Usmx2012 onlinetrends ap.pptx

Interac(ve Marke(ng Trends 2012 Reflexions of the Mexican Internet Adver5sing Industry

Adriana Pena, Sweden Dec 2011

Being on top of trends and making business decisions based on their implica5ons has never been harder but in the other hand has never been as fascina5ng

I´ve been a passionate participant of innovation all my life. Doing things different or for the first time has been the driver of my career. Now I have a unique opportunity to sit down from the pits and watch the cars running at accelerating speed and drawing conclusion from what I see. From these cold lands of Sweden I have been able to analyze great sources like Forrester, e-marketer, Mashable, Sociagility, Comscore, Brand Republic and tons of bloggers and journalist who had published an enormous amount of information. The data is all there, making sense of it and drawing conclusion for our market has been a thrilling endeavor.

I hope you find this presentation interesting and useful, but most of all I hope you share the same passion I feel for being part of the generation that is driving such amazing changes in our business.

Interac5ve marke5ng budgets will be as big as TV sooner than expected in US

Source: Forrester

In Mexico we still have a long way to go, but online advertising budgets are still expected to grow double digits in the next coming years

In Mexico despite what official sources have been publishing,

I estimate based on industry information that online budgets

may not be more than 4.5% in 2011

On the other hand expected growth for 2012 is 20-30% at the expense of other media

like magazines, TV and Newspapers

One of the challenges to agree on the size of the internet adver5sing budgets lays in

the defini5on of online budget: is it only money being paid to media partners, or does it inlcudes brand web pages, development of aplica5ons and agency fees?

Disregarding the actual size of online adver(sing budget of Mexican adver(sers the trend heads towards a strong growth, making online

marke(ng a discipline that cannot be minimized anymore

Interac5ve Embeds itself in the mix: the next digital

decade is here The following factors in US will enable the growth over the next five years: 1.   Bigger interac(ve teams 2.   Excitement about emerging media 3.   Interac(ve marke(ng effec(veness 4.   Customer obsession

Source: Forrester

In Mexico we have to consider these other factors as well:

1.  Younger brand managers and

younger employees in general at clients and agencies will pitch for their fresher ideas to be heard

2.  Social Media and recent political effects of it makes anyone who is not in touch with new media look outdated

3.  Marketing effectiveness has not being proved for consumer brands but a 40% reach of internet in Mexico makes a very compelling argument

4.  Tablets, Iphones androids and other ”cool” devices in the hands of tons of people will make it very hard to ignore the relevance of new media

5.  Rebates paid by media players to media agencies above 10%, makes online adverstising the most profitable media for media agencies

Percep5on of effec5veness will drive a different mix of interac5ve

marke5ng spending Although in Mexico investments on Internet Marketing will grow, lack of proper use of ad serving technology as well as an over use of clicks or cost per click as measurement of campaign´s ROI makes it very difficult for Marketing Directors to be fully convinced of effectiveness of online media The overall effectiveness of online media is still somehow a myth to be proven especially for the mass consumption advertisers that happen to have the biggest marketing budgets •  TV penetration is overwhelming in the country and is the

most easy to be measured and proven media

•  Media agencies rarely use the required technology or proper methodology to prove basic metrics like unique total reach of an online campaign so traditional media planning parameters like audience reach or number of people touched by an online campaign are unknown or severely under estimated since most campaigns are being measured only by website visits or ad clicks

•  There are very little studies on actual effects on brand health

from an interactive marketing campaign in Mexico

•  Very few big advertisers have an e-commerce business and the consequent experience of efficiencies in conversion rates that internet has in e-commerce strategies

Social Media, Mobile Marke5ng and Display adver5sing will drive US Interac5ve Marke5ng Spend

Search’s Share Shrinks Share will shrink 11 points as marketers refocus their search marke5ng strategies based on ”geTng found” by users. Brands will expand the play field in which they could be found by its customers by moving their search budgets to be present in mobile devices and social networks

Source: Forrester

Video ads will be the fastest-‐rising category of online spending in the next coming years

Source: eMarketer.com

1.  US online video ad spending to grow 43% in 2012. Digital video ads reproduces the richness consumer associate with TV at a lower cost and can be used a reach extender medium for TV with the same ad.

1.  Search behavior and their associated marke5ng spend moves to other media.

A por5on of marketer´s search budgets will move to mobile and social networks as users rely more on non-‐PC devices and nontradi5onal search engines like Youtube or FaceBook

2.  SEO Technology tempers the growth of agency fees. Development of be]er SEO plaôrms will make it easier for brand pages to be found therefore these technologies will undercut or replace agency fees dropping SEO costs about 15%

3.  Rich search ads capture brand dollars. Improved search engines interfaces will deliver new display-‐like ad formats embedded into search results

4.  Small and medium-‐size business (SMB´s) adopt and grow search programs.

Affordable search management solu(ons like Clickable and offline directories like SuperMedia from Verizon

Superpages are managing search adver5sing for local marketers who want to transi5on away from yellow pages ads

5.  Search spend shicing to display. Increasing keywords costs will eschew paid search for biddable display search, display ads bought through automated auc(ons

Search spend shicing to display

Source: Forrester

1.  Increasing cost of niche and remnant inventory. Online ad exchanges like AdBrite enable adver5sers to buy niche inventory and also to buy all inventory for its real market value

2.  Be]er online ad management tools. New data management plaôrms improve audience targe(ng, eliminate overlap across mul5ple publishers and measure the contribu(ons of a given impression towards business goals

Marketer´s love affair with display media is back: Driven by ad exchanges that simplify media buying process

Source: Forrester

1.  Marketers will create more relevant mobile ads. A skyrocket growth in acquisi5on of smartphones and tablets will allow be]er ads for mobile devices. Also be]er mobile ad servers will enable be]er ad targe5ng to specific clusters of users

2.  Tablets with their expensive ad units will become mainstream. These devices will contribute to the increase of mobile marke5ng investment due to the innova5ve and expensive ad formats they enable

3.  Adop5on of smartphones and tablets accelerates the demand for content consumed on these devices including, video, audio, social media, games, news, books and other types

4.  Buyers will embrace mobile commerce and adver5sing that drives it. Mobile commerce will top 31 billion and the upcoming explosion of tablet adop5on will amplify this virtual circle. Already 47% of tablet owners have shopped on their devices

5.  Email will s5ll be part of the mix of interac5ve marke5ng but spend on email marke5ng delivery, crea5ve, analy5cs and so won’t increase mainly because of their very low CPM´s

Source: Forrester and KPCB

According to Forrester This year Mobile overtakes Email and Social Media in US

1.  Due to the rela5vely low-‐cost of Social media management, brand expenditures on it won´t grow as much.

2.  Developing own social assets like a Facebook page or TT profile involves low costs, mostly community managing related only. Listening plaôrms cost only 5k-‐10k a month and there are very good open source plaôrms

3.  Social networks offer limited paid inventory. The biggest social media outlets for adver5sers FB and TT have only a few pay per click adver5sing op5ons, significantly smaller than tradi5onal media portals

4.  Listening will develop into social intelligence. Social data will be integrated to exis5ng CRM databases

5.  More interac5ve marke5ng investment will spawn more ad-‐supported content

Although all brands will jump into some kind of social media ac5vity, Social Media total investment will grow

moderately

Source: Forrester and KPCB

Mobile commerce is the next big thing in business. This will have an impact specially on retailers and the way consumers interact with them. 70% of those who have smartphones have used them on store. On the other hand following what Trendwatching.com calls “Retail Renaissance” consumers will enjoy shopping products and services in the real world more than ever and this will be driven by the fusion of technology and engaging experiences. 1.  Offline in-‐store experiences will have its online experience too. 8 out of 10

consumers research their purchases online. While online conversion rates for e-‐commerce are around 2-‐3.5% offline conversion rates from digital ads to stores for fashion retailers are 20-‐25%

2.  Barcode scanning is on the rise 3.  Time-‐or-‐loca5on-‐based offers and rewarding visits through some kind of geo-‐

located social media like Foursquare will be more frequently used 4.  Tablets will fuel deeper experiences and interac5ons with retailers and

products, especially luxury products and cars

e-‐commerce reloaded: Mobile and in-‐store digital experiences

Source: Trendwatching and e-‐Marketer

Following the interna5onal trend in Mexico online display adver5sing (be]er known as banners and videos) will get the mayor chunk of the growth in interac5ve spend. These are great news for media players and bloggers as well. The local drivers of this growth are: 1.   Tradi(onal media players like magazines, TV and radio are becoming full mul(media

companies and will encourage a strong growth of their digital new business

2.   Small niche content players are jumping in since digital is cheaper to produce than all other media (bloggers like whatevertomorrow, etc) and some old small players will shut down their printed edi5ons and leave only their online versions

Reflexions for Mexican Marke5ng Industry: Display Adver5sing

1.  As in the US ad-‐exchanges are already in the local market, providers like Ad-‐

Ne5ck are successfully selling to adver5sers. This technology enables a much more cost efficient alloca5on of ads and makes it much easier to buy space in niche content players including bloggers

2.  These players could represent a threat to tradi5onal media buying agencies since they automa(zed the media buying process and reduce the need for “alloca5on” advice. On the other hand they bring more transparency to the buying process since buying prices are auc5oned directly by the adver5ser. These could represent a long term challenge to agencies that buy media since another source of revenue for them are markups in adver5sing rates

Reflexions for Mexican Marke5ng Industry: Display Marke5ng: Ad-‐exchanges already here but s5ll with a long way

to go

1.   Relevance of social media has grown tremendously, due to many recent public events the percep5on of it importance in society has grown

2.  Mexico is one of most ac5ve countries in Social Media (see Comscore graphic in slide 11)

3.  Brands and Cyber stars are already ac5ve. Many brands already have a profile in FaceBook , or twi]er. Celebri5es are already charging “Product Placement” fees ranging from 1k to 60k just to post a comment about a brand.

4.   Most of Mexican adver(sers will jump into some kind of social media ac(vity in the near future since Social Media is the “cool thing” to be doing right now and to open a brand profile in FB, TT or YT is free.

Reflexions for Mexican Marke5ng Industry: Social Media brand ac5vity will increase tremendously

1.  Media buying within social media plaôrms is somehow a limited ground since mayor players offer few adver5sing op5ons (although this may change in the near future since 52% of traffic goes to SM). On the other hand a significant factor in Mexico is that FB, TT, and Google´s You Tube do not pay direct rebate fees to media agencies (some ad networks who resell social media ads do so) therefore social media ads investments won´t grow as much as one might expect

2.  Related services like community managing, content crea5on, consul5ng, development services like social media applica5ons and “social-‐media5on” of tradi5onal webpages will sprout. This will bring room for new revenue streams for tradi5onal online agencies and as well as new independent players (many bou5que specialists have appeared in the market to provide with community managing services and analy5c services)

3.  Mexico is par5cularly fond of Twi]er so the new brand´s profile that they have launched for 21 global adver5sers will drive more brands to Twi]er (h]p://bit.ly/tv0yfn) . Some of these global adver5sers already have interac5ve marke5ng investments through their Mexican branches like Coca-‐Cola, Dell, American Express, Pepsi and Nike

Social Media Brand ac5vity will grow, crea5ng a new market for related service providers

Reflexions for Mexican Marke5ng Industry: Social Media brand ac5vity will increase but social ad

investments will not necessarily grow as much

1.  Bigger Adver5sers in Mexico have less need of Search based online strategies. Search is a fundamental piece of the interac5ve mix when a brand is doing e-‐commerce or when the main objec5ve of a campaign is to drive traffic to a webpage. Adver(sers of consumer brand products who are currently under-‐spending in online and who will be the ones driving the upcoming growth in the Mexican market are not into e-‐commerce. Therefore they most likely tend to use more display, social media or develop glossy applica5ons for smart phones and tablets than search

They don´t need to be found as much as they need to be remembered

2.  An addi5onal force in Mexico to keep holding back the share of Search Marke5ng is that the main player Google does not pay to any agency rebate fees. Therefore profitability of media alloca5on in search is significantly lower for agencies than recommending display adver5sing or other digital online ini5a5ves to their clients

Reflexions for Mexican Marke5ng Industry: Search will keep growing but at a lower speed

As in the US market, affordable search management solu(ons for small and medium companies (PYMES) are in the way to burst into the market. The dominant player in this sector has been Seccion Amarilla, from grupo Carso. They have a very good chance to lead the conversion of these adver5sers since they already have them as clients and they have all the resources and the strategy to do so. Most of these adver5sers won´t develop a webpage on their own or a Facebook profile but would gladly migrate to something digital if a one-‐stop shop solu5on is offered to them. It´s hard to speculate if this market will be shared with Google or other big players including Facebook or if it will be mainly a transi5on of business model within Seccion Amarilla who is the leader in Yellowpages segment

Reflexions for Mexican Marke5ng Industry: Search will keep growing but at a lower speed

1.  Explosion of Smart phones and Tablets acquisi5on. There are already at least 9 million smart phones in Mexico and penetra5on of this kind of devices will grow at a 85% rate. Also tablets are in the rise worldwide and in Mexico as well. These premium consumers will be a very a]rac5ve market to be reached

2.  Innova5ve ad formats will a]ract trendy adver5sers as well as luxury brands. Smartphones and especially tablets allow more engaging ad formats and branded content. These will be very appealing to early adop(ng adver5sers and to agencies or developers that will try to sell these higher revenue ads to its clients

Reflexions for Mexican Marke5ng Industry: Mobile Marke5ng will be a more common part of the mix than

before

4 Take outs for the road 1.  In 2012 Interac(ve spending will surpass magazines

and maybe even Paid TV in Mexico

2.   Brands will fully embrace social media ac5vity this will sprout many new services related to community management, content produc5on and measurement

3.  Mexican adver5sers will increase their investments on display adver5sing triggering more demand for online inventory, specially the one for video ads

4.  Brands will explore different ways to get advantage of the rise of Smart Phone and tablets euphoria

Challenges and Opportuni5es

Agencies Clients Media and Content producers

1.  The center of the conversa5on will be how the online marke5ng budget should be split among all the possible interac5ve ac5vi5es and how these make sense in a bigger scheme of things. This is a challenge for most of the current par(cipants in the market since they are specialized in their discipline.

2.   More budget on online will demand more produc(on of ad formats, social media and mobile apps, social media glossy profiles therefore many independent providers will jump in to the arena

3.  Social Media bring opportunity for new services

1.  Clients will demand more mature agencies that can provide them with solid clear integrated interac5ve strategies; the core issue will how much they should be inves5ng in online marke5ng but how.

2.   Level of complexity of interac5ve marke5ng for clients will rise since brands will need to have an any-‐Time any-‐where digital points of contacts with their consumer deploying conversa5ons and presence according to each digital channel

3.  More clients will have their own internal experts on interac5ve marke5ng

4.  Mobile e-‐commerce and mobile apps will be explored by early adopter adver5sers

1.  More revenue will come from digital adver5sing

2.  Tradi5onal media companies will seize the opportunity reinforcing their online adver5sing s offer to their clients

3.  Social Media and Mobile will trigger demand for content, content producers could produce content for clients or find new ways to get digital sponsored deals

4.  Small players will become more relevant

Some References

US interac5ve Marke5ng Forecast 2011 to 2016 Forrester Research State of Media-‐Social Media Report Nielsen KPCB Internet Trends 2011 October 18 Millward Brown UK Predi5ons 2012 Contagiousmagazine.com 2011-‐2012 digital predi5ons eMarketer 2012 trends Euro-‐RSCG TrenspoTng for 2012 Trendwatching.com 12 crucial consumertrends 2012 Trendwatching.com Retail Renaissance

Business

Usmx2012 onlinetrends ap.pptx