DIGITAL MARKETING HUB v2.0 - AdExchanger

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Digital Marketing Hub <strong>v2.0</strong> BMO Capital Markets IP Device Adoption and Narrowing Adoption Curves At the nodes of these networks are a rapidly innovating group of devices, all potential outlets for marketing. In terms of primary devices, the evolution of IP advertising began on the PC, evolved into its first on-the-go device, the laptop, and then moved onto mobile phones, and in the past few years, tablets. At the same time, secondary IP devices like connected televisions and digital-out-of-home billboards have brought significant change to traditionally analog marketing experiences. Innovation around form factor, processing speeds, screen quality and user interfaces, among other things, have all driven new product evolution. The pace at which consumer media technologies are adopted -- and oftentimes cast aside –continues to accelerate as well. New device adoption is happening more quickly in the digital era for a number of reasons, including increased velocity of marketing, particularly word-ofmouth, and Moore’s Law-like innovation that drives prices lower more quickly. For brands this means events like the annual Consumer Electronics Show in Las Vegas each January has become a magnet for the marketing industry. And just as new devices rise, others fall, creating a need for regular turnover in marketing strategy focus. Finally, on top of all of these devices are constantly shifting range of media and communication properties – portals, social networks, messaging services, etc. – that also drive growth of the advertising and marketing services industry. Exhibit 23. Media Technology Penetration Rates Black and White TV Color TV VCR 100% Wireless phones HDTV Smartphones 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1946 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 Source: Consumer Electronics Association "FastFacts Historical Sales Data - January 2012" More devices also create the need for more customized creative and campaign design. These devices are embedded with different operating systems and different screen sizes (among other things), which also supports industry growth. For example in the smartphone business, marketers are developing branded apps for the Apple iOS platform that runs on all iPhones, but also apps for Google’s open-source Android platform, where the many different screen size and form factors exist. A member of BMO Financial Group 34 June 7, 2012
Digital Marketing Hub <strong>v2.0</strong> BMO Capital Markets Multi-Channel Marketing and More Holistic Consumer View For major marketers, these technological innovations result in a more robust picture of their customer and target base. Marketing CRM databases and strategy personnel have long-aimed to fill out the complete view of a brand’s customer base and all interactions with the brand; with IP advertising, this goal is closer to becoming a reality. Coordination of marketing across more and more consumer touch-points is becoming a more important priority for CMOs. Hurdles include challenges in cross-channel attribution/analytics and silo’ed marketing organizations, both at brands and agencies. Exhibit 24. Multichannel Marketing Is a Top Priority, But Change Comes Slowly Completely Agree-5 4 3 2 Completely disagree-1 We must change dramatically to become a multichannel company 19% 33% 33% 14% 2% Multichannel customers are worth more than single channel ones 23% 37% 27% 11% 1% We must rethink customer service to become a true multichannel co. 30% 38% 20% 10% 2% Our multichannel strategy will factor in how we develop products & services 26% 46% 19% 8% Our multichannel strategy will factor in how we invest in technology 27% 48% 22% 3% Being a multichannel co. is critical to our long-term success 37% 42% 18% 3% Expectations for multichannel relationships with brands have changed 31% 50% 16% 1%1% We will drive more sales by becoming multichannel 37% 47% 13% 3% We have to improve our multichannel capabilities 36% 49% 11% 4% Source: Forrester Consulting on behalf of Webtrends Digital Natives March to Majority Status The sociological division between digital immigrants (we’ll call them pre-1980) and digital native demographics should not be underestimated. Of course the cutoff isn’t a specific year of birth and waves of innovation create sub-groups with different rates of emerging technology adoption. But the point remains that audience and behavior trends offer tremendous demographic growth to IP based advertising and marketing services as a generation for which connectivity is ubiquitous and “second nature” and they are increasing each day. Exhibit 25. Channels Used for Communication by Age Group Overall 15-17 18-24 25-34 35-44 45-54 55-64 65+ Email 45% 10% 16% 39% 45% 55% 77% 91% Text messages 36% 64% 55% 44% 34% 30% 14% 4% Posting messages on Facebook 12% 15% 15% 16% 17% 7% 5% 0% Direct mail (letters, catalogs, postcards, etc.) 2% 1% 3% 1% 2% 2% 2% 3% Instant messaging 2% 4% 4% 4% 2% 1% 1% 0% Messaging app on a cell phone 2% 2% 4% 1% 1% 2% 0% 0% Posting messages on Google+ 1% 2% 2% 1% 0% 0% 0% 0% Posting messages via personal websites or blogs 1% 1% 1% 1% 0% 0% 0% 0% Posting messages on Twitter 0% 1% 0% 2% 0% 0% 0% 0% Source: ExactTarget 2012 Channel Preferences Survey A member of BMO Financial Group 35 June 7, 2012
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