Fastforward Conference Feb 2008

The User Revolution
The Original Six Trends
And The Impact of User Revolution on Your Business
Safa Rashtchy
February 20, 2008 – Orlando, FL
The Media Industry is Transforming in a Dramatic Way….
“Consumers are beginning in a very real sense to own our brands and
participate in their creation… We need to learn to begin to let go.”
- A.G. Lafley, CEO of Procter & Gamble
“We never know where the consumer is going to be at any point in
time, so we have to find a way to be everywhere. Ubiquity is the new
exclusivity.”
- Linda Kaplan Thaler, Chief Executive at the Kaplan Thaler Group, a New York ad agency.
“We must accept the fact that there is no ‘mass’ in ‘mass media’
anymore.”
- Jim Stengel, Global Marketing Offices at Proctor & Gambled
“I spend a ton of time on [MySpace] when I get home from crew, all I do is talk
online and wait for friends to leave me friend requests, it's the highlight of
my night.”
- Teenage Internet Panel Participant
Safa Rashtchy – www.SRnext.com
2
What’s Happening to The Media World?
• We Must look at it from Consumer’s viewpoint
I have over 30
choices for media
channels – I can
choose what I want,
when I want
I know what I want and I know how
to get it; if I don’t know how to
find something, I Google it
Newspapers are a waste of
time, I can read all I want on
the web
I don’t like
advertisemen
ts – they are
disruptive
Safa Rashtchy – www.SRnext.com
TV is so boring, but some clips
can be fun – I watch them on
Youtube
I like brands that are part of
my life and care about what I
like, they are cool and I trust
them
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The User Revolution
4
Six Trends Are the Key Drivers of This Revolutions
1. The emergence of “communitainment”
2. The increasing popularity of Usites
3. Mainstreaming of the Internet
4. Declining usage of traditional media
5. Fragmentation of content consumption
6. Evolution of User generated brands
Source: Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
5
Key Theme #1 – Emergence of Communitainment
• Community + Communication + Entertainment have collided together and are impacting each other’s growth generating a new type of activity that we call “communitainment.”
• The common thread between communitainment sites is that users communicate with each other, either as the
primary activity or a secondary one, and tend to view the site as a place where they can socialize or “hangout.”
Source: Google and Youtube Web Sites
Safa Rashtchy – www.SRnext.com
6
Key Theme #1 – Emergence of Communitainment
• Advertisers must leverage the community aspect of communitainment
• Communitainment is an emerging trend that will partially replace other forms of content
consumption
Over
Over the
the next
next ten
ten years,
years,
we
we expect
expect more
more than
than half
half of
of Internet
Internet
usage
usage will
will be
be communitainment.
communitainment.
Source: Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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Key Theme #2 – Emergence of Usites
•
We broadly define Usites as Websites with user generated content comprising all or the predominant part of
their offering – time spent on Usites has grown from just 3% of total minutes online to 31% since April of 2005
•
All segments of the population participate in Usites
Usite Unique Visitor Growth
Sep-06
Sep-07 % Change
106,247 109,085
2.7%
Yahoo!
102,863 102,252
-0.6%
Time Warner
116,813 117,677
0.7%
Microsoft
100,974 118,003
16.9%
Google
64,781
65,105
0.5%
eBay
Top 5 Average
April 2005
Usites
3%
4.0%
October 2006
InterActiveCorp
YouTube
Wikipedia
Craigslist
Facebook
Flickr
Metacafe
Break.com
bebo
56,601
27,627
33,349
11,787
7,765
6,702
3,066
3,268
917
61,108
54,501
47,529
19,361
18,090
12,586
4,725
3,450
1,299
Average of Top Usites
Average of Top Usites
excluding Facebook
8.0%
97.3%
42.5%
64.3%
133.0%
87.8%
54.1%
5.6%
41.7%
59.3%
50.1%
General
Internet
97%
Usites
31%
General
Internet
69%
Source: ComScore Networks
Safa Rashtchy – www.SRnext.com
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Key Theme #2 – Emergence of Usites
Photo
Not just a review site,
Members can post
profiles about
themselves and connect
with friends
• Not simply user
generated content.
• Members connect with
other members or locals
to discuss/share opinions
Other users can also
participate by “scoring”
another member’s
postings
Localized Communities
Source: Piper Jaffray & Co. and Yelp Sites
Safa Rashtchy – www.SRnext.com
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Key Theme #3 – The Internet as a Mainstream Media Channel
Internet’s reach has expanded massively, from less
than 20% in 1996 to more than 70% in 2007
In a recent survey, 40% of respondents would choose to
keep the Internet and eliminate television
But It’s not just about more people using the web, and
spending more time on it; they are using it regularly, as
part of their daily routine
As a result…
Source: Forrester, Ball State Center for Media Design, Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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Key Theme #3 – The Internet as a Mainstream Media Channel
Daily Reach: Incidence of Use
Daily Reach and Duration for Various Media
100%
TV
80%
Radio
60%
New spaper
Web 2005
40%
Magazines
20%
Web 1995
0%
0
50
100
150
200
250
300
Daily Duration: Average Minutes per User
Source: Ball State Center for Media Design
Safa Rashtchy – www.SRnext.com
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Key Theme #3 – And Becoming A Key Medium at Work
Average Reach at Work
60%
56%
43%
40%
21%
20%
14%
15%
Newspaper
Magazine
0%
Web
Radio
TV
Average Reach of Media at H ome
100%
90%
75%
47%
50%
42%
35%
20%
25%
0%
TV
Web
Radio
Newspaper
Magazine
Source: Ball State Center for Media Design
Safa Rashtchy – www.SRnext.com
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Key Theme #4 – The Decline of Traditional Media Usage
TV Advertising as a Percentage of Total Advertising
Do you watch more/ less/ same TV than 2 years ago?
35%
41.5%
45%
25%
40.1%
30%
18.4%
15%
15%
1980
1985
1990
1995
2000
2005
0%
> 2 years ago
Same as 2 years ago
< 2 years ago
Source: Nielsen, Robert J. Coen - Universal McCann and Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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Key Theme #4 – The Decline of Traditional Media Usage
2006 - 2007 Broadcast Season (Through December 17)
1998 - 1999 Broadcast Season
Program
E.R.
Friends
Frasier
NFL Monday Night Football
Jesse
Veronica's Closet
60 Minutes
Touched By An Angel
CBS Sunday Movie
20/ 20 Wed
Average
% decline
Household
Rating
Share
17.8
29
15.7
26
15.6
24
13.9
22
13.7
22
13.7
21
13.2
22
13.1
20
12.1
19
11.2
19
14.0
22.4
Program
Dancing with the Stars
Desperate Housewives
Grey's Anatomy
CSI
Dancing with the Stars Results
CSI Miami
Sunday Night Football
Criminal Minds
Lost
CSI: NY
Average
Household
Rating
Share
13.5
20
13.3
19
13.3
20
13.1
19
12.7
20
11.3
18
11.1
17
10.8
16
10.7
16
10.6
18
12.0
-14%
18.3
-18%
Source: Nielsen, Robert J. Coen - Universal McCann and Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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Key Theme #5 – Fragmentation of Media Consumption
•
1 Newspapers
Proliferation of media options
2 Magazines
3 Email
4 Broadcast TV
5 Radio
•
The users are increasingly less loyal to established brands
6 CD Player
7 Cable TV
8 Personal Computer
9 Satellite Television
•
10 Internet
Users are going to an increasingly larger number of content sources
11 Cell Phone
12 DVD Players
13 Satellite Radio
14 MP3 Players
15 Tivo/DVR
16 Slingbox
17 iPod
18 Blogs
•
•
1 Newspapers
19 Online Video
2 Magazines
20 Mobile Internet
3 Cable TV
21 Console Video Games
4 Broadcast TV
22 PC Video Games
5 Radio
23 MMORP Games
6 Cassette Tapes
24 Mobile Games
7 Walkman
25 Text Messaging
Newspapers
8 VCR
26 Mobile Video
Broadcast TV
9 Cable TV
27 Download Movies
Popular new sites are growing through viral marketing
Proliferation of content consumption empowers consumers
Magazines
10 Personal Computer
28 Podcasts
Broadcast Radio
11 Console Video Games
29 Instant Messaging
Eight Track
12 PC Video Games
30 Social Networks
1966
1986
2006
Source: Arbitron/Edison Media Research Internet and Multimedia 2006: On-Demand Media
Explodes and comScore Networks
Safa Rashtchy – www.SRnext.com
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Key Theme #5 – Fragmentation of Media Consumption
Consumer Spending Less time with Traditional Media
% spending less time with medium due to time spent online
20%
Internet, 15%
Internet
growth as
measured by
page views
10%
0%
-10%
-20%
Radio, -19%
-30%
Magazines, -30%
Newspapers, -30%
Television, -33%
-40%
Users are spending less time with traditional media`
Source: Arbitron/Edison Media Research Internet and Multimedia 2006: On-Demand Media Explodes and comScore Networks
Safa Rashtchy – www.SRnext.com
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But Wait, It Gets Worse: Consumer Are Multi-Tasking
• Quality of time people spend on TV has deteriorated rapidly with multi-tasking
• DVR revolution has exacerbated advertisers’ difficulty in reaching consumers through television
• The net result is that advertisers increasingly will need to buy more inventory from nearly all types of media
How often do you surf the Internet at the same time as
watching TV?
Never
26%
Always
17%
Seldom
16%
Usually
15%
Do you use your Tivo or DVR to skip television ads?
Watch Most
Ads
6%
Skip Some
Ads
36%
Never Skip
Ads
6%
Skips All Ads
52%
Sometimes
26%
Source: Piper Jaffray & Co. 2006 Online Media Survey
Safa Rashtchy – www.SRnext.com
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Key Theme #6 – The Advance of User Generated Brands
“Consumers are beginning in a very real sense to own
our brands and participate in their creation… We need
to learn to begin to let go.”
- A.G. Lafley, CEO of Procter & Gamble
Source: Yahoo!, Inc.
Safa Rashtchy – www.SRnext.com
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The Web
Advantage in The User Revolution
Safa Rashtchy – www.SRnext.com
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The Golden Search – Key Facts
•
Search is the second most commonly used application on the Web with 550 million searches daily, and search
marketing globally is a $15.8 billion industry growing to $44.5 billion in the next five years (Source: Piper
Jaffray & Co.)
•
There are three types of search: navigational, informational, and commercial. Each represents about onethird of total search queries
•
U.S. search volume growing at 12% CAGR while International search volume is growing at 23% CAGR (20062011)
•
Certain key international markets, including Japan, China, South Korea, and Russia, have developed around
local players, who are unlikely to lose share to Google or other global players
Source: Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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Search Has Become the New Portal
• Five key trends in search today:
ƒ Search is the new portal
ƒ Search is becoming a branding tool
ƒ Google’s dominance is increasing
ƒ Local search remains a looming opportunity
ƒ New search technologies are likely to expand the field by broadening search applications
Recent Top 10 Searches from Leading Search Engine
Martin Luther King, Jr
st. patrick's day
St. Patrick's Day
American Idol
Paris Hilton
Rosa Parks
channing tatum
Poker
Internal Revenue Service
Slipknot
Harriet Tubman
v for vendetta
March Madness
France Protest
Music Downloads
Black History
ncaa
Pam Anderson
Shakira
50 Cent
Jackie Robinson
tara rose mcavoy
Britney Spears
Debra LaFave
Restaurants
George Washington
spencer tunick
Neopets
Chris Brown
Emma Watson
Maya Angelou
natalie portman
Paris Hilton
Lost
Internet
Coretta Scott King
oblivion
Dragonball
NBA
Gwen Stefani
Langston Hughes
terrell owens
Taxes
America's Next Top Model
Web Messenger
Malcolm X
ides of march
NFL
WWE
Fat Man Walking
Source: Google, Ask and Yahoo
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Global Online Advertising : A Big, Growth Industry; Expect Some Bumps
• Expect global online ad spending to reach $81 billion by 2011, growing at CAGR of 21% (2006-2011)
• In 2011, online ad spending will be 11.4% of total ad spending in the United States
• Online can eventually be the second largest medium, and much closer to TV’s level
To get to this growth, advertisers and publishers must
follow the User Revolution; They cannot take “eyeballs” for
granted- Expect potential bumps in the road
Global Total Online Advertising Market
U.S. Online Advertising Revenues ($M)
% of Total U.S Ad Spend
Yr/Yr Growth
International Online Advertising Revenues ($M)
Yr/Yr Growth
Global Online Advertising Revenue ($M)
% of Total Global Ad Spend
Yr/Yr Growth
Global Search vs. Non Search
Global Paid Search Revenue ($M)
Global Branded Advertising ($M)
Global Online Advertising Revenue ($M)
2001
$7,404
3.2%
$2,161
$9,566
23.5%
2001
$505
$9,060
$9,566
2002
$6,229
2.6%
-15.9%
$1,914
-11.4%
$8,143
24.6%
-14.9%
2003
$6,982
2.8%
12.1%
$2,695
40.8%
$9,677
29.8%
18.8%
2004
$9,824
3.7%
40.7%
$4,987
85.0%
$14,810
35.4%
53.0%
2005
$13,956
5.1%
42.1%
$8,034
61.1%
$21,990
37.6%
48.5%
2006
$19,324
6.6%
38.5%
$11,846
47.5%
$31,169
38.5%
41.7%
2007E
$24,696
8.1%
27.8%
$16,575
39.9%
$41,271
40.0%
32.4%
2008E
$29,478
9.2%
19.4%
$21,887
32.0%
$51,364
41.0%
24.5%
2009E
$33,952
10.0%
15.2%
$27,300
24.7%
$61,252
42.0%
19.2%
2010E
$38,233
10.8%
12.6%
$33,117
21.3%
$71,350
43.0%
16.5%
2011E
$42,004
11.4%
9.9%
$39,058
17.9%
$81,062
44.0%
13.6%
'06-'11 CAGR
2002
$1,350
$6,793
$8,143
2003
$2,948
$6,730
$9,677
2004
$5,718
$9,092
$14,810
2005
$10,140
$11,849
$21,990
2006E
$15,832
$15,337
$31,169
2007E
$21,879
$19,392
$41,271
2008E
$27,675
$23,689
$51,364
2009E
$33,193
$28,058
$61,252
2010E
$38,924
$32,426
$71,350
2011E
$44,482
$36,580
$81,062
'06-'11 CAGR
17%
27%
21%
23%
19%
21%
Source: Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
22
The Old Media’s Changing Perception of Google
“Agence France-Presse has sued Google Inc. for copyright infringement, alleging that the Internet search engine
included AFP headlines, news summaries and photographs published without permission. In a suit filed in a
Washington court, AFP sought damages and interest of at least $17.5 million (€13.1 million) and an interdiction on
the publication of its text and photos without prior agreement.”
- Reuters, March 18, 2005
“The Times of London, owned by New York-based News Corp., is training journalists to write in a way that makes
their articles more likely to appear among Google's unpaid search results. "You make sure key phrases and topic
words are embedded in the top paragraph and headlines," says Zach Leonard, the paper's digital-media
publisher” … “Newspapers are buying search words on Google Inc. so that links to their Web sites pop up first
when people type in a search. The Daily Telegraph, for example, bought the phrase "North Korea Nuclear Test"
after the country detonated a nuclear device last October.”
- Wall Street Journal, January 12, 2007
Safa Rashtchy – www.SRnext.com
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The Web Advantage: Video Will Become The Killer App
•
Proliferation of video content will play an
important role in the continued
mainstreaming of the Internet
•
2006-2007 was a pivotal period for video
distribution with more than 15 major content
partnerships signed
•
Watching videos online will take away some
of the time people spend on other activities
•
Expect video to become mainstream in
2008-2010 timeframe
•
A Sampling of Pivotal Event:
9 Youtube becoming the new “Google”
word in media; sponsoring debates
9 Blinkx IPO in London
9 Prime Minister Blair Delivers a Youtubeonly address from 10 Downing St.
Youtube Taking Time Away From Other Activities
Which of these are you spending less time doing as a result of spending
time on YouTube?
%
Activity
Using other Web sites
36%
Watching TV
32%
Emailing, Chatting Online, Blogging, etc.
20%
Watching Videos on DVD
12%
Reading Magazines/ Newspapers
11%
Going to the Movies
7%
Source: Harris Interactive
Safa Rashtchy – www.SRnext.com
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10 Downing Street – Brought to you by Youtube
Source: Youtube.com
Safa Rashtchy – www.SRnext.com
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To Summarize: The New World Order
Source: Piper Jaffray & Co.
Safa Rashtchy – www.SRnext.com
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The Enterprise
Search
Safa Rashtchy – www.SRnext.com
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User
The Enterprise
Search
Safa Rashtchy – www.SRnext.com
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The Five Key Impacts of the User Revolution on Enterprises
1. Enterprise Search is not a tool – it’s the platform that will hold your business
2. Consumers Expect: Simplicity, Common Sense, and Accuracy
3. If you have to use the search constantly, the website is in a very bad shape
4. A good search platform must be built on a great website design, created for
simplicity, common sense, and accuracy
Safa Rashtchy – www.SRnext.com
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Don’t Let This Happen to You
Safa Rashtchy – www.SRnext.com
Source: weather.com
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What the User Revolution Means for Businesses
Listen to Your Customers Saying:
1. If it’s not easy to use, we won’t use it
2. If we don’t need it, we won’t use it
3. Meeting our needs is not enough- To excel, you have to now predict our
needs
Safa Rashtchy – www.SRnext.com
31
Consumers Are Now In Charge
Your Success or Failure
is only
One Click Away
Safa Rashtchy – www.SRnext.com
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