The AlwaysOn & KPMG Survey

New Media Grows Up

Madison Avenue taps the value of online innovation.

O
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
General
the forces of new media have affected the market- 1: What are the two most disruptive forces in media today?
ing, media, branding, advertising, and public relations industries. (Choose two.)
Following are the results of a survey we conducted of more than The pullback of ad dollars 49%
200 of your peers in the media industry. Smartphones'
r potential for location-targgeted 17%
We asked what would be the most disruptive forces in media. content,, advertising
r , and marketin
k g
The results were quite diverse, with 49% of respondents identify- The thinning of “old media” 3
38%
(bankruptcies and closures)
ing the pullback of available ad dollars as the greatest disruption,
The failure of social networks 18%
40% said the emergence of mobile devices as personal computers, to monetize as expected
and 38% felt the reduction of old media through bankruptcies and The mobile device becoming 40%
a personal computer
closures have the most impact on the media industry today.
Internet penetration opening up 25%
%
The economy is also clearly having an impact on advertising, new global markets
k
and the impact is being felt by new media and old media compa- 0 10% 20% 30% 40% 50%
nies alike. In fact, this year, 75% of the respondents see advertisers
moving more than 25% of their dollars and time away from tradi-
tional channels. While this number is high, it actually reflects a
significant drop from the almost 90% response in last year’s sur- 2: Over the next 5 years, what percentage of media time
vey. Seventy-one percent of respondents see the recent new media and spending will move away from traditional channels?
acquisitions by established media companies making money in
less than five years. 0-25% 25%

Social networking is clearly an important force in the media

26-50% 5
58%
industry, and the participants in the survey see progress in adver-
tisers planning for the use of it. Last year, 48% felt advertising 51-75% 17%
agencies lacked a plan to leverage social networking for their
clients. That number is down to 42% this year. The likely uses 76-100% 0%

for social networking for business include creating a new brand 0 10% 20% 30% 40% 50% 60%

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 respon- 3: How long will it take for the old-media acquisitions of new-
dents. That is up from 51% in last year’s results. The best venture media companies to pay off in revenue growth?
investment would be niche media companies (39%) or interactive
marketing companies (30%). 1-2 years
y 7%
We look forward to sharing the full results of the KPMG/ 2-3 years
y 29%
AlwaysOn survey at OnMedia, February 2–4, in New York City.
4-5 years 40%
The presentation will also be available online at www.alwayson-
network.com. 5 yyears 17%

Neve
e r 7%
%
Brian Hughes is a partner with the Philadelphia office of KPMG 0 10% 20% 30% 40% 50%
LLP (www.kpmg.com) and is the co-leader of the Venture Capital Prac-
tice—Eastern Area. Brian can be reached at bfhughes@kpmg.com.

6 | A LWAYSON | ONM E D I A N Y C 2 0 0 9
Social Networking/Web 2.0 Online Advertising
4: Will social networks ever become profitable from 8: Which of the following online-advertising tactics provides
advertising? the best return on investment:

Site visits 11%

Yes: 58%
in time they'll figure it out Click-throughs 14%
No: online chatting 11%
doesn't lead to shopping Qualified prospects/ 44%
Maybe: only if ads become sales opportunities
32%
more creative Captured sales revenue 31%
0 10% 20% 30% 40% 50% 60%
0 10% 20% 30% 40% 50%

5: What's the biggest lesson from the 2008 presidential 9: Is the return in line with traditional advertising channels?
election's use of social media?

Social networks can

powerfully grab mindshare 47%
in society at large
Online networks can successfully
drive micro-payments 34% Yes 58%
to equal big bucks
Businesses will see No 42%
my.barackobama.com 19%
as a model for creating savvy
in-house networks and wikis 0 10% 20% 30% 40% 50% 60%
0 10% 20% 30% 40% 50%

6: What percentage of ad agencies have a plan to leverage 10: What form of online advertising is most effective?
social networking for their clients?

0-10% 18% Search engine 47%

11-20% 24% Banner ads 5%

21-30% 19% Email advertising 6%

31-40% 14% Online partnerships 11%

41-50% 9% Interactive 21%
More than 50% 16% Other 10%
0 5% 10% 15% 20% 25%
0 10% 20% 30% 40% 50%

7: What are advertisers and agencies going to use social 11: How will CPM trend in the next two years?
networking for?

Attract new customers 54%

Create new brand image 72%

Increase 39%
New product launch 54%
Decrease 41%
Direct sales 35%
No change 19%
Nothing 5%

0 10% 20% 30% 40% 50% 60% 70% 80% 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. 17: Where will the majority of the investment come from?
Can it live up to the hype?

No: we'll discover mobile users don't pay any 29%

more attention to ads than do W Web browsers VVenture capital 51%
Absolutely: geo-targeted
g markketing 25%
%
and ads will be a gold mine Private
v equity 14%

May
a be: the jury's out until smartphones 46%
Corporate investment 35%
%
and applications evolve further
0 10% 20% 30% 40% 50% 0 10% 20% 30% 40% 50% 60%

13: How much of their content are media companies 18: What's the best venture investment bet?
adapting for mobile consumption?
0-25% 65% Mobile advertising
r networks 14%

Niche media companies 39%

26-50% 27%
7
Online ad networks / exchanges 1
17%

51-75% 6% Interactive marketing

k companies 29%

0 10% 20% 30% 40% 50%

76-100% 2%

0 10% 20% 30% 40% 50% 60% 70%

14: Do you expect that to increase in the next two years? 19: How will the economic downturn affect venture
investment in media relative to other technology sectors?

Media will do better 1

18%
Yes 87%
than other sectors
Media will be hurtt more 36%
6
No 13% than other sectors
0 20% 40% 60% 80% 100% Media will fair about the same
45%
%
as other sectors
0 10% 20% 30% 40% 50%

15: What is the greatest opportunity for mobile? Survey brought to you by
TV 7%
%

Video / UGC 14%

Music 8%

Shopping 9%

Games 14%

Location-based advertising 4
48%

0 10% 20% 30% 40% 50%

&
16: How will mobile applications monetize?

Advertising 45%
%

Charge
r for apps 27%
7
Third-party
r sponsorship (such as mixing 27%
7
a new music album with a ggame)
0 10% 20% 30% 40% 50%

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