ICT Business Outlook 2008_ Dr Dan

Web 2.0 and iN2015
Web 2.0 and iN2015 STRUCTURE
SiTF 2008, ICT Business Outlook Forum
1.
1 The Dilemma
The Dilemma
Dan Steinbock
Dan Steinbock 2. Media, Marketing and Advertising
ICT Research Director
ICT Research Director
India, China and America Institute (ICA)
India, China and America Institute (ICA)
3.
3 From the Internet…
h
dsteinbock@gmail.com 4. … to Web 2.0
5. U.S. Presidential Election 2008
6.
6 BRICS: Web 2.0 Opportunity
BRICS: Web 2 0 Opportunity

New York City Shanghai Guangzhou Helsinki

SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 1 SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 2

Silicon Valley Versus Madison Avenue
“YOU”
YOU
The Challenge of Channel Proliferation
• “And for seizing the reins of the global
media, for founding and framing the new
di f f di df i h
digital democracy, TIME's ‘Person of the Year’
for 2006 is you.
• “Web 2.0 is a massive social experiment, and
like any experiment worth trying, it could fail.
• “ h
“This is an opportunity to build a new kind of
b ld k d f
international understanding, not politician to “500‐
“500‐channel cable universe” “Why not 500,000 channels!”
p g g
politician, great man to great man, but citizen (digital compression)
(digital compression) (Internet)
to citizen, person to person. “
Speech by TCI’s CEO John Malone (1992) Speech by Intel’s CEO Andy Grove (1996)

SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 3 SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock

Globalization: New Opportunities
Intelligent Nation 2015, Singapore s Infocomm Masterplan
Intelligent Nation 2015 Singapore’s Infocomm Masterplan STRUCTURE

International Infocomm Rankings 2007
1.
1 The Dilemma
The Dilemma
2. Media, Marketing and Advertising
Accenture e-Government Leadership p 1st
Ranking 3.
3 From the Internet to Web 2.0
h b20
International Institute for Management 2nd
Development (IMD) Technology
4. Case: U.S. Presidential Election 2008
Infrastructure Ranking 5. Web 2.0: Rise of the BRICS
World Economic Forum Global IT Report 3rd
E
Economist Intelligence U it’ e-Readiness
i t I t lli Unit’s R di 6th
Ranking
Update on Singapore’s Infocomm Masterplan
(Intelligent Nation 2015, iN2015)
( ll )


Big Three: Direct, Broadcast TV, Newspapers No 1. Direct Mail
US Ad Expenditures ($ mil, 2006) US Behaviorally Targeted Online Ad Spending ($mil), 2005‐2011
US Behaviorally Targeted Online Ad Spending ($mil), 2005‐
Internet
Local $4,000
National
Out of Home*
Business Papers
$3,500
Direct Mail
Local $3,000
National
Yellow Pages
Spot (local) $2,500
Spot (nat'l)
Network
Radio $2,000
Spot (local)
Spot (local)
Cable Networks
Cable $1,500
Syndication (ii)
Spot (local)
Spot (nat'l)
$1,000
Network (i)
Broadcast TV $500
Magazines
Local
National $0
Newspapers
p p
2005 2006 2007 2008 2009 2010 2011
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Source: Author (data: eMarketer July 2007)

SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock
Source: Author (data: TV Bureau of Advertising) 7 SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock

No 2. Newspapers Only Strong Brands Survive
Decline of US Daily Newspaper Circulation, In Mil (1993‐2005)
Decline of US Daily Newspaper Circulation, In Mil (1993‐ From Wall Street Journal to New York Times

Between 1940 and 1990 about 267
papers shut down, due to
– TV news (which killed afternoon
papers),
– the migration from cities to • “It is not easy to change consumer
suburbs (costly delivery) behavior,” says Martin Nisenholtz, CEO
y
– geographic mobility (less of New York Times Digital.
Source: Author (data: NAA)
interest in local dailies) • “Media are complementary. Truly
– a decline in civic engagement
g g transformational changes are predicated
g p
(dating back to Watergate) on dramatic innovation.”

3. Broadcasting Versus Narrowcasting
Washington Post Co.
Washington Post Co. Long‐Term Total TV HH Share Trends (1985‐
Long‐Term Total TV HH Share Trends (1985‐2002)
Term Total TV HH Share Trends (1985
80
• Highest penetration in a top‐10 market.
g p p Primetime (ABC, CBS, NBC)
70
• The Post's daily circulation peaked at Ad‐Supported Cable
60 Syndicated TV
832,000 in 1993. All Other Cable TV Sources
9%
50
• Circulation has dropped by 20% since
40
even as the region's population has
g
grown by 20%.
y 30

Cable TV
20 Broadcast
• Internet revenue is growing, but not as 35%
TV
quickly as ad income is falling. 10
56%
0
• The Post Co.’s main revenue source is
education. 1Q 2007: $11.4 B

Source: Author’s analysis (data: Fortune)
( )


Erosion of Viewers Embracing Fragmentation/Globalization
HHs Viewing Avg
HHs Viewing Avg (2006) Adoption of Infocomm Technology Across the Value Chain
18,000,000

16,000,000 Trends in the
d h
14,000,000 Digital Media and
12 000 000
12,000,000
Entertainment
(DME) Sector:
10,000,000

– Fragmentation
8,000,000
of value chains
f l h i
6,000,000
– Fragmentation
4,000,000
of geographies
g g p
2,000,000

0
Digital Marketplace for Global Media and Entertainment
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
(
(iN2015))
Source: Author’s analysis (data: TV Bureau of Advertising)

The
The Bottomline
The Bottomline STRUCTURE
• Direct mail, newspapers, and broadcasting dominate
Direct mail, newspapers, and broadcasting dominate 1
1. The Dilemma
The Dilemma
U.S. ad expenditures, but each reflects internal
erosion
– Direct mail is migrating to the Web 3.
h
– Newspaper circulation is declining 4. … to Web 2.0
– Narrowcasting is substituting for broadcasting (and new
revenue models)
5. U.S. Presidential Election 2008
– Traditional TV viewership is eroding
Traditional TV viewership is eroding 6
6. BRICS: Web 2 0 Opportunity
BRICS: Web 2.0 Opportunity
• Fragmentation and globalization of DME is an
opportunity

Annual Revenues Approaching $17 bn
Annual Revenues Approaching $17 bn U.S. Advertising Expenditures
Quarterly Revenues (2000–
Quarterly Revenues (2000–2006) % share % growth, 2006
Direct Mail
Direct Mail Internet
Out of Home
Broadcast TV
Direct Mail
Newspapers Cable
Cable Broadcast TV
Radio Total National
Miscellaneous
Yellow Pages Grand Total
Grand Total
Magazines Magazines
Internet Yellow Pages
Total Local
Out of Home
Out of Home
Business Papers
Business Papers Newspapers

0 10 20 30 ‐10 0 10 20
Source: Author (data: IAB Interactive) Source: Author (data: TV Bureau of Advertising)


Internet TV Global VCs
Grabbing Ad Revenue Taking Advantage of Web 2.0
Broadcast TV, Internet* and Online TV**
• Most Internet TV content Ad Revenues Worldwide, 2006‐2011
will be free to users over the ($ bil) • The spreading international interest in Web 2.0 mirrors the
next 1‐2 years. Broadcast TV
evolution of the first wave of “dotcom” investing, which also
• Viewing will take place Online Advertising expanded from its roots in consumer services in the San
2006 190 60 10
mainly on PCs and handheld O li TV
Online TV Francisco Bay area.
devices. • Private investment in Web 2.0 companies more than doubled
• Early adopters are already in Europe in the 1st half of this year to $51.5m, according to
2011 160 325 0.4
04 fi f O d &
figures from Dow Jones VentureOne and Ernst & Young.
networking Internet TV to
their main TV screens.
Online TV Revenues
Worldwide, 2006‐2011
10000 ($ millions) * Includes search, sponsored links, display and video
** Includes video insertion, sponsorship and display

Source: Author (data: Understanding & Solutions, July 30, 2007)
Source: Author’ (data: Understanding & Solutions, July 30, 2007)
0
2006 2007 2008 2009 2010 2011

Value Migration Building Infocomm Infrastructure
Intelligent Nation 2015, Singapore s Infocomm Masterplan
Intelligent Nation 2015 Singapore’s Infocomm Masterplan
Reorganizing the Value Chains
• The Next Generation National Infocomm Infrastructure (NGNII)
Direct Mail
ill id ih i
will provide users with pervasive connectivity and mobility for
i i d bili f
Broadcast TV
anytime and anywhere communications.
Newspapers
Cable
C bl
• The NGNII will meet the future demands of bandwidth
The NGNII will meet the future demands of bandwidth
Radio intensive applications such as digital media, IPTV and R&D.
Yellow Pages
Magazines
• The NGNII will have two components,
Out-of-Home
O t fH
– the National Broadband Network or NBN (wired component)
– and the Wireless Broadband Network or WBN (wireless component).
Mobilization
• The NGNII will aim to be accessible and affordable so as to
The NGNII will aim to be accessible and affordable so as to
facilitate innovation and enable new opportunities.
Internet
Update on Singapore’s Infocomm Masterplan
( ll )


The Bottomline
The
• U.S. Internet revenues close to $17Bn
U.S. Internet  revenues close to $17Bn 1.
1 The Dilemma
The Dilemma
– Approaching magazines, yellow pages
• Relatively low share of U.S. ad expenditures, highest
y p , g
position in terms of growth 3.
h
g
• Toward the convergence of mass TV and the Internet 4. … to Web 2.0
• Global VC activities prompted by Web 2.0 5. U.S. Presidential Election 2008
a ue g a o o O d ed a o a d ob e
• Value migration: From Old Media to IP and Mobile 6.
6 BRICS: Web 2.0 Opportunity
• NGNII may provide disruptive opportunities


Web 2.0 Media Search
New Media Formats by Top TV Nets Effective New Online Media by US Ad Execs
US Paid Search Ad Spending As a % of Total US Online Ad Revs at Top‐4 Portals as %
E‐Mail Alerts Search Online Ad Spending, 2000‐2011 of Total Online Ad Spending, 2004‐2007
50 35
Blogs Online Video 45 Google
40 30 Yahoo!
Podcast (audio)
Social Networking AOL
35 25
Mobile
30
Video Games
RSS 25 20
Very Effective
20
Games Podcasts Most Effective 15
15
…
Viral video (sharing 10 10
Mobile
5
MySpace
Blogs 0 5
Podcast (video)
Podcast (video)
0
YouTube RSS
2004 2005 2006 2007

0% 20% 40% 60% 80% 100% 120% 0% 20% 40% 60% 80% Source: Author (data: eMarketer 4/2007, company
reports
Emerging Media Formats Implemented Most by  Top TV              Select New Online Media that US Ad Execs Consider
Networks in the US, Q1 2007 (% of top TV networks)                     Most Effective or Very Effective, 2006 (% of respondents
August 30, 2007 (MTV 3) Copyright by Dan Steinbock 25
Source:  360i, March 2007                                                                    Source: American Advertising Federation (AAF), Nov 2006 SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 26

Online Video Social Networking
Rise of Online Video Viewers and Ad Spending Social Networking Ad Spending Rising
US Online Video Viewers, 2003‐2010 (millions) 3000
200
MySpace
150 2500 ROW
100 US
2000
50 Others
Oth
0
1500
2003 2004 2005 2006 2007 2008 2009 2010

US Online Video Ad Spending, 2001 2011 ($ millions)
US Online Video Ad Spending, 2001‐2011 ($ millions) 1000
Facebook

5000
4000 500
Niches
3000
0
2000
2006 2007 2008 2009 2010 2011 0 200 400 600
1000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source:  Author (data: eMarketer, May 2007)
Source: Author (data from
eMarketer, 6/2007)

MySpace The Mobile Revolution (2005)
Top 10 Social Networking Sites among US Internet Users

Ranked by visits, Dec 2006-Dec 2007 (% market share and % change)

Source: Hitwise as cited in press release, Jan 16, 2008

Copyright by Dan Steinbock 30

Great Potential, Uncharted Territory Asia‐
Asia‐Pacific: Highest Growth Market
High Potential, Low Use Size of the Global Media and Entertainment Market
• More than 3/4 of US
/
marketing professionals
surveyed think that social
media marketing—Web
media marketing—Web
2.0—can give them a
competitive edge
(Coremetrics, 11/07)
( / )
• The same respondents said
that only 7.75% of their
that only 7 75% of their
online marketing spending
went to such tactics.
(iN2015)


The Bottomline
The Bottomline
The STRUCTURE
• Web 2.0 by U.S. ad execs and TV networks
Web 2.0 by U.S. ad execs and TV networks 1.
1 The Dilemma
The Dilemma
– Search dominates ad spending and is maturing (e.g., Microsoft/Yahoo/
News Corp.) 2. Media, Marketing and Advertising
– Online video accelerating since 2005
Online video accelerating since 2005
3
3. From the Internet…
h
– Social networking exploding since 2006
– In social networking, MySpace has dominant share, but FaceBook 4. … to Web 2.0
exhibits highest growth
hibi hi h h
– In mobile revolution, cutting‐edge developments in Asia and northern 5. U.S. Presidential Election 2008
Europe, not in the U.S.
6
6. BRICS: Web 2.0 Opportunity
• Marketers aware of the potential of Web 2.0, but the
implementation has barely begun
• The opportunities of Web 2 0 may be highest in Asia Pacific
The opportunities of Web 2.0 may be highest in Asia‐Pacific

Using Web 2.0 Youthful Early Adopters
U.S. Presidential Election 2008 Where People Got MOST of Their Election News
(Age Groups / Connection Speed)

Source: Author (data: Pew)


Friends Matter New Technologies
Presidential Candidates & MySpace Campaigns U.S. Presidential Elections
• 1948: Broadcast TV
Obama
• 1968: FM Radio
• 1982: Cable TV
Clinton
• 1992: Laptops
• 1996: Internet
McCain
M C i
• 2008: Web 2.0

Huckabee
MySpace Impact on June 21, 2007

0 50,000 100,000 150,000 200,000 250,000 300,000

MySpace Impact on February 10, 2008
Copyright by Dan Steinbock 37 SiTF 2008 ICT (IDA, 2/19/2008) Copyright by Dan Steinbock 38

The
The Bottomline
• Historically, U.S. presidential elections have been
Historically, U.S. presidential elections have been 1.
1 The Dilemma
The Dilemma
accompanied by the introduction of new media
technologies, from mass TV (1948) to Web 2.0 (2008)
• Typically, early adopters are youthful demographics 3.
h
– Expect spillovers over time 4. … to Web 2.0
• From online video to other social media, Web 2.0 has 5. U.S. Presidential Election 2008
been adopted by the leading candidates to “reach
and touch”
6
6. BRICS: Web 2.0 Opportunity


Marketers: New Skill Sets and Capabilities From Market Share to Mind Share
Marketing Outlook 2008 (CMO Council) From Advanced Economies to Emerging Economies
• Marketers reported significant
p g Customer needs
Customer needs
agency turnover in 2007 with satisfied
Relationship marketing/
advertising (41%), web design
Mind share
(38%), and PR (26%) firms most
(38%) and PR (26%) firms most
Advanced Economies
frequently changed in 2007.
• While spend is tracking upwards, the
Emerging Economies
E i E i
allocation of dollars is moving away
from advertising and PR towards
Traditional/marketing
customer facing and lead and
customer‐facing and lead and Market share
M k h
response generation spend in 2008. Customers reached


The Rise of Large Emerging Economies Toward Mobile Media
BRICs vs G6, 2000‐
BRICs vs G6, 2000‐E2050 Rise of Heavy Users in Emerging Economies

• Pay attention to new trends in the
y
most advanced markets (pen.>100%)
• … especially business models in large
high‐growth markets, particularly
hi h th k t ti l l
BRICs (China, India, Russia, Brazil).
• … Users in emerging economies lead
g g
the world in every category of the
survey, from using advanced
applications to plans to buy powerful
applications to plans to buy powerful
multi‐
multi‐function devices.

Global Mobile Mindset Audit


Social Networking An Intelligent Nation, a Global City
75% of Social Networkers Outside North America powered by Infocomm
• Innovation: The capacity to create… will have to be a key
p y y
differentiating capability of Singapore’s economy of the future
‐> the role of infocomm.
• I t ti S i th f t
Integration: Success in the future will depend on the ability to
ill d d th bilit t
harness resources and capabilities across diverse organization
and geographies ‐> the role of infocomm
• Internationalization: As a small country, Singapore needs to
be well plugged into the globalized economy.

Source: Network World, Oct 2007
, Update on Singapore’s Infocomm Masterplan
( ll )


The Bottomline
The
The Bottomline
• In advanced markets, a transition from market share
In advanced markets, a transition from market share
toward mind share
• Due to mismatch of skills and demand, marketers
report substantial agency turnover
,
THE END
THE END
g g g
• In the large emerging economies (‘BRICs’), market
penetration is the most pressing task
• As the rise of mobile indicates, momentum is now in
the emerging markets
• Rise of large emerging economies in Asia offers great
opportunities in Web 2.0 and to Singapore

ICT Business Outlook 2008_ Dr Dan

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