curt viebranz at j.d. power and associates automotive internet roundtable
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Curt Viebranz at J.D. Power and Associates Automotive Internet RoundtableTRANSCRIPT
Online advertising: Past, Present and FutureCurt ViebranzPresident, Platform AAOL, LLC
Report Title / Confidential 2
FlashBroadband
VideoSocial
Networks
Uber Networks
Web 2.0 Tools
BehavioralTargeting
SmartAds
Reach andFrequency
Control
RolloverInteraction
Ad Exchanges
ContextualTargeting
Tools
Time BasedMeasurement
Things continue to look very complicated…
3
$7
$6$4
$9
$7
$6
$12
$10
$7
$14
$12
$9
$15
$13
$10
$17
$15
$11
$0
$10
$20
$30
$40
$50
2006 2007E 2008E 2009E 2010E 2011E
Other
DisplaySearch
U.S. online advertising
Growth momentum is expected to continue
Est. CAGR = 21%
Both Display and Search revenue are expected to continue to grow in line with the overall online advertising industry growth rate
Source: eMarketer, 8/07
($BB)
4
The rise of the ad network
The past
• Mass audiences centered on basic utilities – mail, IM, search
• Portals leveraged these audiences into vertical categories
• Advertisers spent most of their money with portals
The present
• Social networks, blogs, users generated content
• Audience fragmentation
• Advertisers becoming less dependent on portals to meet their broad reach marketing objectives
5
Online audience is fragmenting
Source: ComScore, July ’07
145%
48%
3% 2% -7% -3%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Facebook MySpace TWX Microsoft Yahoo! Total US
U.S. Page View Growth for Selected Sites
July ’06 – July ’07
Total Websites Across All Domains
August ’95 – September ’07
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22%18% 19% 18%
59% 56%65%
0%
20%
40%
60%
80%
Total Online Display Search Contextual Video Mobile Behavioral
Online advertising is diversifying
Traditional advertiser shift to more ROI, performance-based focus
Major players rapidly building out advertising platform and capabilities to provide at-scale, full-service monetization platform
Estimated Revenue CAGR2007 – 2010
Sources: Jupiter, Oppenheimer, eMarketer: 6/07
’07E Spend: $21.7B $8.9B $8.5B $2.0B $0.8B $0.9B $0.6B
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Display advertising demand is shifting to networks
• Efficiency
• Transparency
• Scale
• Targeting capabilities:data
• High return (Measurable ROI)
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Online advertising network reachEmergence of third-party networks as most efficient way to reach fragmented audiences
Source: comScore Media Metrix, July 2007
Advertising.com’s web display network reaches more users than any other online property
0
50
100
150
200
66.1% 66.3% 71.6% 72.8% 73.3% 88.2%
Fox Interactive
119MM 128MM 131MM 131MM 158MM
Specific MediaBlue Lithium Tribal Fusion Google AdNetwork
Valueclick
MSN-MicrosoftTime Warner Google SitesYahoo! Sites
119MM
45.1%
65.6% 68.7% 68.8%74.1%
88.2%
118MM 123MM 123MM133MM
158MM
81MM
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Marketing allocation by intent: A new intellectual model?
UnderlyingAudience Delivery
TargetedFrequency
Activation
HIG
H P
RO
FIT
LOW
CO
MPLE
XIT
Y
LOW
PR
OFI
T
HIG
H
CO
MPLE
XIT
Y
Vast share of all audience dollars to TV and cable;
very little online representation here
Cable, magazines, selected programming, online radio
Onling, in-storeDR TV, Coupons,
Promotion,
Current Shape of All Ad Spending
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But the shape of online spending by intent is quite different
Underlying Audience Delivery
Targeted Frequency
UnderlyingAudience Delivery
TargetedFrequency
Current Shape of All Ad Spending
Activation
Current Shape of Internet Ad Spending
Activation
HIG
H P
RO
FIT
LOW
CO
MPLE
XIT
Y
LOW
PR
OFI
T
HIG
H
CO
MPLE
XIT
Y
11
Activation will remain a vital and compelling strength of Web advertising
Underlying Audience Delivery
Targeted Frequency
Activation A share – perhaps a majority – of Web spending will remain focused on activation
But activation is not nearly all we can do
Besides, it remains a complex, low-profit area for most publishers
12
But shouldn’t the Web earn a larger share of targeted frequency dollars?
Are the current channels for ‘reinforcing the message with the right consumer’ really doing all that good of a job?
Should we not consider a strategic shift of dollars to the Web for this job?Underlying
Audience Delivery
Targeted Frequency
Activation
Theoretical Curve As Noted in ESOMAR Conference Papers:Source: FORCE Modeling, Paul Dyson, Millward Brown Intelliquest* OTS Opportunity to see advertisement based on GRP levels.
Ad
Aw
aren
ess
Where the TV plan turns from muscle to fat?
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
+1.8
+25
% A
war
enes
s
Number of times ad. seen
+3.2+1
# of ad exposures*
x Incremental reach plateaus: excess
frequency to those already saturated
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Evidence suggests that targeted online frequency gets cheaper over time
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
0 2 4 6 8 10 12 14 16
Frequency level
Cost
per b
rand
ing in
crea
se
Television
Online
Source: IAB XMOS study
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The future
What agencies and advertisers will want…
• An integrated solution
• Massive scale and reach
• Reaching large but targeted segments
• Transparency
• Easy and efficient way to buy advertising: self-service tools and analytics
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Developing a best-in-class monetization platform
Online advertising: Past, Present and FutureCurt ViebranzPresident, Platform AAOL, LLC