WHERE’S THE MONEY: ONLINE AD-TRENDS OUTLOOK

WHERE’S THE
MONEY: ONLINE AD-
TRENDS OUTLOOK

January 19, 2011 AAF Birmingham

Agenda
 Digital advertising trends
 Local advertisers speak
 What next?

© 2011 Borrell Associates Inc.

About Borrell Associates

 Research
Advertising revenues
& spending
www.borrellassociates.com

 Consulting
Advertising strategy
& tactics
 Industry
Conferences
 Locally focused
Offline and especially
online advertising

Our Research

 Online ad spending data for any US market
 Sales data from 4,400+ local Web sites
 Quarterly Delphi Panel surveys

 Ongoing in-market sales consulting
 Major data partnerships:

Forecasting Sources

 Borrell’s model of marketing spending
 Many government & private inputs

 IRS, BLS, D&B, 10Ks, trade associations

 Developing for 20+ years

 Ongoing surveys of local advertisers
 Ongoing surveys of local media company sites

“Skate to where
the puck will
be, not where it
is.”
- Wayne Gretzky

Local U.S. Ad Spending
2010 2011 2012 2016
Online $13.5 $15.3 $18.3 $27.2
Newspaper $21.3 $18.4 $18.5 $19.7

Radio $12.6 $12.1 $11.4 $12.5
Broadcast TV $10.5 $10.5 $11.4 $10.2
Direct Mail $9.5 $8.2 $8.3 $7.3
Other Print $8.4 $8.1 $7.9 $6.1
Directories $6.6 $5.0 $5.3 $4.3
Cable $3.3 $3.2 $3.6 $3.9
Cinema $0.7 $1.0 $1.4 $2.1
Out-of-Home $1.2 $1.1 $1.2 $1.3
Telemarketing $1.0 $0.8 $0.9 $0.9
($ Billion) $88.6 $83.7 $88.0 $95.5

Dedicated Digital-Ad Sales AEs

Local U.S. Non-Ad Spending
($ Billion) 2010 2011 2012 2016

Promotions $114.3 $169.8 $177.5 $273.7

Online Promos $0.8 $1.4 $1.7 $5.9

Online PR $1.2 $1.2 $1.3 $1.4

Ad Production $20.5 $17.6 $19.9 $25.1

Sales Materials $0.9 $0.8 $0.9 $0.9

P.R. $0.3 $0.3 $0.3 $0.4

Research $0.2 $0.1 $0.1 $0.1

$138.3 $191.2 $201.7 $307.6

Promotions defined

 Discounts, coupons,
rebates
 Samples, premiums

 Contests, sweepstakes
 Webinars
 Viral marketing
 Text messaging

The Growth is in Promotions
$400

$350

$300

$250
$274
$ Billion

$200 Local Promo
$170 $177 Local Ads
$150 $114

$100

$50 $89 $84 $88 $96

$- $- $- $-
2010 2011 2012 2016

Big Money with Promotions

Augusta GA
Ferguson Extreme Kitchen
Contest

 253 entries
 7,627 registrations
 30,000 votes
 $50,000 prize, $50,000
sponsorship package
 Turned a contest that ran 6 weeks
into a program that ran 4 months

Online Promotions Skyrocket

© 2010, Borrell Associates, Inc. All rights reserved. (Borrell Associates Q4, 2009, US Totals, in billions)

Local Promotions Increase Share


Local Advertising vs. Local Promotions

$1.56 will be spent
on local promotions

…for every $1
in local advertising
 11% Growth in Advertising in 2014
 26% Growth in Promotions

Do you have a social network site or page?

64% 67%
58%

45%

© Borrell Associates, Inc. SMB Survey Q1 2011
Q3 2010 Q4 2010 Q1 2011 Q2 2011


SMBs Online Spending

SMBs use of Social Marketing Platforms

Business Category Leaders in Social

SMBs Measure of Social Networking Success

Likely to include mobile in 2011?

Percent n
Very likely 12.4% 604

Somewhat likely 23.5% 1,142
Not very likely 30.0% 1,457
Not at all likely 22.4% 1,086
Don’t know 11.6% 563
Total 100.0% 4,852

U.S. Total Mobile Ad $ in Perspective

2011

“Stationary”
Online Ad Spend
Online Ad $38.7 B
Offline Ad
Spending Spending
$182.1 B $48.9 B

Mobile – Local vs. National Ad Spending

National Local
$35

$30

$25
($ Billion)

$20

$15

$10

$5

$-
'10 '11 '12 '13 '14 '15 '16

Local Mobile Ad Formats 2010/2011

$900

$800

$700

$600 Email
Audio
($ Million)

$500
Targeted Display
$400
Video
$300 RoS Display
Search
$200

$100

$-
2010 2011

Local Mobile Formats 2010-2016

$20

$18 Email

$16

Audio
$14

$12
($ Billion)

RoS Display
$10

$8 Video
$6

$4 Search

$2
Targeted
$0 Display
'10 '11 '12 '13 '14 '15 '16

Local Online Advertising – Historic Shares

100%
90%
80% Other
70%

Local Cable
60%
Directories
50%
40%
Radio

30% Broadcast TV
20% Newspapers
10% Pureplay
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010

U.S. Local, Online Ad Formats, 2011/2016

$18 $30

$16
$1,509 Targeted $25 Targeted
$14 Display Display

$12 Static $20 $14,596 Static
$5,288
Display/RoS Display/RoS
$10
Paid Search $15 Paid Search
$8
$2,144
$6 $5,615 Direct/Email $10 Direct/email
$4,210
$4
$643
$629 Video $5 Video
$2 $2,401 $4,491

$ $817
Audio $
Audio
2011 ($ in Billions) 2016

Targeted Ads
1. IP-based geographical
2. Search
3. Explicit Profile Data

4. Behavioral (Implicit Profile Data)
5. Mobile/Location-based
6. Contextual

IP-based geo-targeting
 As determined by a user’s IP address
 Used for local advertisers to reach their
audience

 25-50 miles accuracy
 Better suited for regional advertisers to reach
DMA level

Search targeting
 Used when searching for places, businesses,
housing, entertainment, etc.
 Based on querying

 Allows for highly relevant advertising
 Performs well, high value

Explicit Profile Data Targeting
 Registration quality data
 Collected either offline or online
 Data may be associated with a cookie

 Not about where user has been but what they
have said about themselves
 First party data commands a premium over
third party data

Behavioral (Implicit Profile Data)

 Based on profiles that are inferred from an
individual user’s technical footprint and
viewing behavior

 Data collected through online activities –
specific pages, searches, CTs
 Used in conjunction with Explicit Profile Data
 Higher probability of user interest
 Higher ad rates, CPA, PPC

Mobile/Location-based Targeting

 Targeting through mobile devices –
smartphones, GPS (tablets), some laptops
 Confirmed location (GPS)

 Most available ad inventory has only DMA-
level targeting
 Confirmed-location targeting is extremely
accurate

Contextual Targeting
 Based on content being viewed on an
individual Web page
 Based on geography and the target

 Can range from niche to mass
 Accurate, commands higher price
 Sometimes layered with IP targeting

Local Online Ad Spending
Birmingham-Hoover
$100.0
$90.0
$80.0 $91.6

$70.0
$60.0
($ in Millions)

$50.0
$40.0 $53.0
$30.0
$20.0
$10.0
$0.0

2011 2016

Online Ad Formats 2011/2016
$60 $100
$90
$50 $5.2 Targeted Targeted
Display $80 Display

Static
$70 Static
$40 $17.5 $50.4
Display/RoS $60 Display/RoS

$30 Paid Search $50 Paid Search

$40 $7.1
$20 $19.5 Direct/Email
$30 Direct/email
$14.6
$20 $2.0
$10 $1.9 Video Video
$8.1 $10 $15.1

$0 $0 $2.5
Audio Audio
2011 2016
($ in Millions)

Top Online Business Categories 2016

Birmingham-Hoover
General Merchandise Stores $21.36

Automotive Sales $12.59

Furniture Sales $6.25

Food Stores - Retail $3.82

Real Estate Services $3.47

Recruitment $3.16

Retail Home Improvement $1.94

$0.0 $5.0 $10.0 $15.0 $20.0 $25.0
($ in Millions)

Under Siege from Ad Sellers

Q4 Q1 Q2 Q3
2010 2011 2011 2011
Avg # of AEs

contact you
per month
23 25 20 24
Sales pitches

taken per
month
7 7 8 8

U.S. 2010 to 2011 Online Ad Spending Change

40%

30%

20%

10%

0%

Less likely to buy More likely to buy

Marketing Advisors

Which of these types of information sources
do you use to find out about new advertising

and marketing opportunities?


Confidence in rep ad package advice

50%

40%

30%

20%

10%

0%
Very Somewhat Not very Not at all Do not Don't
confident confident confident confident have print know
rep

Effort seen in reps to listen & understand

60%

50%

40%

30%

20%

10%

0%
A great deal Some effort Not very No effort at Don’t know
of effort much effort all

What can local media do?
 Be consultants, educators
 Develop ad-centric sites
 Participate in promotions
 Go after non-traditional advertisers


WHERE’S THE MONEY: ONLINE AD-TRENDS OUTLOOK

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