Friday, 16 November 2007

IBM study: the end of advertising

The end of advertising as we know it

IBM Institute for Business Value study

Imagine an advertising world where… spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.

Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry.

Download here complete IBM Institute for Business Value study

About the authors

Dr. Saul J. Berman, Global Strategy Leader, Media and Entertainment Industry, IBM Global Business Services

Bill Battino, Communications Sector Managing Partner, IBM Global Business Services

Louisa Shipnuck, Global Business Development Executive, IBM Media and Entertainment Industry

Andreas Neus, Managing Consultant, Communications Strategy and Change, IBM Global Business Services

Survey results

The IBM Institute for Business Value provides strategic insights and recommendations that address critical business challenges to help clients capitalize on new opportunities. The Institute is comprised of consultants around the world who conduct research and analysis in 17 industries and across five functional disciplines, including human capital management, financial management, corporate strategy, supply chain management and customer relationship management.
A new IBM online survey of consumer digital media and entertainment habits shows audiences are more in control than ever and increasingly savvy about filtering marketing messages. The global findings overwhelmingly suggest personal Internet time rivals TV time.

U.S. Highlights

* In biggest DVR market, users report extensive replay of television programming. This is resulting in ad skipping and revenue shakeup unless producers and broadcasters reinvent marketing formats and messaging:
o 24 percent have a DVR in their home, and 48 percent have used video-on-demand from a cable company or other provider
o While 33 percent report watching more television content than before the DVR, 53 percent report watching at least fifty percent on replay

* Users feel extreme regarding new forms of advertising. Marketers have to work harder than ever to understand individuals and micro-segments:
o Nearly 50 percent reported that video spots online – during, pre-rolled or as sponsorships – were the least annoying form of advertisement. Other formats tested were banner ads, pop-ups, and contextual search ads
o However, nearly the same level of consumers responded the same forms of advertising were most annoying online
o Additionally, 11 percent said they’d be willing to pay a little for ad-free viewing of video online

* U.S. users report more usage of social networking sites and user generated content than almost any other content services category:
o 45 percent use social networking sites
o 29 percent visit user generated content sites
o 24 percent use a music service such as iTunes
o 24 percent subscribe to premium television content

Europe Highlights

* In progressive mobile markets, users report content service adoption and cannibalization:
o In the U.K., 26 percent reported watching mobile video, including mobile phones and iPods
+ 73 percent reported using their phones for SMS; 16 percent reported using their mobile phones for gaming; 15 percent reported using their mobile phones for music; 15 percent reported using their mobile phones for sports, news and traffic and two percent for television shows
o For those in the U.K. who had watched mobile video, 18 percent said they reduced “normal” television by a little and another eight percent reduced “normal” television by a lot; four percent substituted television on their regular TV for use on their new device.

* For respondents in Germany who had watched mobile video, 23 percent prefer to view user generated content and 21 percent prefer video trailers or promotions

Asia Highlights

* Japan lags the U.S. and U.K. in social participation, reinforcing the need for media companies and marketers to localize by market as well as catering to individuals and micro-segments:
o When asked if they had already contributed to a social networking site, like MySpace or Xing, 9 percent of respondents from Japan reported yes, compared with 16 percent of U.S. respondents and 20 percent of U.K. respondents
o When asked if they had already contributed to video content sites, like YouTube, four percent of respondents from Japan reported yes, compared with seven percent of U.S. respondents and nine percent of U.K. respondents.

* Australia on the other hand topped all countries surveyed with 30 percent contributing to social networking sites and nine percent to video content sites

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