Outlook 2012 -- Winter Berry Group -- January 2012

8/2/2019 Outlook 2012 -- Winter Berry Group -- January 2012

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Outlook 2012:What to Expect in Direct and Digital Marketing

Bruce BiegelManaging Director

Jonathan MarguliesManaging Director

January 2012



Winterberry Group: Helping Advertising, Marketing, Media and

Information Companies Grow Value

Strategic Consulting

• Corporate Strategy Development

•

Market Intelligence• Marketing Process Optimization

• M&A Transaction Diligence Support

• Investment Banking Services, through



Outlook 2012

What Happened in 2011?

The Challenges Ahead:New Priorities for an

Increasingly Digital World10 for ’12: Critical Themesfor the New Year

Our Agenda



Although the U.S. Economy Expanded Again in 2011, Growth Slowed

Amidst Widespread Fears of a “Double-Dip” Recession

… However

Encouragingindicators emerged as2011 came to a close:

• Jobs market

• Housing market

• Manufacturing

• Consumer confidence

Stubborn Unemployment:~8.5% Stock Market/ Credit Rating Volatility

Anger Over PerceivedEconomic Inequality

Tepid U.S. GDP Growth:~1.8%



The Systemic Migration of Marketing Spending to Digital Channels

Continued—With Search and Display Leading the Charge

U.S. Advertising and Marketing Spending, By Share of Approach 2008-2012E (US $BB)

7%

8% 9% 11% 12%

Source: Winterberry Group analysis of various

sources

55% 56% 57% 56% 56%

38% 35% 34% 33% 32%

62%

68%



Direct Mail Continued Its Modest Rebound in 2011, With Spending

Growing In Line With Marketer Confidence

Source: Winterberry Group analysis

2009 Y-o-YDecline:16.9%

2011 Y-o-Y

Growth: 2.0%

2010 Y-o-YGrowth: 2.4%



DM Volume Degradation Slowed Substantially; First Class Still Poised

to Grab Share as Marketers Seek to Expand Targeting Efforts

Source: Winterberry Group analysis of U.S. Postal Service data

¹Based on estimate of Q4 2011 data

U.S. Direct Mail Volume, 2006-2011

First Class CAGR: -5.1%

Standard Class CAGR: -3.5%



Maturing Social and Mobile Platforms Driving Expanded Interest in

Those (and Other) “Emerging” Channels

Social

Search

Mobile Marketing

Online Display Advertising

Email

Other

Place-based Media/DOOH

Broadcast: TV & Radio

Direct Mail: Non-catalog

Print: Newspapers & Mags

Direct Mail: Catalog

3.0+ = Growth

Source: “Quarterly Business Review” (DMA and Winterberry Group), August 2011

Marketers: To what extent has your spend on the following channels changed compared to SQLY?

Spend Declined Significantly

Spend Increased Significantly

Email

Social

Search

Online Display

2 0 1 1

Mobile

Place-Based Media

2 0 1 2



“Traditional” Media World Confronting Substantial Challenges;

Changing to Address the Demands of Integrated, Data-Driven Media

USPSFinancial,Operational

Volatility

Rapid Declineof the Middle-

MarketPrint (and

LegacyTechnology)Industries

ContinuedDecline ofPure

BrokerageServiceModels

RisingMaterials,Logistics,StaffingCosts

Opportunities— Or Threats?

• Growing demand for targeted, personalized customer

communications, demanding…

• Channel-agnostic marketing execution platforms, as well as…

•

Robust data management, reporting analytics capabilities



Legacy Data Management Infrastructures Are Being Asked to Support

Vast New Streams of Unstructured Information…

“Customer File”: Contact Info

and Demographics

“Prospect File”: CRM

Demographics, Credit Scores

Transactional / Loyalty Records

Public Records

Self-Reported “Intent” Data

Behavioral (Clickstream)

Intent (Opt-In/Registeredand Inferred)

Web Analytics (Geo-/ Technographic)

?



… And So 2011 Advanced a New Potential Solution (and Acronym) for

Marketers to Consider: DMP

First-Party DataCollection

Third-Party/TagCollection

Centralized Data

Management

Integration withOptimization Engines

Analytics/ Segmentation

Data Integration/

Standardization

Export to ExecutionChannels

Data-UsageDashboard/Interface

Management ofPrivacy/User Pref’s

Integration withMedia-Buying Tools



For Suppliers, 2011 Presented Many Opportunities (Depending on

One’s Ability to Support Data, Analytics and Digital Integration)

Expanded marketer spending drove revenue,profitability opportunities

Marketers largely held off on new hiring, driving

demand for third-party outsourcing

New private equity/venture investment in emergingdata-driven marketing platforms continued, propelling

dynamism in the digital world

Boom year for marketing, media and technology M&Aactivity—deal volume up 187% over 2010*

*Source: Petsky Prunier LLC



For Marketers, Caution—Driven Largely by Economic Uncertainty—

Set the Pace for Another Recovery Year

Steady budgets led to increased testing andacquisition spending

Focus intensified on the role that reporting andanalytics tools play in attribution —widely considered

the “holy grail” of targeted marketing

Technology investments focused on cross-channelintegration, leveraging digital channels as the future

hub of activity

Economic uncertainty (especially through Q2 and Q3)inhibited new investment, though concerns largely

abated by year-end



With Print Media Effectively Under Siege—And No Major Events on the

Calendar—Above-the-Line Spending Growth Slows

2011 U.S. “Measured Media” Spending: $118.9BB

Newspapers: $21.5BB

7.3%

-8.2%

Television: $60.5BBMagazines:

$14.3BB-2.2%

Outdoor: $6.4BB

Radio:

$15.6BB

2.0%Cinema:

$0.6BB

Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2010 levels

2.0%

4.9%

2.1%



2011 U.S. “Direct & Digital” Spending: $164.9BB

Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel,from 2010 levels; DR Broadcast estimate not exclusive from above-the-line television spending estimate

Teleservices: $40.1BB

2.0%Direct Mail:

$45.8BB

Digital: $34.6BB19.8%

DR Print: $15.3BB

DR Broadcast: $25.4BB

7.7%Other: $2.8BB

5.1%

Insert Media: $0.9BB

Below-the-Line Spending Grew Yet Again—Driven by Continued

Expansion of Digital Channels

1.5%

7.6%

2.0%

12.5%








Our Agenda

Outlook 2012



Paradigms Are Shifting in the Marketing World—and the Only

Constant is Complexity

Rapid Technological Change

Evolving/Emerging Channels Fragmenting Customer Audiences

Proliferating Data Streams



Channels: New Delivery Media Presenting Opportunities for Marketers

to Enrich Their Customer Relationships

Broadcast Print OutdoorDirectMail

Catalog SearchOnlineDisplay

Place-BasedMedia

Acquisition: Established Acq.: Emerging

EmailMobile/ Tablets

SocialWeb/ Video

LoyaltyPrograms

Retention: Emerging

Teleservices Retail P-o-PDirect Mail/ Statements

Ret.: Established

h l d i i hi i i d



Attuned to New Technology

Options; Knows “ How to Search”

Availability of Specialty ContentDriving “ Microfragmentation”

Years of Digital Experience HaveDriven Sophistication, Insight

Source: eMarketer (Dec. 2011)

U.S. adults spent 30% more time interacting withtheir mobile devices at the end of 2011 than they did

at the beginning of the year

Consumers: Technology Adoption Has Driven Sophistication and

Demand for Tailored Content; Media Consumption Behaviors in Flux

h b ll d d i i f



Data: The Web Has Allowed Us to Harness Tremendous Quantities of

New Information…

0

5

10

15

20

25

30

35

2010 2020E

Global Data Storage, 2010 vs. 2020E (in Zettabytes)

B h R l f h R d f C Ch l T i H Y B



... But the Rules of the Road for Cross-Channel Targeting Have Yet to Be

Written; Until Then, Integration of “Digital Data” Will Remain Elusive

Known Names/Addresses…

… and Anonymous IP Addresses

“Batch” Processing…

… and Real-Time Deployment

Campaign-Driven Execution…

… and Continuous Targeting

Single-Channel Focus…

… and Integrated Marketing

T h l M i h C l N d f N Ch l d D



Technology: Meeting the Complex Needs of New Channels and Data

Streams Requires Platforms That Execute in Near-Real Time

Real-Time Media Buying

Asset Management

Scheduling/Routing

Budgeting

Creative Optimization

Yield Management

Data Processing

Distributed Mktg. Mgmt.

Ad Operations

Creative Production

Business Rules Mgmt.

Ad Serving

Web Analytics

Ad Verification

Campaign Management

Th C l it f T d ’ M k ti E i t H D i M t



Holistic MarketingProcess Management

E f f e c t i v e P e o p l e

M

a n a g e m e n t

The Complexity of Today’s Marketing Environment Has Driven Many to

Re-Examine their Internal Operating Silos

Brand Mktg.Direct Mktg.Digital

Mktg.SalesLoBs

ITInt’lFin.

What’s at stake? • Data

• Strategic Resources/Authority

• Creative Assets

• Investment Capital

• Knowledge/Expertise

Ulti t l S D d H li ti A h t M k ti



Holistic MarketingProcess Management

E f f e c t i v e P e o p l e

M

a n a g e m e n t

Ultimately, Success Demands a Holistic Approach to Marketing

Process Management

Efficient, Effective Marketing Execution

ProcessDesign

PeopleMgmt.

TechnologyDeploy.

StrategicUtilization

of theSupply

Chain

E l i M k ti O ti D d Will B i N Pl i t



Agencies—whose will seek to expand theirmandate upstream from creative/execution intostrategy, planning and program management

Enterprise technology developers—many ofwhom are building “stacks” of tools focused

on driving marketing automation (andsupplanting the role of traditional suppliers)

Management consultants—who will offerprocess management and cross-vertical

expertise to help in building a new marketinginfrastructure

Evolving Marketing Operations Demands Will Bring New Players into

the Advertising Ecosystem (and Alter the Role of Others)



How to Prepare for the “New Complexity”?

“As-Is”

• Understand your core marketing assets—creative, data,technology, people, suppliers• Where do they reside? What barriers exist to leveraging them?

“Could-Be”

• Establish a visit for your “ could-be” marketing

performance• What are your goals (by business, functional unit or geography)?

What gaps will need to be addressed first?

Stakeholders

• Identify the key stakeholders (both externally andinternally) who will need to support the transformation






Our Agenda

Outlook 2012

Major Quadrennial Events Olympics U S Presidential Election Will



Major Quadrennial Events—Olympics, U.S. Presidential Election—Will

Drive an Increase in ATL Spending This Year

2012E U.S. “Measured Media” Spending: $123.1BB

Newspapers: $20.9BB

6.6%

-2.8%

Television: $64.5BBMagazines:

$14.0BB-2.1%

Outdoor: $6.8BB

Radio: $16.3BB

2.0%Cinema:

$0.6BB

Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2011 levels

4.5%

6.2%

3.5%

Digital Direct Mail Will Post Gains Again; Other BTL Channels Will



2012E U.S. “Direct & Digital” Spending: $175.2BB

Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel,from 2011 levels; DR Broadcast estimate not exclusive from above-the-line television spending estimate

Teleservices: $40.7BB

2.5%Direct Mail: $46.9BB

Digital: $40.6BB17.4%

DR Print: $15.2BB

-0.7%

DR Broadcast: $27.7BB

10.7%Other: $3.1BB

5.2%

Insert Media: $1.0BB

Digital, Direct Mail Will Post Gains Again; Other BTL Channels Will

Fight for Share

1.5%

9.1%

11.1%

Social Mobile and Display Continue Posting Substantial Wallet Share



Social, Mobile and Display Continue Posting Substantial Wallet-Share

Gains; Email Continues to Grow (Though Spend Remains Low)

33.3%Social Technology

and Services¹: $2.1BB

8.4%Lead Gen &

AffiliateServices:

$0.2BB

12.4%Search:

$19.8BB

2012E U.S. Digital Advertising Spending: $40.6BB

Mobile: $1.8BB50.2%

Email: $1.8BB12.5%

OnlineDisplay:

$14.8BB

20.2%17.4%

Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2011 levels

¹Excludes social display and social search spend

10 for ‘12: Will “the Economy” Finally Recede From Our Collective



1 Global “ contagion” concerns

continue, but nearly a half- decade of economic stagnation finally begins to give way to more robust investment

10 for 12: Will the Economy Finally Recede From Our Collective

Worries?

10 for ‘12: Will the Suffering End for the Postal Service Print Suppliers



2 The severe bloodletting

diminishes—but the period of long, slow wallet share decline begins anew. Old institutions built upon sustained volume—USPS,mid-sized commercial print suppliers—see continued

contraction and consolidation in an attempt to right-size their platforms

10 for 12: Will the Suffering End for the Postal Service, Print Suppliers

and Others Reliant on “Traditional” Media?

10 for ‘12: Will Publishers Be Able to Satisfy Consumer Demands for



3 Content is king! Driven by

rapidly improving mobile,tablet and video technology,focus shifts to the integration of quality content and commerce—forcing a re- examination of existing publisher revenue models.

Paywalls may increasingly appear among super- premium publisher sites

10 for 12: Will Publishers Be Able to Satisfy Consumer Demands for

Deep, Informed, Media-Appropriate Content?

10 for ‘12: How Will Agencies Address the Challenges of Integrated



4 The concept of the “digital

agency” dissolves further as digital creative/execution becomes fully mainstream and direct and digital disciplines merge under the “ integrated” banner.“Traditional” (-only) shops

exit the scene altogether

10 for 12: How Will Agencies Address the Challenges of Integrated

Marketing?

10 for ‘12: Its About Screens and WhereYou Are But are Marketers



5 Mobile is not a channel—it’s a

way of life. The device or screen (phone, tablet, laptop,TV) with which the consumer interacts is combined with their location to force marketers to identify the right combinations of technology

solutions and content to drive relevant place-based messaging

10 for 12: Its About Screens and Where You Are. But are Marketers

Ready?

10 for ‘12: Will Advertisers Begin Capitalizing on Their Investments in



6 Rich social data—rather than

amorphous “ likes”—emerge as the true reward for social marketing pioneers; the move to capture this asset introduces a new dynamic tension into relationship between consumers,

marketers and intermediaries (as marketers prove less willing to simply give up use of this valuable data set)

10 for 12: Will Advertisers Begin Capitalizing on Their Investments in

Social Media?

10 for ‘12: How Will We Capitalize on the Onslaught of Data That May



7 Marketing data governance

emerges as a renewed corporate priority given the volume and complexity of cross-platform data. Old DM data management fundamentals dictate how marketers capture, parse and

redeploy information for online marketing

10 for 12: How Will We Capitalize on the Onslaught of Data That May

be Used to Drive Effective Integrated Marketing?

But Governance Alone Won’t Help Realize the Potential of Data;



Source: Winterberry Group/IAB survey Not inhibiting interest /

investment in marketing data

Seriously Inhibiting interest /

investment in marketing data

But Governance Alone Won t Help Realize the Potential of Data;

Growing Data-Savvy Talent Will Emerge as a Critical Priority

Which of the following do you see inhibiting interest/investment in marketing data?

10 for ‘12: Who Has the Resources, Insight and Technological Ability to



8 Integrated marketing

platforms (“ stacks”) built by Adobe, IBM, Google, Oracle and potentially others begin competing aggressively with agencies and other traditional marketing service providers

10 for 12: Who Has the Resources, Insight and Technological Ability to

Lead the Marketing Revolution?

10 for ‘12: Will Improved Economic Conditions Bring More M&A



9 2011’s robust deal making

continues—with a focus on the DSP, DMP and ad network sectors—as enterprise marketers seek to streamline what is now a wildly fragmented marketplace of suppliers

10 for 12: Will Improved Economic Conditions Bring More M&A

Activity in the New Year?

f ‘ I Thi h Y f M bil ? S i l? T bl ? Wid ?



No—it's the year of channel

integration, driven by data,analytics and (more than anything else): attribution.But the task isn’t easy,leaving a critical challenge outstanding: How to leverage growing, independent data

sets for cross-channel targeting?

10

10 for ‘12: Is This the Year of Mobile? Social? Tablets? Widgets?

Q i ? (A d Th k !)



Bruce BiegelManaging Director

[email protected]

(212) 842-6030

60 Broad Street, 38th FloorNew York, NY 10004

www.winterberrygroup.com

Questions? (And Thanks!)

Jonathan MarguliesManaging Director

[email protected]

(212) 842-6031

Documents

Outlook 2012 -- Winter Berry Group -- January 2012