Transcript Welcome to Directory Driven Commerce: ‘05
Shifting Paradigms From Promised-Based to Performance-Based
September - 2005
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Agenda
I.
II.
The Big Picture – Overall Trends in Advertising The Multiple Hat Phenomenon – User Perspective III. Trends in SME Behavior IV.
Towards a Performance-Based Model for Yellow Pages 2
Advertising Industry Trends
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1900 – 2000 Advertising = Mass Media
TV Radio Yellow Pages Newspaper
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Television Ad Recall Declines 50% 40% 30% 20% 10% 0% Cable TV goes mainstream Remote control introduced 1965 1974 1981 1986 Source: Newspaper Association of America, Cable TV Advertising Bureau, and Nielsen Media Research World Wide Web arrives Tivo / DVR In homes 2000
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Costs Increase 1972 30 Second Spot = $86,000 Reach: 56,640,000 CPM: $1.52
2002 30 Second Spot = $2,100,000 Reach: 88,465,000 CPM: $23.74
Reach = 1.5X
CPM = 15.6X
Super Bowl Advertising Rates
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Tenuous Trust Trust Somewhat Trust Completely Spam Pop-Up Ads Telemarketing Side-by-Side Demos Search Engine Ads Brand Sponsorhips Radio Ads TV Ads Magazine Ads Consumer Posts Permission E-mail Brand Websites Recos from other Consumers 0% 20% 40% 60% Source: 2004 Forrester/Intelliseek Research 80% 100%
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Consumers in Control “Penetration will reach 31 million households by the end of 2006…The shift to on-demand TV will cut traditional advertising by 19% shaving $7 billion from traditional ad revenues…”
Forrester Research
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Blogosphere – Consumer Generated Media (CGM) Blog readers Blog creators 7% 5% 4% 17% 11% 3% 2002 2003
* As percentage of 120 million U.S. adult Internet users
early 2004
Source: The Pew Internet & American Life Project, The State of Blogging, Washington, D.C.
27% late 2004
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Mass Medium to CPD Mass Medium
(Contextual/Participatory Directional)
TV Radio Yellow Pages Newspaper
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1 2 3 4 5 6 7 8 9 10 11 12
US Ad Spending Totals by Media
2004 US Ad Spending % Change (2003-2004) Direct Mail $48.37
5.0
Newspaper Broadcast TV* Radio Cable TV Yellow Pages Consumer magazine Internet Out of home Business publications All other Total 44.84
41.93
19.10
18.81
13.90
11.44
5.65
5.44
4.00
31.99
245.48
1.8
-0.3
1.2
15.4
0.9
4.0
15.7
5.2
0.7
4.1
3.6
Source: Robert J. Coen’s Universal McCann 11
Change in Share of Ad Spend by Medium 2000 - 2004 100% 2.3% +52.7% 3.6% 80% 26.5% -10.4% 23.8% 60% 40% 6.7% 10.0% 30.1% -8.2% -0.5% +3.6% 6.1% 10.0% 31.2% 20% 24.3% +3.8% 25.3% 0% 2000 ($185 bn) 2004 ($197 bn)
Source: eMarketer, based on IAB/PWC (for online ad spend, which includes search, display ads, rich media, classifieds and other) and Universal McCann (for total ad industry spend, which includes direct mail and yellow pages), 2005
Internet Newspaper Magazine Radio TV Other
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Online to Grow as Share of Total Ad Industry $20 $15 $10 $5 As % of All U.S. Ad Spending Online $15.6
$13.4
$11.5
$9.6
$7.1
3.1% $6.0
2.5% $7.3
3.0% 3.6% 4.1% 4.6% $17.6
18% 15% 12% 9% 5.2% 5.7% 6% 3% $0 2001 2002 2003 2004 2005 2006 2007 2008
Source: eMarketer, based on IAB/PWC (for online ad spend, which includes search, display ads, rich media, classifieds and other) and Universal McCann (for total ad industry spend, which includes direct mail and yellow pages), 2005
0%
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60%
Trends in Directional Advertising
Small Business Advertisers who Use Media Direct Mail 40% Internet Yellow Pages Email Marketing 41% 34% 35% 31% 25% 24% 21% 20% 15% 16% 15% 16% 16% 14% 10% 38% 28% 16% 0% 2000 2001 2002 2003
Source: ConStat/TKG Local Commerce Monitor Tracking study among small business advertisers.
2004 2005
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Next Shift:Towards Performance-Based Advertising Awareness CPD (Contextual / Participatory / Directional) Performance Based “Money where the clicks/calls are” TV Radio Yellow Pages Newspaper
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Percent Breakdown of Total Online Advertising Activity Slotting Fees 2% Classifieds 17% Sponsorship 9% Search 40% Display Ads 20% Referrals 2% Email 2% Rich Media, 8%
Source: Interactive Advertising Bureau/PricewaterhouseCoopers, “IAB Internet Advertising Revenue Report” Q2 2004.
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Paid Search Advertising Spending 2000-2005 50% 40% 30% Paid Search Advertising Spending (as a % of total online advertising spending) 30.0% 32.5% 34.5% 20% 10% 4.2% 1.3% 0% 2000 2001
Source: eMarketer, December 2003
2002 15.4% 2003 2004 2005
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The Multiple Hat Phenomenon
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Consumer Information Use Trend
75% 62% 60% 70% 73% 70% 47% 55% 35% 36% 41% 39% 24% 27% 21% 18% 20% 22% 22% 10% NA NA Printed Yellow Pages Net: Internet Media Internet Search Engines Internet Yellow Pages City Guide Web Site Web Site of Local Business Web Site that Direct Mail/E Refers to Specific Types of Businesses Mail/Coupon Books New spapers Local new spapers w ebsite Online shopping sites Base: Total Consumers Indicates significant differences between waves at the 95% confidence level Source: ConStat/TKG Userview consumer study.
Wave 1 (Oct, 2003) Wave 2 (Feb, 2005) NA 8% Online message boards 19
Reason for Using Specific Advertising Source First
Media Used/Would Use Media First Reasons Used/Would Use Media First^ (Regardless of Shopping Situation) To get a phone number, address or hours of ops To research the product or type of service To find a retailer or business Habit/used to it Don’t like/know how/want to use PC Easy/convenient To research the retailer or business To read reviews In area/local
Base: Used/Would use media first
Printed Yellow Pages a % 34 bc 17 14 8 b 6 bc 6 5 3 2
(n=145)
Search Engines b % 10 29 23 2 - 8 11 18 a --
(n=49)*
Newspaper c % 15 34 a 15 4 - 6 7 10 --
(n=64) Lowercase letters indicate significant differences at the 95% confidence level.
* Small sample size; use caution when projecting data ^ Not all responses shown Source: ConStat/TKG 2005 Userview consumer study.
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PYP Use – Last 6 Months
UK France Spain Italy Germany US 0 20 60 41 47 29 40 59 62 60
Source: The Kelsey Group
80
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Search Use – Last 6 Months
UK France Spain Italy Germany US 0 38 25 34 17 20 39 40
Source: The Kelsey Group
50 60
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IYP Use – Last 6 Months
25 UK France Spain Italy Germany US 0 9 10 17 24 20 30
Source: The Kelsey Group
33 37 40
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Strength of PYP v. Search and IYP
UK France Spain Italy Germany US 0 0.2
0.31
0.41
0.53
0.63
0.7
0.41
0.83
0.4
0.4
0.58
0.66
0.59
0.6
0.8
0.8
1
Source: The Kelsey Group 24
SMEs Use of YP/IYP
Print Yellow Pages Usage About the Same 57% More Often 9% Don't know 3% Less Often 31% Where they look now… Internet Yellow Pages 53% Search Engines 28% Company Websites or Homepages 14% Newspapers 9% June ’04 31%
Source: ConStat/TKG 2005 Local Commerce Monitor Tracking study among small business advertisers.
Direct Mail Magazines or Trade Journals Local TV 8% 8% 7%
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Trends in SME Behavior
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Advertising Media Use
(Traditional) (% Change 2001-2005) 100% Local Telco YP Direct Mail (-9%) (-3%) Magazines/Trade Journals (+7%) Newspaper Other YP Radio (-9%) (+6%) (-1%) 80% 67% 79% 71% 60% 40% 20% 47% 41% 24% 20% 17% 39% 31% 23% 22% 16% 42% 22% 25% 23% 18% 0% 2001 2002 2003
Source: ConStat/TKG Local Commerce Monitor Tracking study among small business advertisers.
73% 44% 35% 24% 20% 14% 2004 72% 38% 38% 30% 27% 16% 2005
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Advertising Media Use
(Online) 100% (Percentage Points Difference 2001-2005) Website (+13%) Search Engine Optimization* Online City Guide (0%) (-4%) IYP Email Marketing Pay-Per-Click* (+7%) (0%) (-2%) 80% 60% 43% 40% 20% 0% 44% 43% 21% 16% 12% 16% 15% 10% 17% 15% 14% 10% 2001 2002 2003
Source: ConStat/TKG Local Commerce Monitor Tracking study among small business advertisers.
* Began tracking in 2003/2004.
55% 24% 20% 16% 11% 10% 2004 57% 28% 17% 16% 8% 8% 2005
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Budget Allocation
June ‘04 June ‘05 32% 15% Telco YPs Newspaper Company Web Site 12% 11% 11% 4% 4% Pay-Per-Click/Search Engine Optimization 1% Magazines or Trade Journals 8% 4% Other YPs 4% 3% Radio 2% 31%
Source: ConStat/TKG Local Commerce Monitor Tracking study among small business advertisers.
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Future Advertising Budget
Plan to Increase Plan to Decrease 14% Direct Mail 4% June ’04 2% 8% 2% 8% 6% Internet Yellow Pages Company Web Site or Home Page Newspaper 2% 7% 4% Telco YPs 12% 3% Paid Search 0% 1% Other Yellow Pages 5%
Source: ConStat/TKG 2005 Local Commerce Monitor Tracking study among small business advertisers.
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Local Paid Search Advertising
Awareness of Local Paid Search Usage of Local Paid Search Not Aware 52% 48% Aware 48% 17% 20% 5% 2% 3% 5% Currently Using Extremely Likely Very Likely Somewhat Likely Not Very Likely Not At All Likely Don't Know
Source: ConStat/TKG Local Commerce Monitor Tracking study among small business advertisers.
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Local Paid Search Advertising
Billing Preferences Amount Willing to Pay $1 Per Call 74% Number of clicks to web site 17% Number of phone calls to business 71% Don't know 12%
(Base: Small Business Advertisers using or extremely/very/somewhat likely to use local paid search) Source: ConStat/TKG 2005 Local Commerce Monitor Tracking study among small business advertisers.
$5 Per Call 21% $10 Per Call 9%
(Base: Small Business Advertisers who prefer being Charged according to the number of phone calls) 32
A Performance-Based Model for Yellow Pages?
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The Opportunity
• Extract more value from current performance print YP already delivers to a segment of advertisers • Extract some value from non advertisers unwilling to commit upfront • Incentive for the print YP industry to promote the category use • One model for all distribution platforms - print, online, wireless, IPTV 34
The Risks
• Advertisers reject the model as too complicated or “unjust” • Sales lock-up – too complicated for commission based sales • Too difficult to implement – phone number issues, tracking devices, etc. • Possession and use decline substantially and reduce call volumes • Individual advertisers find ways to corner the market for calls –(triple truck ads) 35
Contact Information
The Kelsey Group
Neal Polachek 70 Tamalpais Avenue San Anselmo, CA 94960 P: 415.256.1268
www.kelseygroup.com
ConStat, Inc.
William D. Deaton, Ph.D.
70 Washington Street, Suite #225 Oakland, CA 94607 P: 510.267.3100
www.constat.com
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