Impact of tech & techcos on consumer & advertiser behaviour: GroupM report

19 Dec,2013


Presenting extracts from GroupM’s observations of the impact of technology and technology companies on consumer and advertiser behaviour. This is a preview of the final report, which, complete with media investment data from around the world, will be published in the early part of 2014:


This year twenty five years have passed since March 1989 when Sir Tim Berners-Lee, a Fellow at CERN, wrote a paper that proposed connecting ‘…the hypertext idea and connecting it to the transmission control protocol and domain name system ideas…’ The quote finishes ‘…ta da.’


The ‘ta da’ became the World Wide Web. The rest, as they say, is history.To be clear the web created at CERN is not the web of today. For the first time tablet sales exceed PC sales and the sales of smartphones exceed both comfortably. Few of the next billion online users will use a PC-like object as the principal method of access. Additionally much of today’s digital experience is driven by the app universe in which the wire frame of the web is largely invisible. To paraphrase an Oldsmobile commercial of similar vintage, ‘This is not your father’s internet’.


By some means of access or another it is estimated that one third of the world’s population is online. In August Mark Zuckerberg announced the foundation of, a partnership between Facebook, Nokia, Samsung, Qualcomm, Ericsson, Opera and MediaTek to close that gap at a faster rate than the current annual growth rate of 9%.


AdvertIsIng Was Broadcast

Advertising as we understood it in 1989, and for at least another decade, was a function of the broadcast age. From the mid-1950s and the mass penetration of television and peaks in print circulation to the middle of the last decade when broadband became pervasive first to the PC and now to mobile devices advertisers had a reliable supply of large and mostly attentive audiences. Screen based entertainment with the exception of video games, was, in broad terms, a passive activity that became a key driver of popular culture and conversation. In this environment,marketers had few challenges in capturing the attention of audiences, which is not to say their efforts always provoked the desired action.


In the broadcast age the short history of marketing from packaged goods to politicians was characterized by applying maximum pressure to as many people that funds and optimization allow, and pursuing share of voice which is hoped to translate over time to share of mind, wallet and,  ultimately, loyalty. The targeting of advertising used context, day-parts and geography as proxies for audiences, that everyone knew to be only modestly accurate.


Advertisers have always built reach through the aggregation of audiences from multiple channels but this is far harder to do amid the precipitous decline in the reach of non-live individual units.


The challenge is magnified by extreme fragmentation, ad avoidance (albeit often overstated); adblindness (often understated); time shifting; multi-tasking; active screen time and the increasing adoption of over-the-top and often ad-free or ad-light media.


Less attention, fragmented audiences and even more fragmented channels create financial pressure on advertisers to deliver effectively in more places and on more platforms with little additional available resource.


They are doing this by:

# Aggregating ever more fractured audiences in an effort to recreate simultaneous and time-specific reach by matching time spent with media with the funds allocated


# Leveraging more engagement from the premium reach they do invest in by activating against media properties in ways similar to sponsorship – this may not save money in the short term but might hedge against diminishing effectiveness


# Rebalancing investments to increase the volume and value of owned assets (content and utilities) earning an organic dividend by successfully executing in the new stream or feed based marketing forms like Facebook and Twitter


# Redefining audiences and realigning their planning around revenue events or proxies for them by applying better, faster, data to increase the precision of targeting and the value of outcomes


All these strategies have two things in common. All require expertise in digital marketing and require deep data skills and both the ability and desire to leverage the creative application of technology to increase audience engagement. They also require proof that engagement pays as well as the old-fashioned, less surgical approach to advertising.


Aggregation of audiences and Allocation of Budgets

Mary Meeker, a partner at Kleiner Perkins Caulfield & Byers, has long been a leading commentator on the digital economy. She has been a consistent and persistent observer of the apparent disconnect between time spent with media and the allocation of marketing investment by channel.Her expectation is that eventually the eyeballs and the advertiser dollars reach parity. To a degree Ms Meeker’s view is coming true: the usage-to-spend ratio on online display, desktop and mobile, is increasingly proportionate to user time allocation. The falsehood inherent in this is that time spent is not an accurate proxy for utility nor the allocation of advertising dollars. Search is the highest utility activity but hardly the greatest consumer of time. Further, much online time is spent on activities in which advertising is either not permitted or is simply inappropriate.


Ms Meeker also believes technology to be a catalyst of wholesale industrial disruption. This is certainly true of media. Around the world broadcast audiences are not so much in decline: rather, they are fragmenting at speed. Hours spent with traditional broadcast channels are in decline, yet linear TV hours as a whole are stable and total video consumption is rising. Last year we discussed in some detail the redistribution of long-form programing via full episode players and over-the-top TV including Netflix, Hulu and Amazon Prime, and the rise of YouTube and its global analogs. The growth of these channels continues and accelerates as the penetration of tablets, which outsold PCs in 2013, and video-capable smartphones become favored video consumption devices. 25% of YouTube’s views are to mobile devices, yet the idea of the  best available screen persists.


As last year however a comparison with television offers useful perspective. According to Nielsen’s September US Q3 2013 Cross Platform Report 7% of all viewing is now online; the top quintile of internet video and streaming video users consume 25% of their video minutes online; and the second quintile 13%. These quintiles represent 23% of the US population. Incidentally the top quintile of all TV users is also the heaviest-consuming group of online video. The lean-back TV experience is very much alive, and often enhanced by a second screen, as we explored in this report last year. We now spend over a third of our waking time interacting with screens.


Video usage is geographically inconsistent. Television supply is restricted in many markets and as we commented last year we expect to see viewing minutes by screen and by delivery mechanism vary significantly by market. Share of online tends to be higher where one finds ample bandwidth,device penetration and sensible ad loadings.


The search for practical metrics between and across channels continues. Thus far, despite the progress made on viewability and cross-channel rating currencies the industry remains far from aligned. Nielsen OCR is a huge step forward but it requires all the owners of inventory to agree on the metric as a common and comparable currency.


Click here to download complete report



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