Now Next Beyond v2: Making Sense of Change

Now, Next, Beyond
Version #2
January 2015
Mark Holden,
Head of Futures
@holdenmw

Why have we done this?
To make practical sense of change:
• Understand it.
• Prioritise based on likely impact to marketing & communication.
• Technology is a driver, but it’s not all about technology.
• The ‘future’ is not static.

This is not futurology – the next wave is already here
Internet: 50 years Mobile: 30 years Social: 10 years

Even if it’s in front of us, change can happen quickly
0
10
20
30
40
50
60
70
80
Technology adoption rates over the last 100 years
(reaching 25% adoption)

Now, Next, Beyond
Now
Next 12
months
Critical now
Next
Next 24
months
A rising tide
Beyond
Within 5 years
Clouds on the
horizon
Monitor,
experiment, planPrepareAct now
Impact

Now, Next, Beyond
Rise of connected TV
Marketing personalisation
Integrated commerce
The mobile majority
Content as media
Multidevice world
Digitisation of media
Data driving media
Co-creation & customisation
Internet of useful things
Predictive design
Money 2.0
Attention deficit
The generation gap
Privacy value exchange
Social goes mobile
The power of the ‘1st screen’
Modern families
What recovery?
TV - generational tipping point
Murdered by modernity
Demographic reckoning
Confronting climate change
The marketing-media system
New paths to growth
The real value of social
Meaningful marketing
Explicit and implicit
Now Next Beyond
Tech
Behaviour
Practice

The mobile majority
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2020
Smartphone
Tablet
Source: Arena Media forecast (aggregate of penetration data)
August 2015 – the point at which
smartphones exceed UK broadband
penetration

The OS platform ‘war’ is arguably over
Android
iOS
Windows
Other
September 2013 September 2014
Source: Kantar Worldpanel ComTech September 2014

Whilst the hardware sector is commoditising

We’re moving beyond the ‘landgrab’ into brand services
‘Landgrab’ Enhance products & services
Mobile-friendly touchpoints
Apps
Media integration
Commerce New services
App-like experiences
Location
Mobile CRM

We’re moving beyond the ‘landgrab’ into brand services
‘Landgrab’ Enhance products & services

The big change is how we use (and design) apps
Source: Nielsen July 2014; IPA Touchpoints 5
’We’re reaching an app ‘threshold Two thirds of mobile time is still spent in apps

App-like experiences are likely to embedded more
seamlessly into the OS experience
Source: Nielsen July 2014; IPA Touchpoints 5
App experiences directly from notifications’ Card-based design

Multi-device world
Every household in the UK has an average of 4 connected devices:
83% have 2 device or more 66% have 3 devices or more
46% have 4 devices or more 29% have 5 devices or more
1 2 1 2
2
1
Source: IPA Touchpoints 5 2014
*Internet connected devices: Internet-enabled TV, fixed PC, laptop, tablet, mobile phone, games console
Device* type in numbers

The PC remains the workhorse for e-commerce
Source: Global Web Index Q2 2014

But all devices have an influencing role to play in user
journeys to varying degrees

However, there’s a post-PC world on the horizon
Source: Ofcom Children’s and Parent’s Media Usage and Attitudes Report 2014

Getting equipped for the post-PC world
Universal
analytics
Responsive
Design for
comparative
advantage
Tablet
isn’t an
afterthought

Content as media
We’ve seen an acceleration of ‘content as advertising’ in the last year

A fast widening of ‘native’ platforms
Direct Response
Brand
Rich media
Editorial

Content is now the ad ‘substance’ of many digital platforms

5 key developments
Partnerships
Content
distribution
Platform
investment
Influencers
Power of
video

This requires a shift in emphasis

‘Let’s make…
- Social media stories
- Articles
- A blog
- How-to videos
- A programme
- A game
- Photography
- An experience
- A stunt video
- A product guide
- A documentary
- A book
- With influencers etc.
‘Let’s make some
content!’
We need to get specific
vs.

And make choices: why and what we produce
HMG Content Lens
Topics
Tone of
voice
Brand
platform
Monday 10th November Monday 17th November
Wednesday 26th
November REACTIVE
Idea Idea Idea Idea
How it works How it works How it works How it works
Content pillar Content pillar Content pillar Content pillar
SEO integration SEO integration SEO integration SEO integration
Destination platforms Destination platforms Destination platforms Destination platforms
KPI's KPI's KPI's KPI's
Distribution Distribution Distribution Distribution
Content planning & scheduling

Content can work
62% want to see content directly from their
favourite brands
27% want to see branded articles on important
issues
90% of consumers find content useful
78% believe brands providing custom content
are interested in building good relationships
with them
Source: CMO Council – The Content ROI Centre 2014

It requires a good framework for measuring ROI
Awareness Purchase
Emotional
Rational
Entertain
e.g. interactions, sentiment, dwell time
Inspire
e.g. search uplift, participation
Educate
e.g. purchase intent, brand consideration, CRO
Convince
e.g. sales, leads, recommendations, SEO

It requires a good framework for measuring ROI
Awareness Purchase
Emotional
Rational
Entertain
e.g. interactions, sentiment, dwell time
Inspire
e.g. search uplift, participation,
Educate
e.g. purchase intent, brand positioning
Convince
e.g. sales, leads, recommendations, SEO

Sources: Posterscope 2013; Future Source Consulting;
BBC News; Ofcom Communications Market Report 2014
59% of UK digital inventory to be
traded programmatically by 2017
196,000 digital outdoor screens in the
UK; only 4% of ads on them make use
of live content
Programmatic extending to
‘traditional’ media

Sources: Posterscope 2013; Future Source Consulting; BBC
News; Ofcom Communications Market Report 2014
The World Cup saw more people
sharing in real-time than any other
event in history
Dynamic creative is possible
across all media types now
Smart TV’s account for 45% of all new
TV sales

Digital is not a ‘channel’

It’s not just about campaigns, it’s about service design too

Data capabilities are developing at pace
1st party 2nd party 3rd party
Understanding & managing
experiences with one view of the
customer
Fusing customer datasets to fuel new
targeting strategies
Enrich insight and targeting with
supplementary data

Social goes mobile
Facebook
60%
Youtube
36%
Twitter
34%
Instragram
20%
Google+
18%
Active usage 16-30’s in the UK

16-24’s
Instant messaging platforms are accelerating this
0% 5% 10% 15% 20% 25%
Facebook Messenger
Kakao Talk
Kik Messenger
Line
Skype
Snapchat
Vibe
WeChat
WhatsApp
0% 10% 20% 30% 40% 50%
Facebook Messenger
Kakao Talk
Kik Messenger
Line
Skype
Snapchat
Viber
WeCha
WhatsApp
Everyone

IM is set to overtake social networking on mobile

The UK’s major players are not all brand-friendly…yet

But there are opportunities to experiment now
Tactical messages Brand stickers Customer service Superfan IM groups

Social on mobile creates new opportunities
Reactive moments More seamless UGC Impulse buying

Power of the ‘1st screen’
76%
24%
MeshingStacking
*Millward Brown Ad Reaction 2014; 15-44 multiscreen users

Most dual-screening is unconnected to what’s happening on
screen
*Millward Brown Ad Reaction 2014; 15-44 multiscreen users

Though TV clearly does drive social media conversation
Source: Kantar, A year in the life of TV & Twitter in the UK, 2014

And may even help to make programming a little more
popular
Source: Kantar, A year in the life of TV & Twitter in the UK, 2014

Even infamous examples struggle to achieve the reach that
broadcast ads do
15,885 retweets
6,483 favourites
20,000 likes
108m watched
5.1m tweeted
44,500 ‘engaged’
0.008% of active tweeters
A team of 13

Big TV events are creating a 2nd screen scrum

There are ways to design 2nd screen experiences that scale
Partners Amplified content

There are ways to design 2nd screen experiences that scale
Enhanced experiences Be as good as the 1st screen

The modern family unit is in flux
Source: Labour Force Survey - Office for National Statistics
Fewer people getting married Women having kids later

New kinds of household structures emerging
Source: Brand Futures Family of the Future 2014

18%
16% 16%
45%
27%
25%
70%
12%
74%
76%
32%
48%
71%
73%
27%
64%
Parenting Children's education Clothing for children Buying a vehicle Parenting Children's education Clothing for children Buying a vehicle
Male Female
I have final/primary say Share decision-making equally
Families ≠ mums
Source: http://www.ipsos-mori.com/Assets/Docs/Polls/global-trends-survey-gender-divide-tables.pdf

More brands are representing (and celebrating) diversity

Some are even making it their campaign idea

Consumer confidence remains negative despite the
recovery

Disposable income just isn’t what it used to be
1/3rd of the UK workforce are part-
time (the highest since 1992)
Source: Manpower Quarterly Jobs Survey; Institute for Public Policy Research August 2014; Office for National
Statistics
Youth unemployment still high
at 18%
Earnings < inflation from 2008 -
2013

Something Aldi and Lidl have very cleverly exploited

Trading down and value-shopping behaviours are deeply
ingrained
Source: Mintel The Post-Recession Consumer 2014

Creating both challenge & opportunity
Source: Mintel The Post-Recession Consumer 2014
Switched-on
consumers
Unprecedented
access to comparison
information
Intense brand
competition
+ +
Groceries
Mid-range cars
Music industry
DVD’s
Alcohol at home
High street travel
‘Traditional’ banking
Premium-casual fashion
Property aggregators
Value retail
Consumer tech
Fast food
Coffee shops
Gaming
Cinema
TV-viewing
Film-streaming
Fast fashion

Source: Social Flow August 2014
‘Organic social’ is in decline on Facebook and Twitter

‘Organic social’ is in decline
Source: Convince and Convert March 2014

Social media platforms have changed: they are very
different entities now
Analytics, advertising & identity Developer platformConsumer tech

The good news: we have more viable choices than ever

It’s clear that social doesn’t build brands on its own – but
can reinforce brand equity
Source: Peter Field / WARC ‘Seriously Social’ 2014

In many ways we need to get back to fundamentals
Source: Peter Field / WARC ‘Seriously Social’ 2014

People expect brands to tangibly enhance their lives
Today’s paradigm
Most people would not care if 73% of
brands disappeared
Less than 20% of brands notably improve
our quality of life
Source: HMG Meaningful Brands 2014

There are opportunities to make a difference
Brands work hard at improving our
quality of life and well-being
% AGREE 2013
I generally trust brands
They communicate honestly about
their commitments and promises
Brands can play a role in improving my
quality of life and well-being
40%
32%
46%
53%
24%
32%
49%
20%
Source: HMG Meaningful Brands 2014

And being meaningful is commercially beneficial
HM MEANINGFUL BRANDS
Index’13
STOXX 1800 FTSE4 Good Index
x 120% x 175%
MB Index considers top 25 meaningful global brands (from companies operating in the stock market)
Source: HMG Meaningful Brands 2013 – based on top 25 meaningful brands globally

Being meaningful involves driving a blend of benefits for
end users
Placed fairly in
the market
Makes a difference to my life Makes a difference to society
Listens & cares
Good quality
Fair price
Innovative products
Category leader
Emotional (happier, express identity)
Organisational (make life easier)
Financial (savings)
Intellectual (ideas/skills, smart)
Physical (health, fitter)
Social (connecting)
Natural (reuse, recycle)
Gov & Ethics
(ethical, transparent, sustainability leader)
Environment (enabler)
Economy (local economy / jobs)
Community (socially committed)
Workplace (employees)

Getting the blend right can create meaningful differentiation
Source: HMG Meaningful Brands 2013. Scores derived from structured equation modelling and consumer responses
Importance in driving meaningfulness in finance (max 1)
Howeffectiveisthecategoryis
againstthekeyfactors?(outof
7)

Decision-making is driven by the interplay between explicit
and implicit processing
Source: Admap; Researching implicit memory: Get to the truth; 2013

Which has a number of key implications for marketing
planning
‘Emotional’ and ‘rational’ are not mutually exclusive
Blending motivational and rational drivers is most effective
Different channels have a natural skew on the cognitive spectrum
‘Emotion’ needs to be focused – connecting with category motivations

Communications should be designed with the right blend of
‘implicit’ and ‘explicit’ drivers in mind
Source: Innerscope; Dr Carl Marci: How to create better connections by understanding the brain

This reinforces brand-response as a best practice model for
marketing
Source: IPA Databank; The Long & Short Of It: Balancing Short-term and Long-term Marketing Strategies

And leads to a new insight toolkit which examines customer
intent against behaviour
Perceptual insight Behavioural insight+
Industry surveys
Segmentation
Focus groups & interviews
Brand tracking Implicit reaction testing
Passive data
Pre-testing
Propensity modelling
AB testing & observation
Facial recognition
META-ANALYSIS

Connected TV user experiences are improving
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2020
Smartphone
Tablet
Smart TV

And a growing number of entry points – both an opportunity
& challenge

Many household’s will have multiple entry points into
connected TV experiences
1. Device-syncing 2. Smart TV apps 3. Consoles and set-
top boxes
Rights-holders, broadcasters and software services

Opportunities to trial brand experiences now
New formats & providers
Apps: relatively uncluttered
Content hubs

Not e-commerce vs. store – retail channels overlap and blur across
customer journeys

Physical and digital experiences reinforce each other

Multichannel customers are more valuable
Source: Tesco, Winning in the New Era of Retail, 2014

Store visits are already a significant part of e-commerce
Sources: Redsock Multichannel Retail 2013; IMRG
** of eligible General Merchandise sales (i.e. excluding food and impossible items like washing machines and sofas)
* John Lewis state that 34% of John Lewis sales are collected in Waitrose Stores! So actually their figure is probably higher in total. Click-and-collect
was offered at 97 Waitrose's and 35 John Lewis's
On average 10% of
all UK online
transactions
collected in store

Key omnichannel challenges
Data infrastructure – universal analytics framework
Quantifying online-to-offline and offline-to-online
App-based CRM strategies
Enabling seamless (and non-invasive) personalisation

As digital media has grown we are spending more time with
media overall

But this abundance has the effect of making attention scarce

This is amplified by media platform switching

Clarity & consistency is now a differentiator

Generation gap
Over 50’s control 80% of Britain’s wealth
People aged between 50 and 74 spend twice as
much as the under-30s on cinema tickets
Between 2000 and 2010 restaurant spending 65-
74’s increased 33% vs. 18% less for under 30’s
Source: The Economist, Demography, 27th Sept 2014

We need to re-think our stereotypes about 50+ groups
vs.

Over 50’s feel stereotyped and/or ignored by marketing
66% feel that most advertising is aimed at 16-to-34
year olds
Source: High50 / Research Now, The 50+ Project 2014
95% feel that Apple and Samsung don’t target them
at all
(21% couldn’t live without a smartphone;
57% really enjoy having a smartphone)

Young people are becoming more prudent, less hedonistic

At the same their category needs & expectations are shifting

Users are increasingly aware of good (and bad) use of their
data

And some are taking control
On average 9.26% of impressions are ad-blocked, rising up to
17.7% for tech sites
There are 5m estimated VPN users in the UK
Sources: Global Web Index 2014 & ClarityRay 2013

Nonetheless, many users understand there is a value
exchange
84% of 18-34’s
are comfortable
sharing personal
data with
businesses via
social logins if
there is a decent
value exchange
59% of all users
are willing to
share personal
data for brands if
they make it clear
what it will be
used for
Source: Gigya, 2014

Good user experience should underpin data collection &
application
Intelligent retargeting
Give users control & explain
the benefits of data-sharing
‘Be as smart as puppy’ – only
collect what you need to make
UX work

Data & connected media capabilities will lead to system
marketing
RELEVANCE
GRANULARITY INTEGRATION
ACCELERATION
Behavior-based
Purchased-based
Segments
Personalized
Individual-level, Scoring
Simultaneously
dealing with all
Paid Owned Earned
touchpoints
Agility
Real-Time
Consumers’
Interests

This will go beyond the current digital channels

1. Competitive brands hardly differ in loyalty levels.
2. Their difference in size is due to the difference in their
user bases.
3. Reach, penetration and saliency strategies are more
effective than loyalty-driving strategies.
Physical + mental availability
Does the received wisdom about brand growth apply in the
digital world?

Digital customers exhibit greater affinity
Domino’s Pizza
Online
mean score
Offline
mean score
Is a brand I love 7.4 6.9
Brand advocacy 7.2 6.6
Brand consideration 7.5 7.0
Domino’s Pizza Online Offline
They communicate with me a lot 21% 13%
Source: Arena Media Brand Growth Research 2014

And can significantly alter category norms
Source: Arena Media Brand Growth Research 2014
% Average books bought
Physical books – (Amazon) 54% 5.1
Physical books – (Retail) 49% 4.9
E-books – (Amazon) 34% 8.7
Average 6.2
Average number of bets placed in last 3 months
Website Store/person App
Average 8.2 6.9 8.9
Average amount bet in last 3 months
Website Store/person App
Average £81.21 £82.16 £111.70

A new kind of availability
Virtual
availability

New paths to growth
Growth ‘from below’
Growth ‘from above’

New paths to growth
Crowdsourcing
Freemium
Growth-hacking
Digital footprint
CRM
Member-get-member
Network effects
‘Earned’ media
Partner marketing
Effective SOV
Salience
Brand extensions & launches
‘Upper funnel’ marketing
Direct response
Brand comms
Content distribution

This can apply even in ‘traditional’ categories
Amounteachpersoniswillingtopay
Source: Nicholas Lovell, The Curve

‘Kickstarting’ is getting into popular culture

Its not just technology & entertainment

There have been a few brand experiments, but remains a
relatively untapped area

Technologies also developing to enable product mass-
customisation

The Internet of Things is top of Gartner’s peak of inflated
expectations

IoT hype isn’t matching reality
33% of people who purchased a
wearable in the past year either
do not use them any more or
use them infrequently
75% of people are
aware of
wearables
technologies
10% are interested
in using them
Sources: TNS September 2014; PwC The Wearable Future October 2014

Single-purpose devices are likely to do better
Most desirable products
(by intent to purchase)
1. Fitbit
2. GoPro
3. Google Glass
4. Pebble
5. Nike Fuelband
6. Jawbone
7. VivoFit
8. iWatch
Source: Brandwatch July 2014

IoT will be much wider than wearable tech

In-car and in-home are arguably more promising areas

Brands are starting to experiment – service design is a
bigger opportunity than advertising

Voice is a key area to start developing for right now

And there are opportunities to leverage immersive
experiences and devices
Virtual reality demonstrations Interactive retail technology
AR apps

Predictive design: the ‘5th stage’ of technology
1. Hardware
2. Software and OS
4. Data
3. Sensors
5. Prediction

Predictive design: the ‘5th stage’ of technology

Which will shape next generation responsive design
Interactive screens Voice
“V-commerce” Connected living room

Designing services for new interfaces
Where is the customer and what are they doing?
Serving their need at that point
Context
Service
Device OS, screen size, gesture, voice
Design Designing quick, intuitive user experiences
Outcome Transact, prime a transaction, reward, entertain

Mobile interactions have increased 13x
from 2009 - 2014
Mobile is starting to change the way we pay and manage
money

Mobile is starting to change the way we pay and manage
money
+100% +10%
+300%
From 45m in 2013
to 90m in 2014
10% monthly growth in
payments in 2014
Payments to grow from
14m in 2013 to 44m in
2014
Over 10million contactless card
journeys, to roll out across the TFL
network in 2014

Despite some consolidation it remains a fragmented space
for end users

Relative penetration is still low

Security remains a concern for many

There will be further consolidation – and a few early
‘winning’ candidates
Backed by high street banks
1m registered users in 3
months
Rolling out in waves across
participating banks
1m cards activated within 72
hours
Already bigger than all
contactless competitors
156m registered users to
migrate into mobile services
An established intermediary
Has reach (and revenue) to
consolidate
Peer-to-peer Payments End-to-end

Beyond payments, banking and currency disruptions are on
the horizon
‘Mobile-first’ banking propositions have started to arrive

Beyond payments, banking and currency disruptions are on
the horizon
“Crypto currencies are inevitable, once we
figure out regulation and how to keep our
digital wallets safe in the future.”
- Eric Schmidt
Despite it’s volatility, there is still an active market in Bitcoin. If regulated and made friendly for end
users, virtual currency could be a significant change in banking practice & money transfer.

TV VIEWING:
GENERATIONAL
TIPPING POINT

At the moment the vast majority of our viewing is still on
linear TV
Average daily viewing: 3:55
88% watched live
0:03 daily average across phones, tablets
& laptops
1.5% of total TV viewing on
connected devices
Source: BARB / Thinkbox 2013 average

But the recession has softened the start of a clear shift

Generational media differences are stark

We are seeing the start of a fundamental change
A screen in every room Living room ‘cinema screen’ +
‘satellite’ connected screens

Murdered by modernity
“The Murdered by Modernity mindset is bound to gain greater prominence in the years
ahead.
But this is not a trend that will necessarily cause contradictory feelings. We might like to
complain about our always-on lifestyles and our inability to escape from technology, but
we will also enjoy our ability to find information instantly with a click or a swipe and each
new innovation will be welcomed with considerable enthusiasm.”
- Richard Nicholls, Future Foundation

People are increasingly feeling the need to switch off
0%
20%
40%
60%
80%
100%
Total
Male
Female
16-24
25-34
35-44
45-54
55-64
65+
AB
C1
C2
DE
2010 2012 2014
“The stresses of modern life mean that people are
less happy than they used to be”
“Sometimes I feel the need to get away from
phone calls, emails and text messages and
switch off” | % agree or agree strongly
Baby boomers
58%
Gen Y
60%
Gen X
65%
60%
Source: nVision Research | Base: 2,200 - 5,000 online respondents aged 16+, GB, 2013

We are starting to build a set of normative behaviours
around use of technology

Brands can help people save time & minimise digital clutter
Less is more
Quality over quantity
Save time, not dwell time
Good old fashioned effective frequency

We’ll see 2m growth amongst 65+ by 2020
Source: ONS / nVision | Base: UK

An ageing population will have consequences for
productivity and fiscal health
In developed economies we have
hit a demographic ‘sweet spot’
optimal to economic growth – the
point at which a high proportion of
working age people support a small
pool of dependants.
We are now emerging out that
‘sweet spot’ into a more challenging
period.

This is already starting to materialise
Source: Joseph Rowntree Foundation 2014

Life trajectories are changing - it’s become harder to define
customers by age alone
Sources: Source: ONS/nVision | Base: England and Wales, 2013; Labour Force Survey, ONS/nVision | Base : Individuals
aged 20-34, UK

This will have significant consequences
Parents & workers for longer Dependants for longer
Drive discretionary spending Squeezed discretionary spending
Spending more on care Spending more on pensions
Younger for longer ‘Older’ earlier

People have been more worried about money than the
environment

But that is starting to change

Genuine sustainability will be a competitive advantage
The Global 100: World Leaders in Clean Capitalism
50% of Millennials think
that in the future, more than
any other sector of society,
business will achieve the
greatest impact on solving
society's biggest
challenges

This may require brands & businesses to change how they
operate
Services vs. products Sacrificing for sustainability

Want to hear more?
mark.holden@arenamedia.com
@holdenmw

Now Next Beyond v2: Making Sense of Change

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