Monday, March 23, 2009

New study shows consumers far more digitally savvy than agencies

New study shows consumers far more digitally savvy than agencies

March 23, 2009

-By Noreen O'Leary <>

NEW YORK Ad agencies are years behind in catching up to digitally savvy
consumers who are moving their media habits online more quickly than
expected, according to new global research from the IBM Institute for
Business Value.

IBM found that between 2007 and 2008, the proportion of consumers saying
they used social-networking tools soared to 60 percent from 33 percent;
for online and portable music services it more than doubled to 46
percent; mobile Internet nearly tripled to 41 percent; and access to
mobile music and video quadrupled to 35 percent.

In contrast, 80 percent of the ad executives interviewed expect the
industry to be at least five years away from being able to deliver
cross-platform advertising, encompassing sales, delivery, measurement
and analysis.

IBM also found that interactive, measurable formats like the Internet
and mobile are expected to account for 20 percent of global ad spending
by 2012. Some 63 percent of the global CMOs who were interviewed said
they expected to increase interactive and online marketing spending in
2009 while 65 percent will cut back on traditional advertising.

Study co-author Saul Berman, IBM global leader, strategy and change
consulting services, said agencies need to understand the value shift --
and the parallels with what has happened in the music industry.

"It's very hard to accelerate analog dollars into digital pennies,"
Berman said. "Where will the money come from? The answer may be, 'You're
going to make less money.' The money may be going somewhere else in the
value chain. The music industry didn't lose money, the music companies
lost money. Companies like Apple, which manufactures devices, make
money, as [does] ring tone providers, retailers like Best Buy and
concert promoters."

The lessons to be learned, per IBM: Traditional industry players need to
identify ways to monetize new consumer experiences before new entrants
do; and there are significant new consumer opportunities-beyond just the
value of content through value-added services, hardware and software

For its research, which will be released this week, IBM conducted 70
interview sessions with global industry execs and surveyed more than
2,800 consumers in Australia, Germany, India, Japan, the U.K. and the


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