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Outfront Conference April 2012 AdvertiserPerceptions.com VIDEO ADVERTISING CONVERGENCE What Adver+sers Think™ Speaker: Ken Pearl, CEO

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Outfront Conference April 2012 AdvertiserPerceptions.com

VIDEO ADVERTISING CONVERGENCE What  Adver+sers  Think™    

Speaker:  Ken  Pearl,  CEO    

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Adver&ser  Percep&ons  is  the  leader  in  providing  the  media  industry  with  research-­‐based,  adver&ser  insight  and  guidance  necessary  for  strengthening  media  brands  and  increasing  adver&ser  sa&sfac&on.      We  specialize  in  determining,  analyzing  and  communica&ng  what  adver&sers  think  —  their  plans,  opinions  and  mo&va&ons.  

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Outfront Conference April 2012 AdvertiserPerceptions.com

TODAY’S DISCUSSION

•  Advertiser Optimism •  TV to Digital Migration •  Decision Drivers •  Preferences: Format,

Pricing and Length

Advertiser Perceptions of Digital Video Advertising

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Outfront Conference April 2012 AdvertiserPerceptions.com

STUDIES USED

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ADVERTISER INTELLIGENCE REPORTS •  Wave  16  •  Fall  2011 VIDEO ADVERTISING CONVERGENCE STUDY •  Preliminary/Early  Findings    •  Release:  Late  May  2012 DEMAND-SIDE OF DIGITAL VIDEO ADVERTISING STUDY •  Conducted by Advertiser Perceptions for IAB •  Fall 2011

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Outfront Conference April 2012 AdvertiserPerceptions.com

METHOD • INTERVIEWS CONDUCTED ONLINE AND BY PHONE

• INCENTIVES INCLUDE CASH AND INFORMATION

Profiles of Leading US Advertisers Overall

Marketer 40% Agency 60% VP and Above 33% Director/Supervisor 33%

Manager/Planner/Buyer 33%

METHODOLOGY AND PROFILE OF LEADING U.S. ADVERTISERS Qualification: 100% Involved in Television and/or Digital Video Media Brand Selection Decisions

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DIGITAL   TV  

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ADVERTISER OPTIMISM INDEX When  More  Plan  to  Increase  than  Decrease  Ad  Spending  in  the  Next  12  Months    

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Outfront Conference April 2012 AdvertiserPerceptions.com

AIR Wave 11 Spring 2009

AIR Wave 12 Fall 2009

AIR Wave 13 Spring 2010

AIR Wave 14 Fall 2010

AIR Wave 15 Spring 2011

AIR Wave 16 Fall 2011

Broadcast TV -17 -8 0 -1 5 5 Cable TV 1 11 13 15 19 21 Digital (net) 40 55 60 59 48 52

-30

-20

-10

0

10

20

30

40

50

60

70

Optimism

Pessimism

ADVERTISER OPTIMISM

Base: All respondents Benchmarks represent differences between respondents increasing and decreasing ad spending in the next 12 months

Trends in Ad Spending, Next 12 Months Differences Between the Percent Increasing and Decreasing by Media

Optimism for Digital, Cable and Broadcast

Digital  (+12)  

Cable  (+20)  

Broadcast  (+22)    

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Spring  2009  Fall  2011  

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Outfront Conference April 2012 AdvertiserPerceptions.com

48

49

50

51

52

53

54

55

Fall 2011 Digital Display 50 Digital Search 53 Digital Video 54

Search  

ADVERTISER OPTIMISM DIGITAL VIDEO More Optimism About Increasing Video Ad Spending

Base: All respondents by applicable media Benchmarks represent differences between respondents increasing and decreasing ad spending in the next 12 months

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Video  

Display  

Video  

Digital Ad Spending, Next 12 Months Differences Between the Percent Increasing and Decreasing by Media

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Outfront Conference April 2012 AdvertiserPerceptions.com

Q: Imagine the amount of your company's/your client's total (SEGMENT) advertising budget as a whole is a pie, and each of these media types is a share of the pie. In the next twelve months, would you expect the share spent on each to increase, decrease or stay the same? Base: All respondents by applicable media

Ad Spending, Next 12 Months Differences Between the Percent Increasing and Decreasing by Media

ADVERTISER DIGITAL VIDEO OPTIMISM BY AD CATEGORY

54

77

66 65 63 61 61 58 57

54 50 49

44 44 43 37 35

0

10

20

30

40

50

60

70

80

90

100

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All Categories are Optimistic about Video

Most  Op+mis+c  Auto  Consumer  Electronics  Financial      Least  Op+mis+c  Beauty    Telecom  Energy    

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Outfront Conference April 2012 AdvertiserPerceptions.com

TV TO DIGITAL MIGRATION

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Shifting Ad Dollars, Reasons Why and Issues

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Outfront Conference April 2012 AdvertiserPerceptions.com

DIGITAL VIDEO AD SPENDING | NEXT 12 MONTHS Majority Plan to Increase Digital Video Advertising

Q: Imagine the amount of your total online display (not including search) advertising budget as a whole is a pie, and each of these media types is a share of the pie. In the next 12 months, would you expect the share spent on each to increase, stay the same or decrease? Base: ALL RESPONDENTS

• Agencies are more Bullish than Marketers

• TV and Digital Media Decision Makers are Aligned

55% Marketers

69% Agencies

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Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

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Outfront Conference April 2012 AdvertiserPerceptions.com

DIGITAL VIDEO AD SPENDING | NEXT 12 MONTHS Average Digital Video Advertising Share of Budget Increase…

Q: What overall increase in digital video advertising do you expect in the next 12 months compared to the past 12 months? Base: ALL RESPONDENTS

55% Marketers

69% Agencies

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Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

22%  

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Outfront Conference April 2012 AdvertiserPerceptions.com

TELEVISION TO DIGITAL MIGRATION BEGINS TV Ad Budgets are Starting to be Used for Digital Spending

Q: For each website/network/DSP that you will primarily place digital video on, please tell us if the money for digital video primarily come s from …? (Select one.) Base: All Digital Respondents

Percent of Respondents Stating Budget Source for Digital Video Advertising

53%

14%

33%

Digital TV Both

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TV  Ad  Budgets  Paying  for  Digital  Video  Adver&sing  

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Outfront Conference April 2012 AdvertiserPerceptions.com

DIGITAL VIDEO ADVERTISING | REASONS WHY

Q: Why are you (extremely/somewhat likely)to shift ad dollars from television advertising to digital video advertising in the next 12 months? Base: Those extremely/somewhat likely to shift ad dollars from television advertising to digital video advertising in the next 12 months.

Total Ad Budget

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Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

In  their  own  words  (unaided)  

Digital   TV  

“More  Targetable”  

“Produc&on  is  Less  Expensive”  

“Overall  More  Efficient”    

“More  Bang  for  the  Buck”      

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Outfront Conference April 2012 AdvertiserPerceptions.com

TOP TWO AIDED REASONS FOR MIGRATION

Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

REASONS Better ROI

Agencies 53%

Marketers 62%

REASONS Audience is Moving

Agencies 47%

Marketers 41%

Better ROI…followed by It’s Where the Audience is Moving

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Digital Media Decision Makers

55%

TV Media Decision Makers

57%

Digital Media Decision Makers

44%

TV Media Decision Makers

50%

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Outfront Conference April 2012 AdvertiserPerceptions.com

In their own words (unaided) DIGITAL VIDEO ADVERTISING | WHY NOT

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Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

Digital   TV  

“Client  Experience”    

“Proven  Effec&veness”  

“Mass  Reach”  Less  about,  Why  Not  Digital    More  about,  Why  Television    

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Outfront Conference April 2012 AdvertiserPerceptions.com

TOP TWO AIDED REASONS WHY NOT

Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

REASONS ROI

Agencies 36%

Marketers 56%

REASONS Standard Metrics

Agencies 44%

Marketers 38%

Less Effective ROI…followed by Lack of Standard Metrics

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Digital Media Decision Makers

44%

TV Media Decision Makers

43%

Digital Media Decision Makers

41%

TV Media Decision Makers

43%

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Outfront Conference April 2012 AdvertiserPerceptions.com

MEDIA DECISION MAKING

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Criteria Used, What’s Important to Most and Who Decides

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Outfront Conference April 2012 AdvertiserPerceptions.com

Ad Results are #1

148

134 121 121 119

112 114 102

83 75

56 49

0

20

40

60

80

100

120

140

160

IMPORTANT MEDIA SELECTION CRITERIA | DIGITAL VIDEO

Q: Please think about MEDIA TYPE advertising spending on (SEGMENT) generally. Please tell us how important each of these criteria are in determining where to spend your company's advertising dollars. Base: Total digital video respondents. Index 100 = total average of all related media brands

Index of Percent Rating Media Selection Criteria Very Important (5 on a 5-Point Scale)

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Important  to  Most    Ad  Results    Audience  Composi+on  Targe+ng  Op+miza+on    Audience  Reach        Important  to  Fewest  Cross-­‐Media  Integra+on  Marke+ng  Services    Image/Environment      

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Outfront Conference April 2012 AdvertiserPerceptions.com

Slightly More Agencies Care About… •  Targeting •  Optimization •  Engagement •  Content •  Image

0

20

40

60

80

100

120

140

160

Agency Marketer

IMPORTANT SELECTION CRITERIA FOR DIGITAL VIDEO AGENCIES AND MARKETERS AGREE ON MOST

Q: Please think about MEDIA TYPE advertising spending on (SEGMENT) generally. Please tell us how important each of these criteria are in determining where to spend your company's advertising dollars. Base: Total digital video respondents Index 100 = total average of all related media brands

Index of Percent Rating Media Selection Criteria Very Important (5 on a 5-Point Scale)

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Outfront Conference April 2012 AdvertiserPerceptions.com

AD RESULTS MATTERS MOST | DIGITAL VIDEO AGENCIES / MARKETERS

19%

26%

32%

32%

37%

43%

44%

48%

55%

56%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Time Spent on Website

Number of Page Views

Number of Impressions

Number of Visitors

Impact on Offline Response and/or Retail Traffic

Click-thru Rates

Impact on Product Awareness

Impact on Brand Awareness

Impact on Sales

Return on Advertising Investment (ROI, ROA, Sales

Conversion Rates

Agency Rank

Fall 2011

17%

26%

26%

29%

37%

43%

44%

45%

56%

63%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Time Spent on Website

Number of Impressions

Number of Page Views

Number of Visitors

Impact on Offline Response and/or Retail Traffic

Impact on Product Awareness

Impact on Brand Awareness

Click-thru Rates

Return on Advertising Investment (ROI, ROA, Sales

Conversion Rates

Impact on Sales

Marketer Rank

Fall 2011

Q: How important are these aspects of ad results?

Base: Respondents rating ad results 3-5 on a 5 point scale.

Percent Rating Criteria Very Important (5 on a 5-Point Scale)

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Q: To the best of your knowledge, please tell us which role/function is most responsible in the following aspects of decision-making for digital video advertising. Base: ALL RESPONDENTS

 Respondentsà   Total   Agency  Marketer  Whether  to  Use  Digital  Video  Adver+sing:  Agency  (Net)   47%   55%   28%  

Marketer  (Net)   41%   33%   60%  

How  Much  Budget  to  Allocate  for  Digital  Video  Adver+sing:  Agency  (Net)   55%   65%   31%  

Marketer  (Net)   37%   28%   59%  

Crea+ve,  Tac+cs,  and  Placement  Digital  Video  Adver+sing:    Agency  (Net)   62%   71%   41%  

Marketer  (Net)   26%   17%   47%  

WHO IS RESPONSIBLE FOR DIGITAL VIDEO AD DECISIONS? Roles are Unclear…Except for Creative, Tactics and Placement Decisions

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Outfront Conference April 2012 AdvertiserPerceptions.com

DIGITAL VIDEO ADVERTISING

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Preferences: Format, Pricing and Length

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Outfront Conference April 2012 AdvertiserPerceptions.com

Format, Pricing and Length DIGITAL VIDEO ADVERTISING PREFERENCES

Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

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?  

EXPANDABLE  BANNER    

IN-­‐  BANNER    

RICH  MEDIA  OVERLAY    

?  

10  SECONDS    

30  SECONDS    

60  SECONDS  

?  

 CPV  

 CPC    CPM  

Format  

Pricing  

Length  

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Outfront Conference April 2012 AdvertiserPerceptions.com

Pre-Roll, 15 Seconds, CPM Pricing DIGITAL VIDEO ADVERTISING PREFERENCES

DIGITAL  VIDEO  

ADVERTISING  

PRICING              CPM  

FORMAT                Pre-­‐Roll  

LENGTH                          15  Seconds  

Source: IAB Demand Side of Digital Video Advertising Study, 2011 –Conducted by Advertiser Perceptions

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Outfront Conference April 2012 AdvertiserPerceptions.com

ANSWERS • Advertisers are optimistic about Digital Video Advertising • The Migration of ad dollars from Television to Digital has begun • Primary Reasons Why?

– ROI – Audience Shift

• Why Not? – ROI Concerns – Lack of Standard Metrics

• Ad Results, Audience, Targeting and Optimization are key decision drivers

• Preferences – Format: Pre-Roll – Length: 15 Seconds – Pricing: CPM

VIDEO ADVERTISING CONVERGENCE SUMMARY

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VIDEO ADVERTISING CONVERGENCE THERE’S A LOT WE STILL NEED TO KNOW

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Learn  More  About  the  Video  Adver2sing  Convergence  Study  at…      adver+serpercep+ons.com/solu+ons/digital-­‐video-­‐convergence/  

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Adver&serPercep&ons.com