Digital Marketing

Will it change everything?

Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

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David Wiesenfeld Background

• Franklin and Marshall College

• BASES (new product sales forecasting)

• John B. Pierce Foundation, Yale University

• Ocean Spray– Director, Business Insights

• The Nielsen Company – VP, Insights & Innovation, Digital

– Advertiser clients:

– Agency clients:

– Publisher clients:

Digital has become embedded in consumers’ lives

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tal

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Time spent online continues to grow dramatically

US average approx. 8 hrs/wk

76%Composite online

penetration in “Tier I” countries*

Typical American spent ~1 hour a

week more online in 2011 than 2010

Sources: Pew Foundation, The Nielsen Company, www.internetworldstats.com, www.census.gov

*Western Europe, Australia, Canada, Japan, USA (Dec 2010)

500M50M 2200M1100M

Global internet access doubling every 5 years

1996 2001 2006 2011

0%

25%

50%

75%

2001 2010

Internet Television

More Americans would rather give up TV than the Internet!

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This effects what marketers need to do to reach consumers …

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Facebook Myspace.com Twitter.com LinkedIn Classmates Online

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Top U.S. Social Media Sites

February-08 February-09 February-10

Number of US consumers who …

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Mill

ion

s

Sunday Newspaper Circ

Coupon/Reward Website Visitors

Sources: Nielsen NetView, www.newsosaur.blogspot.com - Oct 26, 2009

Sources: Nielsen NetView, www.newsosaur.blogspot.com - Oct 26, 2009

Top US Social Websites

Feb 2008 Feb 2009 Feb 2010

Exposure to Manufacturer Coupons

Sources: www.syfy.com

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… and how consumers decide what to buy

Word-of-mouth is our strongest marketing tool. We offer a compelling referral program that rewards both the customer and the friends and family she refers.

Josh Himwich, Director of E-Commerce, Diapers.comSources: Pew Research Center, www.diapers.com, www.zeer.com

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A common digital marketing observation

Adult Media Time Allocation (US)

Sources: TVB Media Comparisons Study 2010, Adults 18+; eMarketer 2010

Television51%

Digital28%

Radio15%

Newspapers4%

Magazines2%

Only 18% of media spend occurs online

Online media spend is underdeveloped

Is Digital another channel for media and commerce …

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… or is Digital more like a parallel world?

Source: Nielsen

Shopping

Entertain-mentSocializing

Learning

Socializing

Offline Time Allocation Online Time Allocation

40%

15% 10%

25%

Product-ivity

10%

Shopping 10%5%

25%Entertainment

45%

Product- 15%

Learn-ing

ivity

Shopping

Entertain-mentSocializing

Learning

Socializing

Offline Time Allocation Online Time Allocation

40%

15% 10%

25%

Product-ivity

10%

Shopping 10%5%

25%Entertainment

45%

Product- 15%

Learn-ing

ivity

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Just because you can, doesn’t mean you should …

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The 3 Powers of Digital Marketing

1. On Demand

2. Real Time

3. Personalized

Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

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Working

Shopping

Enter-tainment

Sociali-zing

Learning

Working

Shopping

Enter-tainment

Sociali-zing

Learning

Offline Brand Engagement

Creating Online Brand Destinations

Online Brand Engagement

Talking to Segments Interacting with Consumers

Online Marketing is about translating traditional marketing to digital; Marketing Online is about leveraging digital to market better

Paid Owned Earned (Social)

DefinitionAdvertiser buys media to distribute

desired content

Advertiser creates and publishes its own

content

Consumers & other “free agents” share Advertiser content

ORConsumers create &

publish original brand-relevant content

Examples

TV commercialsPrint ads

Online display adsOnline video adsSponsored links1

CatalogsWeb sites

AppsFacebook fan pageConsumer hot line

Consumer reviewsBlog-post mentions

Word of mouth“Liking” paid ads

Organic search results2

A helpful framework for the new media landscape

1Paid ad or link served in response to select search terms or other user actions2Unpaid search results – driven by naturally-occurring search behaviors 13

‘Owned media’ properties come in many forms

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A more helpful framework …

Degrees of freedom

ReachOR

Targetability

Lo

Hi

Hi

Lo

Lo

Hi

Network TV

Local TV (Spot)

Cable TVRadio

PrintDigital (Paid)

Digital (Owned)

Direct MailDigital (Brand-Generated Social)

Digital (Consumer-Generated Social) Mass Media

Digital

PR/WOM

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Digital Media “Rules of Engagement”

1a.Digital more effectively/efficiently supports your goals vs. other media

• Digital is the hot media channel and I need to be there

1b.Enables ‘on strategy’ action that no other vehicle does

2a.Adapt message/creative to digital platform

2b.Just because you CAN do it in digital, doesn’t mean you should

Use marketing sense

Use commonsense

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Leveraging digital to enrich brand experience: Starbucks.com

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P&G’s Style United allows consumers to build a style profile, and provides customized fashion advice

Online provides new ways for brands to engage consumers:

Leveraging digital degrees of freedom: DollarShaveClub.com

http://www.youtube.com/watch?v=ZUG9qYTJMsI

Online recipes are sort of like the iTunes of food

RANK (Sept 2010)

Food/ Cooking SiteUnique Audience

(000)Active Reach

(% )

1 Allrecipes 9,827 5.2

2 Food Network 8,781 4.6

3 Kraft Foods 8,284 4.4

4 About.com Food & Drink 5,442 2.9

5 Cooks.com 5,292 2.8

6 Betty Crocker 4,465 2.3

7 Pizza Hut 3,741 2.0

8 Myrecipes.com 3,110 1.6

9 Domino's Pizza 2,825 1.5

10 Food.com 2,800 1.5

11 Delish.com 2,623 1.4

12 Pillsbury 2,571 1.4

13 Kroger 2,346 1.2

14 OpenTable.com 2,150 1.1

15 Taste of Home Magazine 2,056 1.1

► 8 of Top 10 Food sites are recipe-related

► 25% of US online consumers visit food/cooking sites each month, spending an average of 20 minutes per month at these sites

20Source: Nielsen Netview

Multiple online venues featuring one-click integration to Kraft website, other digital content, including e-commerce

Fresh content

Mobile app – accessible whenever meal planning, shopping, meal preparation occur

Connections to other platforms

BEST

LOTS of ideas – not the ‘killer recipe’ – leverages digital navigation capabilities to find recipes & match with needs

Kraft has digitally charged its recipe program to create a high-impact on-demand relationship campaign

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Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

Is it because everybody’s doing it?

Shopping

Entertain-mentSocializing

Learning

Socializing

Offline Time Allocation Online Time Allocation

40%

15% 10%

25%

Product-ivity

10%

Shopping 10%5%

25%Entertainment

45%

Product- 15%

Learn-ing

ivityShopping

Entertain-mentSocializing

Learning

Socializing

Offline Time Allocation Online Time Allocation

40%

15% 10%

25%

Product-ivity

10%

Shopping 10%5%

25%Entertainment

45%

Product- 15%

Learn-ing

ivity

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Facebook Myspace.com Twitter.com LinkedIn Classmates Online

Uni

que

Vis

itor

s (0

00)

Top U.S. Social Media Sites

February-08 February-09 February-10Feb 2008 Feb 2009 Feb 2010

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Maybe because it’s the end of the world as we know it …

We’re losing control of our brands … ANARCHY!

New Pampers rumored to cause Diaper Rash

United Airlines Breaks Guitars – 9 million hitshttp://www.youtube.com/watch?v=-QDkR-Z-69Y

Comcast repairman falls asleep after 1 hour on hold with Comcast– 1.6 million hits 24

Maybe because it’s the end of the world as we know it …

Harnessing the power of consumer advocacy – the marketing version of cold fusion

X =

1.00 1.68“friend endorsement effect”X =

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Digital is reconnecting makers and consumers by allowing big brands to act small

Interactive 1.0

5000 BC – 1790’s

1 – 1

Proprietor is mktg/pr/cr

2000’s →1800 – 1990’s

One-way

Impersonal

“Mass Mktg” from massive entities

‘On demand’ interactions

Reintegration of mktg/pr/cr

Interactive 2.0

Industrial Revolution

Digital Revolution

A Brief History of Commerce

Personal Mktg 1.0 Personal Mktg 2.0Mass Marketing

Digital allows

personalization to SCALE

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Is this the future of ‘marketing?’

Olay ‘live’ on-demand beauty consults

Best Buy Twelpforce

Social media allows consumers to act “bigger” … just as importantly, it allows brands to act “smaller”

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Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

‘Listening’ is an easy, low-cost way to derive value from Social Media

ListeningObserving and interpreting naturally-occurring discussion to understand consumers’ lifestyles, attitudes, and needs

Listening WILL enhance your brand and marketplace understanding in several ways:

Deeper, more penetrating insights Early detection of risks, opportunities Enhance current research methods – refine topics and language

‘Mining [Social Media] is free mind-reading’ - Chris Brogan

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Listening allows researchers to study consumers ‘in the wild’

• Listening is a philosophy

• Will market researchers of the future be more like tour guides?

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Confidential & ProprietaryCopyright © 2010 The Nielsen Company

Why have over 25,000,000 of these sold?

Photos from getsnuggie.com, petside.com

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Confidential & ProprietaryCopyright © 2010 The Nielsen Company

Listening ‘trail’ enables trend analysis

WTF Blanket

Snuggies mainstreams (CNN, Time, Today

Show)

Snuggies Blog Mentions

• Peak level similar to popular TV shows (30 Rock)• Surpasses that other recent fashion innovation – Crocs

The Cult of Snuggie0.4M views

2.7M views

Source: Nielsen BuzzMetrics

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Commercial is offbeat

Commercial is realistic

Would remember commercial

Good benefit communication

Keeps me warm

Listening

Sightings

Braindead InventorsSnuggie Pub Crawl

WTF Blanket Parody

Snuggies

Survey

Snuggies Attribute Ratings(% Agreeing)

Warm

Backwards Robe

WantCommercial

Source: Nielsen Online

Listening helps tell the whole story. In some cases, listening is essential to finding the story

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How strongly do you agree that Brand X gives you energy?

Listening appears to be measuring something different than traditional ‘asking’ techniques …

These are complementary notions … we generally consider both in our everyday decision making

Man, did that 5-Hour Energy Drink charge me up! It’s AMAZING!!!MAGNITUDE

(How Many?)

INTENSITY(How Strongly?)

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Business School Buzz

Application through acceptance period generates discussion on

blogs and in forums

Columbia sets Twitter on fire by announcing use of 200 character-

only essays on application

School Buzz on Twitter, Facebook, Blogs, and Forums

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3 ways companies use Listening to improve marketplace performance

1. Innovation and co-creation

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2. Sense and respond

Cleaner for the Environment, Not for the DishesBy MIREYA NAVARRO

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BEST WORST

3. Consumer engagement

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Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

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Country E-Commerce Sales

UK $ 70.7

Germany $ 56.9

France $ 47.3

Benelux $ 9.0

Italy $ 8.8

Spain $ 7.0

Denmark $ 4.1

Sweden $ 4.0

Switzerland $ 4.0

Norway $ 3.5

Poland $ 3.0

Finland $ 2.8

China $ 65.8

India $ 6.4

Brazil $ 7.8

USA $ 165.4

Global e-commerce sales to reach $1 trillion in 2013

Global E-Commerce Retail Sales(US$ billion)

Sources: The Nielsen Company, eMarketer, Internet Retailer, Morgan Stanley

(US$ billion - 2010)

Note: Sales do not include travel, services

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Digital

Online grocery shopping consistent with long-termevolution around acquisition of food/everyday consumables

• Specialty shops

• Apothecary

•Small grocers•Neighborhood drugstores

• Supermarkets• Supercenters• Chain drugstores

1810 2010

Increasing Convenience

Increasing Choice

•Content•Connectivity•Customization

Increasing Efficiency

Consumer at the mercy of environment

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Global market forces will drive e-commerce growth

• Aligns with convenience customization, “on demand” megatrends

• First generation of ”digital natives” forming households

• Potential to reset manufacturer-retailer relationship

• Ability to “touch” consumer at point of purchase

• New business model potential (direct to consumer, services)

• CPG beachhead in looming Amazon - Walmart battle for global e-commerce supremacy

• Fence-sitters jumping in

• Economies of scale building in more developed online CPG markets

CONSUMER TECHNOLOGY

MANUFACTURERS RETAILERS

DEMAND

SUPPLY

• Broadband penetration

• Mobile adoption

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Sensor technology married with portability is the mobile ‘killer app’

Portability “Sensability”

Broadband“Cloud”

Product CodingComputing Power

Smartphone Tricorder

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Mobile has potential to transform shopping as we know it

(Play video)

http://www.youtube.com/watch?v=nJVoYsBym88

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E-Commerce is transforming shopping … and much more

Scenes from my commute

“The future is already here, it’s just not evenly distributed” -- William Gibson

Is the commercial landscape of our cities and towns headed back to the future?

Will retail workers be the farmers of the 21st century?

# of US Farmers

1900 2010

# of US Retail Workers

2010

-90% ??

2050

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c. 2025On-demand “pop up” stores …

the store itself becomes mobile

Where might all this go?

c. 2018The end (or reinvention) of brick &

mortar retail as we know it?

c. 2012Multi-store, multi-modal transactionsShop across multiple online and offline retailers;

checkout once

Today’s Discussion

• Rise of the Digital Consumer

• Online Marketing vs. Marketing Online

• Why all the Buzz around Social Media?• Digital alchemy – social media for brand building• Back to the future of market research – social media “listening”

• Your kids won’t shop for groceries the way you do

• Rules of the virtual road – guiding principles for marketing online

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Digital Marketing: Rules of the Virtual Road

Three most powerful differentiators of digital from media and commerce perspective: on-demand, real-time, personalization

- Ability to scale personalization may be most powerful feature

\ Digital is not the answer to everything- Deploy digital if (and only if) it allows you achieve your objectives more effectively

than another platform

Digital levels the playing field – low barriers to entry; many “real world” advantages of established brands do not translate

Fundamental principles of marketing still apply online – ultimately, the difference is there are more tools and fewer constraints

Digital is a marketer’s playground – those who master the digital tool kit and creatively apply it to support an overarching strategy will succeed

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