Title of Presentation Subhead - Pew Internet & American Life Project

The new pathways to purchase in the world of networked consumers Henry Assael - lecture at NYU October 6, 2011 Lee Rainie: Director, Pew Internet Project Email: [email protected] Twitter: @Lrainie

PewInternet.org

Implication: A New Consumer Decision Journey to Manage ACTIVE EVALUATION: The consumer adds 1.7 more brands to consideration, based on packaging and sampling

INITIAL CONSIDERATION:

PURCHASE: At the moment of purchase, the consumer has evaluated only 3.2 brands, and makes decision based largely on information learned before shopping

Consumer starts with 1.5 brands in mind, influenced by previous trial and word of mouth

POST-PURCHASE EXPERIENCE: 66% of consumers engage with their brand after purchase (e.g., online research), and this engagement has a meaningful impact on the likelihood of repeat purchase

Source : Pete Blackshaw: CMO, NM Incite, a Nielsen-McKinsey Company

Where Social Media Fits in to the Mix Most influential touchpoints Store/agent/dealer interactions Prior brand/ product experience Consumer-driven marketing  Word of mouth  Online research  Offline/print reviews Company-driven marketing  Traditional advertising  Direct marketing  Sponsorship  In-store advertising

12 26 43 28 10

5 21

37 31

39

Initial Consideration

26

22

Active Evaluation

Moment of Purchase

Friending the Social Consumer

Source : Pete Blackshaw: CMO, NM Incite, a Nielsen-McKinsey Company

Your experiences -1 • Smaller scale / impulse buys • Piece of music • App • Something off the shelf Pew Internet findings in 2007 among music buyers:

• 83% find out about music from the radio, TV, or in a movie; • 64% find out about music from family, friends, or co-workers.

PIP Consumer choice survey (2007)

PIP Consumer choice survey (2007)

PIP Consumer choice survey (2007)

Your experiences -2 • Mid-scale products • Cell phone • Clothes Pew Internet findings in 2007 among cell buyers: • 59% ask an expert of salesperson for advice; • 46% go to one or more cell phone stores.

PIP Consumer choice survey (2007)

Your experiences -3 • Life-altering “investments” • Real estate – apartment hunting • College choice • Car Pew Internet findings in 2007 among real estate shoppers (homes and apartments): • 49% look at ads in the newspaper; • 47% ask a real estate agent for advice

PIP Consumer choice survey (2007)

PIP Consumer choice survey (2007)

PIP Consumer choice survey (2007)

Digital Revolution 1 Internet (78%) and Broadband at home (62%)

65% 62%

Networked creators among internet users • • • • • • • • • • •

65% are social networking site users 55% share photos 37% contribute rankings and ratings 33% create content tags 30% share personal creations 26% post comments on sites and blogs 15% have personal website 15% are content remixers 14% are bloggers 13% use Twitter 6% location services – 9% allow location awareness from social media – 23% maps etc.

Impact on shopping • Shopping is a “full contact” sport throughout its phases: – Research phase • 60% of all Americans do research online about products

– Purchase phase • 55% of all Americans made e-purchases; 51% travel reservations

– After-purchase phase • 37% rankings and ratings; another quarter describe their shopping experiences

So what for brands? • The Bermuda Triangle – Markets are fractured – Marketplace is roiled – Metrics haven’t kept pace – Too much noise

• Brands are co-owned by advocates /acolytes – Best of times - sanctuaries – Worst of times - #fail

Digital Revolution 2 Mobile – 84%

Mobile internet connectors – 63% adults Wireless internet users 70

65

63

60 55

57

54

59

50 45 40 35

37

30 Nov-08

May-09

Nov-09

May-10

Nov-10

May-11

35% own “smartphones”

The networked consumer: cell phones

Interesting tidbit: 17% of American adult cell phones owners have bumped into another person or an object because they were distracted by talking or texting on their phones.

PewInternet.org

56% of adults own laptops – up from 30% in 2006 52% of adults own DVRs – up from 3% in 2002 44% of adults own MP3 players – up from 11% in 2005 42% of adults own game consoles

12% of adults own e-book readers - Kindle 9% of adults own tablet computer - iPad

Dramatically More Cross-Platform / Media-Mixing 59% of Americans use TV and the Internet Simultaneously

Source: Nielsen Three-Screen Report

Impact of mobile connectivity on shopping • Just in time information – Where can I get a deal? – Price comparisons

• “Networked info” packed into the shopping experience – QR (quick response) codes

• Announcement and validation of purchase – Sharing the shopping story

So what for brands? Attention zones Continuous partial attention Deep dives Info-snacking

Media zones Social Immersive Streams Creative / participatory Study / work

Digital Revolution 3 Social networking – 50% of all adults

What does this mean? Social networks are more influential and institutions less influential - 1

Sentries

What does this mean? Social networks are more influential and institutions less influential - 2

Evaluators

What does this mean? Social networks are more influential and institutions less influential - 3

Audience = New media are the new neighborhood

Impact of SNS on shopping • Purchasing can be group activity • “Consumer cartels” arise (Groupon, Living Social)

With Dramatically Different Channel Preferences Discuss New products

Complain

Email

96

97

Call a live representative

94

FAQ on company website

Question: Those who would contact the company to…

Make a Reco.

Crisis

94

96

76

95

92

90

95

94

NA

92

NA

74

Post an opinion or question on company website

87

80

77

82

48

IM through the company's website

81

78

78

76

71

Posting on a company message board

77

69

71

74

47

Posting on a blog sponsored by that company

68

61

64

68

41

Telephone - automated response/recording

57

57

62

59

52

Reading company's Facebook page

55

NA

53

NA

36

Sending photo or video to company

53

48

48

51

41

Posting on the company's Facebook page

50

42

47

47

31

Texting the company via mobile device

36

34

40

37

41

Source: Nielsen Consumer Channel Preference Study ‘09

Get Advice

Brand Credibility More Important Than Ever Six Drivers of Brand Credibility Trust

Authenticity

Transparency

Confidence Consistency Integrity Authority

As Advertised Real & Sincere Real People Informal

Let the Sun Shine In Easy to Learn Easy to Discover No Secrets

Affirmation

Listening

Responsiveness

Playback Reinforcement Search Results Accountability

Follow-Up Empathy Welcome Mat Invitational Marketing Humility (we can learn) Solidifying the Solution Absorbing Feedback Dignifying Feedback

24 Source: Nielsen Consumer Channel Preference Study ‘09

Implication: Bold New Questions for Companies Issue

The Big Question

Credibility

How to manage and protect credibility and trust in a highly transparent, 24/7 feedback environment?

Influencer Management

How to extend the notion of key influencer management to everyday consumers and even employees?

Cultivating How to generate earned media from customer service, and Earned Media how service in general can be leveraged more strongly for brand and business-building via social media?

Organization

How to best manage day-to-day digital/social media operations, recognizing that social media breaks down geographic and organizational barriers.

Listening & What are the right listening & measurement protocols to drive Measurement accountability, feed engagement strategy & investment? Source: Nielsen Consumer Channel Preference Study ‘09

Implication: (or erosion) of Web Sites SocialDeath Commerce Ecosystems Facebook

LinkedIn

Website

MySpace

Twitter

Implication: New and More Holistic Rules of Engagement

Brand Backyard

Consumer Relations

Brand Site Contact Center E-mail Phone Web Site

43

Branded Media Channels

Engagement Blog Chat, SMS Phone Rate & Review

Common

Consumer Backyard

Forum / Communities

Consumer Outreach

Communities User-Contributions Ratings & Reviews Co-Creation

Platforms Twitter Facebook YouTube Flickr, LinkedIn

Influencer Outreach

3rd Party Consumerist Edmunds WebMD TechCrunch

Implication: From Selling to Service Pizza Hut

Convenient pizza ordering experience

Ben & Jerry’s

Experience B& J through peace, love and ice cream

Kraft

Discover recipes for any occasion.

Hershey’s

Simulate your favorite choc. milk experience at anytime

Dunkin Donuts

Communicate with coworkers for coffee runs

Relevance to BP Price Finders Product Info

Travel Services Environmental Info

Source: Nielsen Consumer Channel Preference Study ‘09

Implication: Rise of Consumer Cartels

Source: Nielsen Consumer Channel Preference Study ‘09

Implication: Massive Levels of Retailer Innovation Can BP empower its franchises and/or products around innovation?

Source: Company websites; Progressive Grocer & Pittsburgh Post-Gazette Source: Nielsen Consumer Channel Preference Study ‘09

Implication: The Rise of Real-Time

24/7 Real-Time War Room

24/7 Engagement

All aspects of integrated, brand- Deliberate effort to shape and monitored social media manage messaging

Source: Nielsen Consumer Channel Preference Study ‘09

Listening Beyond Borders Listening tools cover multiple languages & regions

Looking Ahead

Source: Nielsen

Near TermAhead Trends /for 2012 What’s Next? Trend

What It Is, What It Means

Mass Socialization

Social “earned” media & paid media become more intertwined

Platform Proliferation

New devices and multi-tasking abound

Mobile Comes of Age

Extends mass socialization & extends media to point of sale

Apps Everywhere

Disruptive growth in apps, fueled by games and service utilities

Dominance of Facebook

A juggernaut, rewriting rules + shifting attention from websites

Rise of Social Commerce

Redefining consumer retailer interactions, powered by GPS, etc

Relevance & Privacy

Cautious advance to addressability; heightened scrutiny

Infrastructure Growth

Increased access and speed expand digital opportunities

“Heads Down” Generation

Dramatic consumer habit change; all eyes to wireless devices

Digital Downsizing

More filtering/control of apps, friends, followers, choices

41

Longer Term Trends/ &Next? Disrupters What’s Ahead Market Trends

Description

Digital & Social

From separate roles to unified and integrated (now one & the same)

Mobile Disruption

Re-setting the entire landscape

Activism & Social Media

Smarter, Creative, More Empowered/Linked & More Sophisticated

Payments and Fees

Friction-free and seamless (already in play with iTunes)

Organizational Trends Globalization of

Description Creating huge opportunities….and huge operational

Social Media Blending

challenges sophisticated: Paid, Owned, Earned Increasingly

Brand Managers

Moving to “Community Manager” Roles & Responsibilities

Enterprise SM

Dramatic expansion beyond marketing innovations

Marketing + Service

New synergy between marketing & operations

Agency Integration

Social prompting greater integration from agencies & suppliers

Speedbacking

Practice of immediately responding to key issues, crises

42

Things to watch • Content metering online – new media business models • Enhanced tech – 3-D • New attention research – Nielsen and Coalition for Innovative Media Measurement • • • •

Privacy debates Net neutrality debates Spectrum allocation debates Rise of the “internet of things”

Thank you!