2015 Annual Outlook: What to Expect in Direct and Digital Marketing

Transcription

1 2015 Annual Outlook: What to Expect in Direct and Digital Marketing Bruce Biegel Senior Managing Director January 8, 2015

2 About Winterberry Group Corporate Strategy Brand Data Strategy, Marketing Technology & Process Re-engineering consulting M&A Buy side Targeting and Integration Planning Commercial Diligence Support Market Insight & Intelligence A subsidiary of Investment bank The Leading Mid-Market Advisor (Bloomberg) 30 transactions completed in 2014!

3 2014 Recap: The Numbers 2014 The Trends : What Happened, What Didn t? Global Perspective: Marketing and Advertising Around the World Outlook 2015

4 The Year That Was U.S. GDP started bad and wound up good nasty weather led to some turbulence but then a nice ride almost to the end Congress did not do bad things (or much of anything) they were too busy playing politics And there was something about more digital advertising

5 Traditional Media Did Not Stagnate, But No Real Catalysts To Drive Growth 2014 U.S. Measured Media Spending: $124.4BB 2.7% Outdoor: $7.2BB Cinema: $0.7BB 1.0% 2.2% Radio: $15.9BB 0.5% Magazines: $15.1BB 1.2% Television: $68.5BB 3.3% -7.5% Newspapers: $16.9BB Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2013 levels

6 Digital Kept Taking Share (of New Money and Old), And Direct Outperformed Expectations 32.0% 17.0% 2014 U.S. Direct & Digital Spending: $146.1BB 19.6% Display: $23.4BB Search: $24.2BB (Includes Mobile & Desktop) Other Digital: $5.5BB Insert Media: $0.8BB 1.0% $2.1BB 9.0% Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2013 levels; Insert Media includes FSIs and statement inserts; Display and search reflect spending on desktop and mobile 3.0% Direct Mail: $45.2BB Teleservices: $41.5BB Other: $3.4BB 1.0% 6.2% (Includes Mobile & Desktop) 2.7%

7 In Digital, It Was About Social, Mobile, Video and Data 2014 U.S. Digital Advertising Spending: $55.2BB 3.0% 32.0% 24.1% $2.1BB Display: $23.4BB (Includes Mobile & Desktop) Other Mobile 2 : $.4BB 29.4% Social Technology and Services¹: $3.0BB 27.0% Lead Gen & Affiliate Services: $2.1BB 3.0% Search: $24.2BB 17.0% (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2013 levels ¹Excludes social display and social search spend 2 Excludes mobile display and mobile search spend

9 True or False: Postal Hikes Threatened Mail And they did volumes were down, though not as much as predicted and spend was up due to higher postage and package costs Retention mail continued its systemic shift to Yet direct mail kept its share in acquisition marketing: It can be integrated with digital channels (mobile, behavioral triggers) It is targetable, predictable & measureable True Still in process False

10 True or False: Programmatic Approaches Continued To Expand Programmatic display (banners, video, mobile, social) advertising exploded in 2014 Rising from 24% of all digital display spending ($4.24BB) to $10.06BB Captured 45% of all display spending And along with the growth of programmatic exchange based buying came a significant increase in the use of digital data True Still in process False Source: emarketer and Winterberry Group analysis

11 True or False: Social Targeting with CRM Data Went Mainstream Facebook and Twitter Custom and Tailored Audiences options leveraging CRM data to target (or suppress) engagement on social platforms report extremely high lift Social targeting soars Social attribution matters Social IDs for audience recognition gives social sites a targeting advantage (we know what you did last summer ) True Still in process False

12 True or False: Online and Offline Data Continued to Merge Marketers focused on aggregating data assets in 2014, often investing in DMP technology. DMP spending grows to ~$350M from single digits 4 years ago Expected to continue rising at a CAGR of 13.9% through 2017 Activating the data across channels is still a challenge Internet of Things (IoT) generates more behavioral and interaction data than is actionable True Still in process False Source: Winterberry Group analysis of various sources

13 True or False: Content Came of Age Native advertising came on in full force in 2014, with spending reaching $3.2BB It s about owned driving earned and leveraging paid to get out the word Still early Good content is hard Deceptive advertising is still a risk True Still in process False

14 True or False: Campaign Management Platforms Evolved to Support Omnichannel Traditional campaign management platforms and service providers rebranded as customer journey mapping platforms, and executed across mail, and display environments DSPs evolved to support marketing execution across media channels (display, social, search) and formats (mobile, video, native) What s next? True Still in process False

15 True or False: Consolidation, Significant IPOs and More Digital Stacks 2,904 deals were reported in the marketing, media and tech segments in 2014, equaling more than $126.1BB in aggregate value Data LiveRamp, BlueKai, DLX, Adometry, Convertro Agency Sapient, non Publi-com Ad Tech X+1, BrightRoll, Conversant Alibaba True Still in process False Source: Petsky Prunier 2014 Marketing Deal Overview Release

17 Everybody s Doing It: Three Quarters of Panel Confident in Data Driven Marketing Growth

18 Show Me The Money: Budgets Rise as 63.2% Say Spend Up Y/Y; 73.5% Predict More Growth

19 Emerging Markets Posted Higher Levels of Confidence Even With Tight Economies

20 It s All About Customers: Majority Say Demand for Customer-Centricity Driving DDMA Effort

21 Borders Matter Less: Embrace of Data- Driven Approach Fairly Consistent Worldwide

22 Tops Among Channels Capturing Share of Spend? Digital (Of Course)

23 Data Matters: 92% Say It s Growing More Important to Efforts

24 Consumer-Friendly is Just Good Business: Marketers Aligned with Regulatory Aims

25 Doesn t Matter Where You Are Marketers Want More: Cash, Talent, Expertise (training)

27 All Signs Point to a Strong 2015 Economic expansion continues, GDP growth expected at 3% in 2015 Job creation will continue to surge (unemployment to remain below 6%); wage increases to follow Low oil prices = more cash to spend And, total ad spend will be higher than ever surpassing the pre-crash U.S. peak.

28 All Signs Point to a Strong 2015 But There are several inhibitors, raising red flags: No Olympics, World Cup or any global sports events Off year for elections (Less DC entertainment) Financial market nervousness about interest rates, global growth, geo-political meltdown, deflation, etc. The Bull has had a long run (70+ months). Is it tired?

29 Rolls; Direct Mail Performs Direct mail No postal rate increase in early 2015 but volumes rise, prompting slight increase in overall spend Acquisition mail remains strong (retention continues to decline) Digital to offline retargeting (sending direct mail as a result of digital action) increases spend, slow but steady rise Marketers continue adopting -centric approach to customer journey mapping, campaign management list building and opt-in across devices increases in priority (value) as they are the key to cross-channel audience recognition and therefore targeting, attribution, etc.

30 Search and Display Continue to Grow; New Spend Driven by Mobile Opportunities Search Search growth rates slow substantially though new spending is fueled by mobile Mobile, geo-location and tracking opportunities (beacons, etc.) continue to fuel new, real-time, relevant search marketing efforts Display Display (banners, video, social, mobile, etc.) spend to surpass search for first time Growth drivers: mobile and social targeting, video, native, programmatic all similar to 2014 except maybe some TV share shift

31 Measured Media Up Again But Not in Line with GDP Growth 2015E U.S. Measured Media Spending: $126.3BB 2.5% Outdoor: $7.4BB Cinema: $0.7BB 1.0% 1.9% Radio: $16.2BB -1.1% Magazines: $15.0BB 1.53% Television: $70.6BB 3.1% -2.8% Newspapers: $16.4BB Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2014 levels

32 Data-Driven Efforts Accelerate; Display Up Big Driven By Programmatic Approaches 21.1% 11.1% 2015E U.S. Direct & Digital Spending: $156.8BB 21.8% Display: $28.3BB Search: $26.9BB (Includes Mobile & Desktop) Other Digital: $6.7BB Insert Media: $0.8BB 1.0% 7.3% Source: Winterberry Group analysis of multiple sources Note: Arrows reflect percentage change in spend, by channel, from 2014 levels; Insert Media includes FSIs and statement inserts; Display and search reflect spending on desktop and mobile $2.3BB 9.7% Direct Mail: $45.7BB Teleservices: $42.6BB Other: $3.5BB (Includes Mobile & Desktop) 1.0% 2.7% 2.7%

33 Mobile and Social Fuel Most Digital Growth 2015E U.S. Digital Advertising Spending: $64.2BB 21.1% 9.7% 37.3% $2.3BB Display: $28.3BB (Includes Mobile & Desktop) Other Mobile 2 : $.6BB 16.3% Social Technology and Services¹: $3.9BB 31.5% Lead Gen & Affiliate Services: $2.2BB 3.8% Search: $26.9BB 11.1% (Includes Mobile & Desktop) Source: Winterberry Group analysis of multiple sources Note: Arrows reflect expected percentage change in spend, by channel, from 2014 levels ¹Excludes social display and social search spend 2 Excludes mobile display and mobile search spend

34 2015 Trends: Is Social All That? What we think is TRUE Social sites and their apps rule Social is delivered more often across more mobile devices Social sites have tons of data (behavioral and other) Social IDs eat cookies social recognition and audience extension a priority in 2015 BUT what else? Transaction data is more predictive, so social commerce is an imperative Social effectiveness is still to be proven (attribution required across the journey) 2015 is the year that this gets sorted out

35 2015 Trends: It s About The Beacons It s here now It s about in-store, location and recognition to drive engagement/activation It s about behavioral data collection; not just targeting It s about leveraging data later, or post beaconing 2014 tests lead to 2015 adoption: retail, finance, OOH; Macy s, Lord & Taylor, Barclays, Miami airport, entertainment centers (Levi s Stadium, theaters) However It s still early; roll-outs to accelerate; consumer adoption (optin, new use cases, more retargeting) to grow significantly It will be about direct sales/marketing before branding will it take share from promo spend or is it taking new money?

36 2015 Trends: Programmatic & Addressable TV It s all that Set-top-box (STB) plus connected TV (apps, OTT) data integrated with offline and online/behavioral data for deeper consumer insights Consistent messaging (offer management and targeting) across platforms (devices) possible at greater scale Audience buying but not RTB use cases take hold But, it s not scalable yet Buying processes still being sorted out; pricing still in process Data availability and use case development not set However Major brands in CPG, retail and finance are investing

37 2015 Trends: Big Data, the Internet of Things (IoT) and My Refrigerator is Talking to My Car! It s happening 50 billion devices sensors, beacons and computing devices will be connected to the Internet within 5 years¹ The Internet of Things is reaching a tipping point in the collection, management and deployment of data for marketing and sales uses cases However It s not just about social There s still no easy way to parse (what to keep and what to toss) that much data We re not quite there yet but there s no lack of money or talent trying to solve the issues. Check back in 2016 on your wearable ¹A Strategist s Guide to the Internet of Things, Frank Burkitt, 2014

38 2015 Trends: Campaign Orchestration / Execution Continues Omnichannel Expansion What s happened It s about touchpoint management (and attribution) Customer journey maps are integrated into the campaign platform across channels Data architecture and integration are critical is the preferred hub; mobile/social deployment is required DMPs are an extension of traditional marketing databases for enhanced data collection and audience insights What s next ESP platforms mature in 2015, offer enhanced channel support, better integration of data, easier user interface Verticals and segments (enterprise, mid-market and SMB) get attention ¹A Strategist s Guide to the Internet of Things, Frank Burkitt, 2014

39 2015 Trends: It s the Year of Attribution and Measurement (or one of those years ) Today s requirements Accurate, data-driven, cross-environment measurement and attribution, which can solve for bad actors and optimize spend justifying investment with ROI Tools that are fast (real-time) and easy to implement (and don t use budget already allocated) Questions to be sorted What channels should we move to? Not enough time (or money) to test them all How do we optimize? Should I do this in-house? Or out? What about fraud and bots and viewability (oh my!)

40 2015 Trends: Still More M&A Activity What s happened 2014 saw tremendous deal volume and value Ad tech and related IPOs up then down What s next Big cliff of investible funds Demand high for companies with first-party and compiled data Stacks expand toward owning the entire audience insight, management, engagement and measurement continuum; tech companies with early adoption will be integrated Companies that IPO d in 2013/2014 use their cash and stock, become buyers to drive scale Valuation/multiples likely to remain high in 1H15 ¹Pestky Prunier, Deal Notes, January 2015

41 Questions? Bruce A. Biegel Senior Managing Director