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| MP93493 |
| MAPS MARKETING IN THE DIGITAL AGE: OCTOBER 2003 |
| Overview |

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This report covers: marketing in the digital age, market dynamics and
segmentation, digital television, multichannnel TV, viral campaigns, text,
picture messages, mobile phones, mobile phone ownership, EU legislation,
analogue spectrum, mobile phone charges, tumbling call charges, avertiser
insights, media priorities, financial services, insurance, comsumer durables,
fast moving consumer goods,
Companies covered
include: British Sky Broadcasting Group, Flextech, AOL, Google, MSN, Yahoo!,
mm02,Vodaphone Group, Freeview, Sky, IDS, Wella, Chapstick, MTV, Gossard G4ME,
| Executive Summary |
| 1. Introduction |
| DEFINITION |
| 2. Strategic Overview |
| MARKET DYNAMICS AND SEGMENTATION |
| Table 1: Actual and Planned Marketing Budget Allocations by Category ( percent of marketing expenditure), 2001-2003 |
| Segmentation |
| Table 2: Share of Multichannel TV Market by Type of Platform ( percent of households), Q1 2003 |
| Competitive Structure |
| Digital Television |
| Mobile Technology |
| Industry Issues |
| Spam |
| Cookies |
| The Consumer |
| Market Forecasts |
| Table 3: Penetration of Digital Television Among UK Households (million households and percent), 2002-2007 |
| Table 4: Penetration of Digital Television Among European Households ( percent and million households), 2002-2008 |
| 3. Digital Television |
| BACKGROUND |
| MARKET SIZE |
| Table 5: Penetration of Multichannel TV Among UK Households by Type of Platform ( percent of households), 2001-2003 |
| Table 6: Share of Multichannel TV Market Among UK Households by Type of Platform ( percent of households), 2001-2003 |
| Table 7: Penetration of Digital TV Among UK Households by Type of Platform ( percent of households), 2001-2003 |
| Table 8: Share of Digital TV Market Among UK Households by Type of Platform ( percent of households), 2001-2003 |
| Table 9: Number of Digital Television Consumers in the UK by Service Provider, December 2002 |
| Consumer Trends |
| Table 10: Channels Broadcast on Freeview, June 2003 |
| Table 11: Annual Shares of Viewing by Individuals ( percent of total viewing time), 1998-2002 |
| Marketing Activity |
| Advertising |
| Table 12: Main Media Advertising Expenditure by Cable and Satellite Companies (£000), Years Ending June 2002 and 2003 |
| Distribution |
| CASE STUDIES |
| Nicorette on Sky and IDS |
| Honda Interactive Campaign on Sky |
| 4. The Internet |
| BACKGROUND |
| MARKET SIZE |
| Table 13: Growth in Interactive Advertising Expenditure in the UK ( percent), 2001-2002, 2002-2003 and 2001-2003 |
| Competition |
| Table 14: Top Ten Internet Marketing Agencies by Number of UK Staff and Turnover (£m), 2002 |
| Marketing Activity |
| Advertising |
| Table 15: Main Media Advertising Expenditure by Online Retailers (£000), Years Ending June 2002 and 2003 |
| Table 16: Main Media Advertising Expenditure on Internet Services (£000), Years Ending June 2002 and 2003 |
| Distribution |
| Websites |
| Table 17: Top Ranking Destination Sites by Category ( percent of UK traffic), February 2003 |
| Broadband |
| Trade Associations |
| Viral Marketing |
| Table 18: Top Ten Viral Campaigns by Number of Downloads, June 2003 |
| CASE STUDIES |
| Eidos Hitman |
| Objectives |
| Methodology |
| Results |
| Xbox 'Champagne' |
| Objectives |
| Methodology |
| Results |
| 5. Mobile Technology |
| BACKGROUND |
| Multimedia Messaging |
| Market Size |
| Consumer Trends |
| Table 19: Volume of Text and Picture Messages by Operator (million), 2001/2002-2002/2003 |
| Table 20: Penetration of Mobile Telephone Ownership by Age Group and Social Grade ( percent of UK adults), November 2002-February 2003 |
| Table 21: Mobile Telephone User Preferences Regarding Senders of Advertising Messages and Promotions ( percent of respondents), 2003 |
| Competition |
| Table 22: Total Revenue of UK Mobile Telephone Operators by Type of Service (£m), 2001/2002-2002/2003 |
| Table 23: Estimated Retail Revenues Generated by Mobile Telephony by Operator (£m), 2001/2002-2002-2003 |
| Marketing Activity |
| Advertising |
| Table 24: Main Media Advertising Expenditure by Mobile Telephone Network Operators (£000), Years Ending June 2002 and 2003 |
| Distribution |
| CASE STUDIES |
| Wella |
| Objectives |
| Methodology |
| Results |
| Chapstick and MTV |
| Objectives |
| Methodology |
| Results |
| Gossard G4ME |
| Objectives |
| Methodology |
| Results |
| 6. An International Perspective |
| MARKET DEVELOPMENTS |
| Table 25: Growth in Interactive Marketing Expenditure in the Top Five Global Markets ( percent), 2001-2002, 2002-2003 and 2001-2003 |
| Competitor Environment |
| Table 26: Take-up of Broadband by Country (number and percent of subscribers/households), End 2002 |
| Fighting Spam |
| Consumer Behaviour |
| Table 27: Number of Active Internet Users Among Major Spanish-Speaking Populations (000), January 2003 |
| Table 28: Profiles of Total US and US Hispanic Internet Users by Age Group ( percent), January 2003 |
| 7. PEST Analysis |
| POLITICAL FACTORS |
| EU Legislation |
| ECONOMIC FACTORS |
| Analogue Spectrum |
| Mobile Telephone Call Charges |
| SOCIAL FACTORS |
| Tumbling Call Charges |
| DIY Broadband |
| TECHNOLOGICAL FACTORS |
| 8. Advertiser Insights |
| INTRODUCTION |
| MARKETING MANAGERS' PERSPECTIVES |
| Media Priorities |
| Financial Services |
| Insurance |
| Consumer Durables |
| Auto Replacement Parts |
| Fast-Moving Consumer Goods |
| Keeping Informed |
| AN AGENCY PERSPECTIVE |
| CONCLUSIONS |
| 9. Company Profiles |
| DIGITAL TELEVISION |
| British Sky Broadcasting Group PLC |
| Corporate Strategy/Products |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| New Research |
| Advertising |
| Profitability |
| Flextech |
| Corporate Strategy/Products |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
| THE INTERNET |
| AOL (America Online) |
| Corporate Strategy/Products |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| New Research |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
| Google Inc. |
| Corporate Strategy/Products |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| Industry Recognition |
| Distribution |
| Profitability |
| MSN |
| Corporate Strategy/Products |
| User Demographics |
| Table 29: MSN Network Demographics ( percent of adult network users), June 2003 |
| Strengths and Weaknesses of Company |
| New Product Development |
| Advertising |
| Distribution |
| Profitability |
| Future Company Developments |
| Yahoo! Inc. |
| Corporate Strategy/Products |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| New Research |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
| MOBILE TECHNOLOGY |
| mmO2 PLC |
| Corporate Strategy |
| Strengths and Weaknesses of Company |
| New Product Development |
| Brand Development |
| Innovations |
| Appointments |
| Advertising |
| Distribution |
| Profitability |
| Vodafone Group PLC |
| Corporate Strategy |
| Strengths and Weaknesses |
| New Product Development |
| Brand Development |
| Innovations |
| Appointments |
| Advertising |
| Profitability |
| 10. The Future |
| 12. Further Sources |
| Associations |
| Companies |
| Publications |
| Websites |
| General Sources |
| Bonnier Information Sources |
| Government Publications |
| Other Sources |
| The Government is determined to put the UK at the forefront of the digital revolution. A Department of Trade and Industry (DTI) statement reads: `The communications and media industries have a huge impact on each of us.' It continues: `The UK needs this sector to be innovative, energetic and competitive, ready to respond to today's and tomorrow's communications environment.' (www.dti.org.uk Industries and Sectors, E-Communications). |
| One of the ways in which the Government encourages competition is by the removal of red tape. The EU E-Commerce Directive has already been adopted and 2003 will see the creation of a new regulatory body, Ofcom, which will take a consultative approach wherever possible to allow the industry to largely regulate itself. |
| However, while the Government is keen to offer as much choice as possible to consumers, it also needs to guard the interests of its citizens, and is putting measures in place, through Ofcom and other regulatory bodies, that will protect people from some of the more cynically exploitative practices such as `spam' e-mail and texts (i.e. unsolicited bulk messages). |
| In this report, Key Note looks at the way in which the marketing industry can be innovative, energetic and competitive in its own exploitation of new media. All of the new technologies are relatively young. The older technologies, such as television and fixed-line telephony, reached their maximum household penetrations many years ago but even the Internet has yet to do so. The Government has set targets for both the take-up of digital television (95 percent of households by 2010) and Internet access (95 percent of the population with access to government online services by 2005). |
| Although those involved in the industry perceive demand for digital television from consumers to be slow too slow to save ONdigital, and with the first BBC Digital channel having been launched to a very small audience the take-up is extremely rapid compared with that of other major new technologies. With around a third of households now able to receive digital television (whether through an aerial, cable or satellite dish), Key Note can now see, in marketing terms, the Early Majority entering this market. Innovators and Early Adaptors account for around 15 percent of households. The Early and Late Majorities between them make up around 65 percent. Following this model, Key Note expects to see a take-up of digital television by 80 percent of households before 2006. It is between this year and 2010 that the Government expects to turn off the analogue signal. The Laggards, the remaining 20 percent of households, could well force the Government to make its decision nearer to 2010 than 2006. |
| For marketers, digital television especially systems linked to a two-way technology offers the possibility of getting even closer to customers. Interactivity will enable marketers to identify their target audiences with much greater accuracy and generate responses directly. However, there is some consumer ignorance reported by the Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS), on the nature of 'red button' services. A large number of viewers are simply unaware that many interactive services are charged to their telephone bills. |
| Other digital media also afford more opportunities for marketers, from creating a `buzz' on the Internet before launching a television or press campaign, to information feeds into customers' e-mail and onto their mobile telephones. |
| Despite the furore around the sale of third-generation (3G) licences, priced when the technology market was at an inflationary high, mobile telephone technology is leaping forward, with around 50 million people subscribing to mobile telephone services by the end of 2002. |
| If marketers can get things right, and not allow themselves to be caught up in the universal loathing consumers have of any kind of spammed communications, these media can bring them much closer to their customers. |
| This is the first Key Note report to look specifically at marketing opportunities in digital media. It contains original research among advertisers, detailed company profiles of new media owners and case studies of successful new media marketing campaigns. |
| Key Note's Advertising Agencies Market Assessment 2003 report noted that Internet advertising expenditure now accounts for 1 percent of total media spend. This points the way to a trend for greater interactivity between advertisers and their customers via a raft of different media. Each of these types of media is discussed in detail in this report. |
Text © 2003 MAPS
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Last updated by Amanda Porteous November 2003