyst eMarketer Inc.

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