New Media Grows Up
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The AlwaysOn & KPMG Survey
New Media Grows Up
O
Madison Avenue taps the value of online innovation.
nMedia is the forum where CEOs from new media companies meet the global advertising and media establishment. In preparation for this one-of-a-kind event, we wanted to find out how the forces of new media have affected the marketing, media, branding, advertising, and public relations industries. Following are the results of a survey we conducted of more than 200 of your peers in the media industry. We asked what would be the most disruptive forces in media. The results were quite diverse, with 49% of respondents identifying the pullback of available ad dollars as the greatest disruption, 40% said the emergence of mobile devices as personal computers, and 38% felt the reduction of old media through bankruptcies and closures have the most impact on the media industry today. The economy is also clearly having an impact on advertising, and the impact is being felt by new media and old media companies alike. In fact, this year, 75% of the respondents see advertisers moving more than 25% of their dollars and time away from traditional channels. While this number is high, it actually reflects a significant drop from the almost 90% response in last year’s survey. Seventy-one percent of respondents see the recent new media acquisitions by established media companies making money in less than five years. Social networking is clearly an important force in the media industry, and the participants in the survey see progress in advertisers planning for the use of it. Last year, 48% felt advertising agencies lacked a plan to leverage social networking for their clients. That number is down to 42% this year. The likely uses for social networking for business include creating a new brand image, attracting new customers, and launching new products. Investment in new media opportunities will come primarily from the venture capital firms, according to 57% of the respondents. That is up from 51% in last year’s results. The best venture investment would be niche media companies (39%) or interactive marketing companies (30%). We look forward to sharing the full results of the KPMG/ AlwaysOn survey at OnMedia, February 2–4, in New York City. The presentation will also be available online at www.alwaysonnetwork.com. Brian Hughes is a partner with the Philadelphia office of KPMG LLP (www.kpmg.com) and is the co-leader of the Venture Capital Practice—Eastern Area. Brian can be reached at [email protected]. 6 | A LWAYSON | ONM E D I A N Y C 2 0 0 9
General 1: What are the two most disruptive forces in media today? (Choose two.) 49%
The pullback of ad dollars Smartphones' r potential for location-targgeted content,, advertising r , and marketin k g The thinning of “old media” (bankruptcies and closures) The failure of social networks to monetize as expected The mobile device becoming a personal computer Internet penetration opening up new global markets k
17% 3 38% 18% 40% 25% % 0
10%
20%
30%
40%
50%
2: Over the next 5 years, what percentage of media time and spending will move away from traditional channels? 25%
0-25%
5 58%
26-50% 17%
51-75% 0%
76-100% 0
10%
20%
30%
40%
50%
60%
3: How long will it take for the old-media acquisitions of newmedia companies to pay off in revenue growth? 1-2 years y
7%
2-3 years y
29%
4-5 years
40% 17%
5 yyears 7% %
Neve e r 0
10%
20%
30%
40%
50%
Social Networking/Web 2.0
Online Advertising
4: Will social networks ever become profitable from advertising?
8: Which of the following online-advertising tactics provides the best return on investment: 11%
Site visits
Yes: in time they'll figure it out No: online chatting doesn't lead to shopping Maybe: only if ads become more creative
58%
11%
10%
20%
30%
40%
50%
60%
44% 31%
Captured sales revenue 0
10%
20%
30%
40%
50%
9: Is the return in line with traditional advertising channels?
5: What's the biggest lesson from the 2008 presidential election's use of social media? Social networks can powerfully grab mindshare in society at large Online networks can successfully drive micro-payments to equal big bucks Businesses will see my.barackobama.com as a model for creating savvy in-house networks and wikis
14%
Qualified prospects/ sales opportunities
32% 0
Click-throughs
47%
Yes
34%
58% 42%
No
19%
0 0
10%
20%
30%
40%
24%
14%
5%
10%
6% 11% 21%
Interactive 16%
0
15%
20%
60%
5%
Banner ads Online partnerships
9%
More than 50%
50%
47%
Email advertising
19%
41-50%
40%
Search engine
11-20% 31-40%
30%
10: What form of online advertising is most effective?
18%
21-30%
20%
50%
6: What percentage of ad agencies have a plan to leverage social networking for their clients? 0-10%
10%
25%
7: What are advertisers and agencies going to use social networking for?
10%
Other 0
10%
20%
30%
40%
50%
11: How will CPM trend in the next two years?
54%
Attract new customers Create new brand image
72% 54%
New product launch 35%
Direct sales 5%
Nothing 0
10% 20% 30% 40% 50% 60% 70% 80%
39%
Increase
41%
Decrease 19%
No change 0
10%
20%
30%
40%
50%
O N M E D I A N Y C 2 0 0 9 | A LWAY S O N | 7
The AlwaysOn & KPMG Survey
Mobile Marketing
Investment
12: Mobile has been called the last great hope for ads. Can it live up to the hype?
17: Where will the majority of the investment come from?
No: we'll discover mobile users don't pay any more attention to ads than do W Web browsers Absolutely: geo-targeted g markketing and ads will be a gold mine May a be: the jury's out until smartphones and applications evolve further
29%
10%
20%
30%
40%
0
65%
Mobile advertising r networks
30%
40%
50%
60%
Yes
29%
Media will do better than other sectors
40%
60%
80%
100%
15: What is the greatest opportunity for mobile?
Media will fair about the same as other sectors
9% 14%
Games
4 48%
Location-based advertising 0
10%
20%
30%
40%
50%
16: How will mobile applications monetize? 45% %
Advertising Charge r for apps Third-party r sponsorship (such as mixing a new music album with a ggame)
27% 7 27% 7 0
8 | A LWAYSO N | O N M E D I A N Y C 2 0 09
10%
20%
30%
10%
20%
30%
40%
Survey brought to you by
8%
Music
40%
50%
45% %
14%
Shopping
40%
36% 6
7% %
TV
30%
1 18%
0
Video / UGC
20%
Media will be hurtt more than other sectors
13% 20%
10%
19: How will the economic downturn affect venture investment in media relative to other technology sectors?
87%
0
60%
70%
14: Do you expect that to increase in the next two years?
No
50%
39%
0
2% 20%
40%
1 17%
Interactive marketing k companies
10%
30%
14%
Online ad networks / exchanges
6%
0
20%
Niche media companies
27% 7
76-100%
10%
18: What's the best venture investment bet?
0-25%
51-75%
35% %
Corporate investment
50%
13: How much of their content are media companies adapting for mobile consumption?
26-50%
14%
Private v equity 46%
0
51%
VVenture capital
25% %
50%
&
50%
New Media Grows Up
O
Madison Avenue taps the value of online innovation.
nMedia is the forum where CEOs from new media companies meet the global advertising and media establishment. In preparation for this one-of-a-kind event, we wanted to find out how the forces of new media have affected the marketing, media, branding, advertising, and public relations industries. Following are the results of a survey we conducted of more than 200 of your peers in the media industry. We asked what would be the most disruptive forces in media. The results were quite diverse, with 49% of respondents identifying the pullback of available ad dollars as the greatest disruption, 40% said the emergence of mobile devices as personal computers, and 38% felt the reduction of old media through bankruptcies and closures have the most impact on the media industry today. The economy is also clearly having an impact on advertising, and the impact is being felt by new media and old media companies alike. In fact, this year, 75% of the respondents see advertisers moving more than 25% of their dollars and time away from traditional channels. While this number is high, it actually reflects a significant drop from the almost 90% response in last year’s survey. Seventy-one percent of respondents see the recent new media acquisitions by established media companies making money in less than five years. Social networking is clearly an important force in the media industry, and the participants in the survey see progress in advertisers planning for the use of it. Last year, 48% felt advertising agencies lacked a plan to leverage social networking for their clients. That number is down to 42% this year. The likely uses for social networking for business include creating a new brand image, attracting new customers, and launching new products. Investment in new media opportunities will come primarily from the venture capital firms, according to 57% of the respondents. That is up from 51% in last year’s results. The best venture investment would be niche media companies (39%) or interactive marketing companies (30%). We look forward to sharing the full results of the KPMG/ AlwaysOn survey at OnMedia, February 2–4, in New York City. The presentation will also be available online at www.alwaysonnetwork.com. Brian Hughes is a partner with the Philadelphia office of KPMG LLP (www.kpmg.com) and is the co-leader of the Venture Capital Practice—Eastern Area. Brian can be reached at [email protected]. 6 | A LWAYSON | ONM E D I A N Y C 2 0 0 9
General 1: What are the two most disruptive forces in media today? (Choose two.) 49%
The pullback of ad dollars Smartphones' r potential for location-targgeted content,, advertising r , and marketin k g The thinning of “old media” (bankruptcies and closures) The failure of social networks to monetize as expected The mobile device becoming a personal computer Internet penetration opening up new global markets k
17% 3 38% 18% 40% 25% % 0
10%
20%
30%
40%
50%
2: Over the next 5 years, what percentage of media time and spending will move away from traditional channels? 25%
0-25%
5 58%
26-50% 17%
51-75% 0%
76-100% 0
10%
20%
30%
40%
50%
60%
3: How long will it take for the old-media acquisitions of newmedia companies to pay off in revenue growth? 1-2 years y
7%
2-3 years y
29%
4-5 years
40% 17%
5 yyears 7% %
Neve e r 0
10%
20%
30%
40%
50%
Social Networking/Web 2.0
Online Advertising
4: Will social networks ever become profitable from advertising?
8: Which of the following online-advertising tactics provides the best return on investment: 11%
Site visits
Yes: in time they'll figure it out No: online chatting doesn't lead to shopping Maybe: only if ads become more creative
58%
11%
10%
20%
30%
40%
50%
60%
44% 31%
Captured sales revenue 0
10%
20%
30%
40%
50%
9: Is the return in line with traditional advertising channels?
5: What's the biggest lesson from the 2008 presidential election's use of social media? Social networks can powerfully grab mindshare in society at large Online networks can successfully drive micro-payments to equal big bucks Businesses will see my.barackobama.com as a model for creating savvy in-house networks and wikis
14%
Qualified prospects/ sales opportunities
32% 0
Click-throughs
47%
Yes
34%
58% 42%
No
19%
0 0
10%
20%
30%
40%
24%
14%
5%
10%
6% 11% 21%
Interactive 16%
0
15%
20%
60%
5%
Banner ads Online partnerships
9%
More than 50%
50%
47%
Email advertising
19%
41-50%
40%
Search engine
11-20% 31-40%
30%
10: What form of online advertising is most effective?
18%
21-30%
20%
50%
6: What percentage of ad agencies have a plan to leverage social networking for their clients? 0-10%
10%
25%
7: What are advertisers and agencies going to use social networking for?
10%
Other 0
10%
20%
30%
40%
50%
11: How will CPM trend in the next two years?
54%
Attract new customers Create new brand image
72% 54%
New product launch 35%
Direct sales 5%
Nothing 0
10% 20% 30% 40% 50% 60% 70% 80%
39%
Increase
41%
Decrease 19%
No change 0
10%
20%
30%
40%
50%
O N M E D I A N Y C 2 0 0 9 | A LWAY S O N | 7
The AlwaysOn & KPMG Survey
Mobile Marketing
Investment
12: Mobile has been called the last great hope for ads. Can it live up to the hype?
17: Where will the majority of the investment come from?
No: we'll discover mobile users don't pay any more attention to ads than do W Web browsers Absolutely: geo-targeted g markketing and ads will be a gold mine May a be: the jury's out until smartphones and applications evolve further
29%
10%
20%
30%
40%
0
65%
Mobile advertising r networks
30%
40%
50%
60%
Yes
29%
Media will do better than other sectors
40%
60%
80%
100%
15: What is the greatest opportunity for mobile?
Media will fair about the same as other sectors
9% 14%
Games
4 48%
Location-based advertising 0
10%
20%
30%
40%
50%
16: How will mobile applications monetize? 45% %
Advertising Charge r for apps Third-party r sponsorship (such as mixing a new music album with a ggame)
27% 7 27% 7 0
8 | A LWAYSO N | O N M E D I A N Y C 2 0 09
10%
20%
30%
10%
20%
30%
40%
Survey brought to you by
8%
Music
40%
50%
45% %
14%
Shopping
40%
36% 6
7% %
TV
30%
1 18%
0
Video / UGC
20%
Media will be hurtt more than other sectors
13% 20%
10%
19: How will the economic downturn affect venture investment in media relative to other technology sectors?
87%
0
60%
70%
14: Do you expect that to increase in the next two years?
No
50%
39%
0
2% 20%
40%
1 17%
Interactive marketing k companies
10%
30%
14%
Online ad networks / exchanges
6%
0
20%
Niche media companies
27% 7
76-100%
10%
18: What's the best venture investment bet?
0-25%
51-75%
35% %
Corporate investment
50%
13: How much of their content are media companies adapting for mobile consumption?
26-50%
14%
Private v equity 46%
0
51%
VVenture capital
25% %
50%
&
50%
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