Digital disruption explores, identifies and examines cases in which digital is responsible for changing industries including book retailing, electronics retailing, publishing, advertising, video rental, music industry, medical, and education. Joint research by Augustine Fou and Tery Spataro and special thanks to Melisa Lopez.

1. Digital Disruption
By Augustine Fou and Tery Spataro April 12, 2012
(c) Copyright 2012 Augustine Fou and Tery Spataro

2. Newspaper Industry
Real-time – “By the time the ad is
printed and distributed in
newspapers; the room for rent is
already rented off of Craigslist.”
Access – If I am moving to
Dallas, I don’t have access to local
Dallas newspapers. But I can go
on Craigslist.”
Newspapers Craigslist
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(c) Copyright 2012 Augustine Fou and Tery Spataro

3. Film Industry (Kodak)
Once considered the
most innovative
company in the world,
Eastman Kodak grew
complacent in its
success and failed to
innovate. They sat idly
by as digital completely
replaced the entire
industry.
Today they are still
trying desperately to
sell their portfolio of
patents.
Film Digital
(c) Copyright 2012 Augustine Fou and Tery Spataro

4. Magazine Advertising
Measurable – user
clicks can be
measured with
online ads
Larger impressions
– no longer limited
by print distribution
online ads reach
more users
Print Ads Online Ads
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(c) Copyright 2012 Augustine Fou and Tery Spataro

5. Long Distance Phone
More minutes are being spent
through IP-based services like
Skype, instead of traditional phones
Domestic long distance revenues
also being displaced by “included
long distance” with mobile phone
plans.
Long Distance VoIP / Wireless
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(c) Copyright 2012 Augustine Fou and Tery Spataro

6. Video Rentals
By eliminating the need to
distribute physical DVDs via
retail stores, Netflix was able to
replace Blockbuster at 1/3rd the
revenue. Source: go-Digital
blog
Online streaming will also rapidly
replace viewing on physical media
such as DVDs/Blu-Ray
DVD Rentals Streaming Video
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(c) Copyright 2012 Augustine Fou and Tery Spataro

7. Music Industry
Music industry revenues
continue the “smooth decline.”
Singles – Customers no longer
buy full albums; they download
individual songs through digital.
Compact Discs Music Downloads
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(c) Copyright 2012 Augustine Fou and Tery Spataro

8. Book Retailing
Amazon.com Barnes & Noble X Borders
Physical Retail Digital Retail
(c) Copyright 2012 Augustine Fou and Tery Spataro

9. Electronics Retailing
Best Buy
X X
Circuit City CompUSA
• Amazon offers far larger selection than possible in physical retail
• Amazon prices were the same or better on 96% of all products (Source:
Barclay’s via BusinessInsider
• Amazon offers free shipping on most items and no sales tax in most
states.
(c) Copyright 2012 Augustine Fou and Tery Spataro

10. Tablet vs Publishing
iPad Users Have Cancelled Already Do Not
Newspaper Subscriptions Switched Subscribe
to Digital to Print
11% Newspap
Likely to er
Switch in 31%
Next 6
Months
31%
Unlikely
to Switch
Not Sure
to Digital
7%
20%
“End of subscriptions. Over 40% of users
surveyed by RJI will soon or already have
cancelled a newspaper subscription. “
– Reynolds Journalism Institute, Morgan Stanley
Research 10
(c) Copyright 2012 Augustine Fou and Tery Spataro

11. Advertising
For every $1 taken out of traditional advertising, only 10 – 20 cents
need to be put into digital because it is that much more efficient. .
Traditional Ads Digital Ads 11
(c) Copyright 2012 Augustine Fou and Tery Spataro

12. Online Display Ads
More effective - Search ad click
rates are 10x – 100x higher than
display; it is based on exactly what
the user is looking for – keyword.
Read More: Search Kicks Display
Google (GOOG) overtook Yahoo
(YHOO) in revenue within 3 years
of launch. Search Ad Revenues is
now 2/3rds of the online
advertising pie.
Display Ads Search Ads
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(c) Copyright 2012 Augustine Fou and Tery Spataro

13. Consulting Dr. Google
Percent of Internet users who have looked online for information about
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Digital [information & tools] will give consumers
the opportunity to completely manage individual
Source: Pew Research Center’s Internet & American Life Project,
August 9-September 13, 2010 Survey. N=3001 adults and the margin medical needs.
of error is +/-3 percentage points for the full sample. Margins of error for
Sub-populations are higher.
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(c) Copyright 2012 Augustine Fou and Tery Spataro

14. Sharing Medical Conditions
Consumers manage medical
needs while sharing their
insights with other patients
becomes a treasure throve of
data on disease management,
health and wellness.
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(c) Copyright 2012 Augustine Fou and Tery Spataro

15. Digital Adoption By Doctors
• Physicians are slower to adopt to digital for professional use with patients.
• But Physicians will tweet a surgery for educational purposes.
Top concerns that may hold physicians back from interacting with patients online.
“Four hours, a team of
medics and 100 tweets:
The reality of open-heart
surgery shared with the
world on Twitter.”
- Claire Bates
Physicians & social media for professional use.
Source: Mesotheliomapage.com; created by OBizMedia.com
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(c) Copyright 2012 Augustine Fou and Tery Spataro

16. Immersive Teaching
Classroom Teaching vs Khan Academy
Source: Knewton.com
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(c) Copyright 2012 Augustine Fou and Tery Spataro

17. So What?
Do you wait till digital
disrupts you? …
… or do you proactively innovate
now to build sustainable
competitive advantage?
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(c) Copyright 2012 Augustine Fou and Tery Spataro

18. Dr. Augustine Fou – Chief Digital Strategist
Dr. Augustine Fou is Chief Digital Strategist of
Marketing Science Consulting Group, Inc., a
company he founded over 11 years ago. He is an
industry-recognized thought leader in digital
strategy, search and social media marketing and
former Group Chief Digital Officer of Omnicom's
Healthcare Consultancy Group.
Dr. Fou teaches social media marketing to
executives at Rutgers University’s Center for
Management Development. He is a frequent
panelist, moderator, and keynote speaker. He
writes a monthly column on Integrated Marketing
for ClickZ.com.
Dr. Fou completed his PhD at MIT in Materials
Science at the age of 23. He started his career
with McKinsey & Company. and can be found on
Twitter.com @acfou.
slide shares - http://www.slideshare.net/augustinefou
bio - http://www.linkedin.com/in/augustinefou
646.867.0826 | acfou@mktsci.com
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(c) Copyright 2012 Augustine Fou and Tery Spataro

19. digital strategist, entrepreneur, digital agency executive, author, researcher, behaviorist, investor, adviser, mentor, professor
Bio || Twitter || LinkedIn || The Book || Pinterest || Slideshare
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(c) Copyright 2012 Augustine Fou and Tery Spataro

20. Stuff I Did
 Digital Experiences & Shopping – cheeky overview of the buyer’s decision making process
using digital, the future of in-store retail and use of digital experiences.
 Digital Strategy – a look at digital strategy a usages for innovation, communication and
promotion.
 Fashion Intelligentsia - research report I did to provide insights into how fashion minded
women acquire information for shopping. This report was voted the best of Slideshare.
 The Changing World of Digital - looks at digital communication from a historical perspective
and identifies the way the consumer changes from passive involvement to participant.
 Healthy Digital - explores who the natural and organic consumer is and identifies their
digital behavior.
 Community During Crisis – what Governments can learn from the Boulder Community’s
usage of Social Media during the Boulder Fire.
 Digital Marketing Strategy vs Tactics – Asking strategic questions, forming ideas and
identifying tactics.
 The Other Side of the Box - the story about a cat, box and perception. “The Other Side of
the Box” a book about perception, a cat and quantum thoughts.
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(c) Copyright 2012 Augustine Fou and Tery Spataro

21. Melisa Lopez – Digital Media Director
Melisa has over 7 years of experience in
ecommerce, digital media marketing, and
Internet strategy consulting as founder of
MR Roses Flower Co, and WPS Digital, a
digital marketing company.
Melisa Lopez is a former Client Analyst at
Goldman Sachs. Melisa earned her MBA
from Florida International University, and
a Professional Certificate in Digital Media
Marketing from New York University.
She is a magna cum laude, Bachelor of
Arts in Economics, of Universidad San
Francisco de Quito
Melisa can be found on Twitter.com
@carmenmel
LinkedIn: http://www.linkedin.com/pub/melisa-lopez/4/488/962
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(c) Copyright 2012 Augustine Fou and Tery Spataro