Minds Eye
The Marketing Minds Newsletter

Market Data

Baby-boomers make up 1/3rd of Web Users
Of the 195 million web users in the USA, approximately one third belong to the baby-boomer generation (people currently aged in their mid-40s and up to 60 years old). Boomers spent more money than average web users on online shopping last year. In Australia, baby-boomers are the largest "generational" group, comprising 26% of the population. For comparison, Generation Y (teenagers through to 26 year olds) only make up 20% of the Australian population. (Jupiter Research and Australian Bureau of Statistics)

Generation Y choose communications media that puts them in control
Data from Ofcom, the UK's Communications authority suggests that people in the 16 to 24 age group watch television for one hour less per day than the average television viewer. Readership of newspapers and magazines has also declined.

Instead, the internet plays a central role in daily life; more than 70% of 16-24 year old internet users use social networking websites (compared to 41% of all UK internet users) and 37% of 18-24 year olds have contributed to a blog or website message board (compared to 14% of all UK internet users). The number of mobile phone calls made by this age group is 35% higher than the average for all adults, and the number of SMS messages sent is 150% higher.

Interestingly, downloadable content (including video, music, and podcasts) is believed to be on the increase, as is the viewing of TV via PCs: in the UK, 38% of Generation Y view TV over their PCs. The data points to a preference to communicate, gather information and receive content when, where and how Generation Y chooses to access it - rather than via more passive behaviour.

MySpace #1 on the Web
In July 2006, myspace.com became the world's most visited website, surpassing Google and Yahoo with 4.5% of all internet visits. MySpace is used by more than 80 million people (mainly teenagers) who use the site as a social networking environment. (Hitwise)

Product Placement Spending up 42%
Global paid product placement spending in TV, film and other media grew 42.2% in 2005 to US$2.21 billion. Most spending comes from five product categories: transportation & parts, apparel & accessories, food & beverage, travel & leisure, and media & entertainment. The US is the largest market with US$1.5 billion being spent on paid placement in 2005, next is Brazil at $285 million, Australia $104 million, France $57 million, and Japan $53 million. Growth in paid placement spending is fastest in the USA at 49%, followed by Brazil (44%), Italy (27%), China (27%), and India (26%). (PQ Media August 06)

Internet Advertising Spending Up 60% in Australia
While Australia's overall spending on media for the 6 months to June 30th grew just 3.8% to A$4.9 billion in the 6 months to June 30th, online advertising grew by 60% to A$421 million. The growth in online advertising appears to be at the cost of newspaper adverting, which has declined at a modest, but steady rate in the last few years. Currently 36.7% of all advertising spend, Newspapers represented 41% in 2003. Apart from the increase in online spend, the market share of all other media types has been stable over the last three years. At mid 2006, the figures are: Newspapers 37%, TV 32%, Radio 8.6%, Online 8.5%, Magazines 7%, Outdoor 3.6%, other Print 2.5%, Cinema 0.8%. (Commercial Economic Advisory Service of Australia, Sept 06)

Internet Advertising Up 37% in USA
Internet advertising revenue grew 37% in the USA in the 6 months to June 30th, reaching US$ 7.9 billion. Keyword advertising (sometimes called search advertising) represented 40% of the total. (Interactive Advertising Bureau, Sept 06)

Playing Dress-ups on Social Networking Sites
About $900m worth of virtual items such as weapons and clothing are sold online annually, compared with an estimated $3 trillion that is spent off-line on various forms of self expression, ranging from clothing to make-up to jewellery and other fashion items. (Financial Times and Wallop 26/09/06)

What Happened..
(Marketing News in recent weeks)

Social Networking sites choose sides in the Online Advertising War
Leading social networking sites MySpace and Facebook have each signed exclusive deals for advertising space. Microsoft's MSN business is to be the exclusive supplier of web advertising to Facebook, following a similar deal between Google and MySpace's owner, News Corp.

Reports suggest that initially MSN will provide only banner adverts to Facebook, with text-based ads to follow. The service will use the Microsoft Adcenter platform.

MySpace, which is geared towards teenagers, attracted more than 46m unique visitors to its site in July, compared with about 8.5m for Facebook, which is aimed at a slightly older audience (Nielsen/NetRatings data).

Online music competition intensifying - paid and advertising-funded models
The domination by Apple's iTunes of the online music download market is being challenged by a raft of new entrants, including MySpace which has announced it will sell songs marketed directly by approximately 3 million unsigned bands. MySpace will offer non-copyright controlled MP3 files, allowing the songs to be played on any MP3 player (including iPods).

Microsoft is increasing competition in the sector with announcement of its "Zune" iPod challenger and a music download store, and Korea-based Samsung has also announced it will launch a range of digital music players and a music download service. The world's largest music business, Universal Music has announced an advertising-funded service called SpiralFrog which will offer free music downloads.

Australian advertisers move to Online phone books
Sensis, the directories and advertising business of Telstra - Australia's major telecommunications company, announced that for the first time it's online business generated more new revenues that its physical print directory business. While still much larger in absolute terms, revenue growth from the print versions of Yellow Pages (Sensis' largest business) grew just 2% to $A1.05 billion during 2005-2006, compared with 54% growth at online Yellow Pages (to A$122 million). Overall, Sensis' revenues grew by just under 7% to A$1.83 billion.

Battery recalls challenge reputations
What started out with Dell recalling 4 million laptop batteries has expanded into an industry-wide problem with recalls and battery replacement programs being announced by Apple, IBM, Lenovo, Toshiba, Fujitsu, and Sony - the manufacturer of most of about 9 million batteries being replaced. Dell was initially forced to announce the recall after photos of Dell laptops bursting into flames appeared on the web. The company's troubles deepened when a number of leading airlines (including Virgin Atlantic, Qantas, and Korean Air) insisted that Dell laptops could only be used with the batteries removed (using in-seat power supplies).

Damage to Dell's reputation was reduced when first Apple and then other manufacturers announced they were also recalling some laptop batteries - predominantly made by Sony. Of the companies affected, Dell in particular appears to have reacted well to minimise damage to its brand:

• Dell was the first to act
• The response was comprehensive, and on a scale of the replacement program left little doubt that it was putting the interests and concerns of customers first, despite the perceived high cost of the replacement program (in fact, the bulk of the costs are being carried by Sony)
• Clear information was given to affected customers by email and on the company's website
• Dell's advertising and catalogues were updated to give greater prominence to the company's services offerings.
• Dell has not built up the story with the press, and
• The company did not confuse potential customers by attempting to discuss the problem within it's demand-generation activities. It did not alert otherwise aware prospects that there was a historic problem (since fixed in new product shipments).
• It has not released updates on the status of the recall, or otherwise kept the Dell aspect of the story live with the press. The approach has been to allow the press to focus on the broader story which evolves with each new vendor that announces a recall and with the financial market's focus on Sony's liabilities.

Dell's handling of the situation might be contrasted with that of Lenovo (the Chinese manufacturer who acquired the ThinkPad brand from IBM). In early September a passenger on a United Airlines flight which was getting ready for take off noticed smoke coming from his laptop bag which contained a charged battery and his Lenovo computer. The passenger ran back into the terminal holding the smoking bag which caught fire and had to be doused with fire extinguishers. Lenovo did not announce a battery recall till 28th September, and had earlier said that its computers which used Sony batteries were not at risk.

Random Thoughts

Perhaps the web DOES substitute for TV Advertising

One of the most strongly held beliefs of major advertising companies is that there is no substitute for the impact and emotional engagement which can be achieved by advertising. While there is clearly some self-interest in such beliefs ("they would say that, wouldn't they"), it is not such a crazy view to hold. The medium of a well made TV advert, delivering high-end production values and a well-crafted message, viewed as broadcast-quality video is always very compelling.

Recent advances in online advertising technologies looks as though this may change. Online adverts with many of the same production values are beginning to appear in online campaigns. For an example, Jaguar's "Gorgeous" campaign for its new XK sports coupe uses beautiful cinematography, very attractive models, a well written and produced sound track, and highly atmospheric short scenarios involving beautiful people and its car to create an online video advert that would be hard to better on TV.

Combined with major uptake of broadband in attractive market segments such adverts erode the "impact differential" between TV and online advertising.

Importantly for firms such as Jaguar, the ability to target specific audiences and control the placement of online advertising much more precisely than can be achieved on Television means that the impact of TV-like advertising can be obtained without incurring the costs of a mass-marketing TV campaign (which TV media buyers find it hard to avoid. TV stations are called "broadcasters" for a reason).

To date, online has been very attractive to marketers for good reasons. The web is:

• pervasive and widely used by consumers in most markets
• more easily used to target specific audiences
• relatively low-cost (both in terms of ad creation and media costs)
• highly measurable, and can be linked right through to a completed sale
• a more involving and intimate medium than television.

Online advertising can also contain more immediate and actionable calls to action without detracting from the production quality of a video advert. An appropriately placed "more information" or "book a test drive now" link is both more effective and less intrusive than a "call 13 29 00" or other contact details in a TV advert - and much more likely to be acted upon.

Significantly, Jaguar's current online campaign (running on sites such as Business Week online and the Financial Times FT.com site) incorporates video footage taken for a similar TV advert, which has been modified and added to for the online video advert.

Most high quality production values and film-making is expensive, whatever medium the final advert is to be shown on. None the less, placing video ads online can increase customer relevancy, heighten their involvement with the advertising, and give a much better return on media costs.

Perhaps not for every product or market, but for many advertisers, the latest online video adverts may make TV a luxury you don't need to afford.

Interesting New Links

UK communications market - Ofcom's annual review published
This report by the UK's communications regulator contains a wealth of data on trends in communications usage in the UK, ranging from TV and Radio to Social Networking sites. http://www.ofcom.org.uk/research/cm/overview06/

Sahana - Disaster Relief & Survivor Contact System
Free and open source Disaster Management System. It mainly facilitates management of Missing people, disaster victims, Managing and administrating various organizations, managing camps and managing requests and assistance in the proper distribution of resources. Won prize at Software 2006 and was Sourceforge Project of the Month for June 2006.  Not a marketing initiative, but genuinely useful for large-scale humanitarian projects.
www.sahana.lk

Just for Fun

Our New Phrase
(non-essential Marketing vocabulary)

Zero Billion Dollar Business
This is something you don't necessarily want to find yourself in. A Zero Billion Dollar Business is disruptive to an existing market. It substitutes for products and services which are generating billions of dollars of revenues without establishing a new revenue stream. A simple example would be Microsoft's destruction of the browser market when it destroyed Netscape's business in the 1990s by bundling Explorer with all Windows shipments at no extra charge.

Current examples would be Craig's list which has substituted for huge amounts of classified newspaper advertising without establishing a large scale business, and YouTube which has achieved huge awareness amongst people wanting to post and exchange video clips but is rumoured to be loosing US$1 million a week because of the enormous costs of hosting and serving all that video on to the web.

Jokes
(essential marketing mind-flexing exercises!)

...and there's this pirate with a peg leg, an eyepatch, and a hook. "How'd ya get the peg leg?"
"AARRGGH, I was fightin' a huge shark, thrashin around in the water, and I killed the sonofabitch, but it chewed off me leg."
"How'd ya get the hook?"
"AARRGGHH, the very next trip, I was reelin' in a giant fightin' barracuda, and I finally landed him after two days, but the rope tore off me arm."
"And how'd ya get the eye patch?"
"AARRGGH, shortly after that, I was standin on me porch, and a seagull crapped in me eye."
"That's nothing compared with the other stories, why do you have an eyepatch?"
"It was me first day with the hook."

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What's the difference between in-laws and outlaws?
Outlaws are wanted.

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An engineer walks by a pond. He hears a voice that says "Help me." He looks down to see a frog on a lily pad. The frog says "I am truly a beautiful princess but I am under the spell of an evil witch. If you kiss me I will turn into a beautiful woman." The engineer gently picks up the frog then puts it in his pocket protector. The frog says " Hey, aren't you going to kiss me?" The engineer says "No, anyone can have a beautiful woman, I've got a talking frog."

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A guy goes to his Doctor for a routine check up and the Doctor says, " I've got some bad news, You're going to die, soon!"

The guy says, " Please tell me, Doc, how much longer do I have to live."

"Well you've got 10..........."

10 ...? 10 What?

"9......."

"9?"

"8......."