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Interactive Ads presentation for MIT Sloan project for CISCO Systems
1. New Business Model in Professional
Sports enabled by Interactive and
Targeted Advertising
Ranning Li
Grace Montesano
Mikhail Turilin
1
2. How much value can interactive/
targeted advertising bring to
sport venues?
2
3. Stadiums donʼt capture the value of
in-stadium advertising
Ads assets Revenue
Naming rights Naming rights
Sponsorship contracts
In-stadium ads
In-stadium
advertising
Banners
visible on TV
Banners
visible on TV
“The most important part of stadium
Effective advertising deals is banners visible on TV.
Other types are not so important...”
Brands want Targeted
“We are looking for ways to increase
revenue from in-stadium advertising.”
Measurable
Fenway Park 3
4. Interactive video ads are 3x more
effective than regular TV ads
Dedicated advertiser location (DAL)
Research Question: Do interactors with interactive TV ads
exhibit a level of ad recall equal to or greater than the level of
ad recall associated with three exposures to a regular TV ad?
Recall rate
90%
80% Explore BMW
78% 79%
70%
60%
50%
40%
30%
20%
10%
0%
DAL video ads 3 exposures of regular TV ads
* Please see appendix slides for more information on ad format.
Comparison of three interactive television ad formats, Steven Bellman, Anika Schweda, &
Duane Varan, Journal of Interactive Advertising, Vol 10 No 1 (Fall 2009), pp. 14 34.
4
5. Static image ad spending is decreasing while interactive
media spending is increasing by 17% annually
Forecast: US Interactive Marketing Spend, Forecast: US Display Advertising Spend,
2009 To 2014 2009 To 2014
$ millions Chart 2 CAGR $ millions Chart 1
$60,000 34% $20,000
11%
27%
$45,000 $15,000
17%
$30,000 $10,000
15%
$15,000 $5,000
$0 $0
2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
Social media
Online video
Email marketing
Rich media (excl. video)
Mobile marketing
Static image
Display advertising
Contextual ads
Search marketing
Source: March 2009 US Interactive Marketing Forecast Source: Forrester's Online Advertising And Classifieds
Online Survey Forecast, 4/09 (US only)
5
6. Traditional stadium sponsors will increase
interactive media spending by 14%–22% annually
US Interactive Marketing Forecast, 2009 To 2014
Traditional Stadium Sponsors Emerging brands
$ millions CAGR $ millions CAGR
$20,000 $20,000
15%
19%
$15,000 22% $15,000
19% 12%
$10,000 $10,000
14%
$5,000 $5,000
23%
$0 $0
2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
Telecommunications
Media and entertainment
Consumer goods
Automotive Retail and wholesale trade
Financial services Other
Source: Forrester Research Interactive Advertising Forecasts, 4/09 and 10/09 (US only)
6
7. Stadium will lose 50% sponsorship revenue in
the next five years
US Interactive Marketing Forecast, 2009 To 2014
4% 3% 3% 3% 3% 2%
100%
34% 33% 32%
38% 37% 36%
75%
50%
61% 63% 64% 66%
58% 60%
25%
0%
2009 2010 2011 2012 2013 2014
Performance-based Impression-based Sponsorship
Source: Forrester's Interactive Advertising Model, 4/09 (US only)
7
8. Stadium can implement interactive
and targeted advertising system
Advertising Vehicles
Banner Ad In-Stream Ad Smartphone Hall Screen
Buy Pepsi Buy Pepsi Buy Pepsi
Opt-in and behavioral targeting - 66% Limited number of eyeballs
Limit is a number of
Coupon Sweepstakes Replays impressions each visitor
can physically have.
REPLAY Putting too much
advertising will have
negative user experience.
Fenway Park Stadium
Account Manager
8
9. Interactive ads can increase annual
revenue up to $46M per baseball stadium
In-stream Banner
$ 358K $ 6.75 $ 46M
77 63 Total Per Game Per visitor For 1 Year
in-stream banner
ads/game/fan ads/game/fan
53,000 4M 3.3M Sold impressions - 90% Revenue
fans/game in-stream banner
ads/game ads/game In-stream Banner In-stream Banner
3x
$90 $30
Targeted
CPM CPM
Tightly
70%
2.8M 2.3M 2.6M 2.1M 2x $231K $63K 2x
impressions impress impressions impress
$45 $15
Targeted
Loosely
30%
CPM CPM
1.2M 1.0M 1.1M 0.9M $50K $14K
impress impress impress impress
9
17. Conclusions
• Stadiums donʼt capture large part of the value of in-
stadium advertising
• Brands are starting to switch to targeted/interactive
advertising
• Interactive/targeted advertising could be 3-12 times
more effective
• Stadiums could be converted to interactive/targeted
advertising vehicle
• New revenue to stadium could increase up to $46M
per year*
* For Baseball. Revenue could be different for each sport because of different attendance and
different amount of impressions delivered 14
20. Brands prefer measurable,
targeted and interactive ads
“We spent millions of dollars on sponsorship contracts, but we donʼt know the
results of the advertising in stadium.”
PepsiCo
Measurable “In some cases, like search and online advertising, we have been able to
measure ROI driving true incremental volumes and true increases in sales.”
VP, Global Interactive Marketing The Coca-Cola Co.
“Target group for each of our brands is around 20% of population. We want
Targeted advertising to be as targeted to these consumers as possible!”
PepsiCo
“ We try to experiment with different types of interactive advertising. We
believe itʼs more efficient.”
Effective
“Our experiment with targeted advertising on Facebook for Easy Tone had a
great effect in brand awareness.”
Reebok
17
21. Interactive ads are more effective in achieving
marketing objectives than traditional ads
US Marketers' Attitudes Regarding the Effectiveness of Interactive Marketing Compared to
Traditional Advertising, by Goal, Q3 2007 (% of respondents)
Chart 1
Selling products online 87% 10% 3%
Driving online traffic 87% 10% 3%
Delivering promotions 79% 19% 2%
Generating leads 75% 15% 10%
Building loyalty 64% 28% 9%
Increasing consideration 61% 32% 8%
Creating brand awareness 56% 33% 11%
Selling products offline 50% 32% 19%
Driving traffic to a store 47% 35% 18%
0% 25% 50% 75% 100%
More effective Neither more nor less effective Less effective
Source: Forrester Research, Teleconference: The US Interactive Marketing Forecast 2007-2012, January 4, 2008
18
22. Interactive ads are the second most influential
among online ads
Chart 1
Types of Online Ads that Most Influence US Internet Users, by Age, October 2007 (% of respondents)
67%
77%
Search engine result ads 87%
87%
55%
58%
Interactive ads that provide information or entertainment 68%
73%
53%
59%
Banner ads 63%
71%
36%
30%
Video pre-roll ads 28%
28%
21%
19%
Video post-roll ads 19%
17%
22%
22%
Embedded video ads 12%
9%
23%
19%
Ads or products placed within online virtual worlds 14%
7%
23%
16%
Ads or products placed within video games 8%
8%
0% 23% 45% 68% 90%
Millennials (13-24) Generation X (25-41) Boomers (42-60) Matures (61-75)
Source: Deloitte Development and Harrison Group, "The State of the Media Democracy Second Edition," provided to
eMarketer, January 2008 19
23. Only 7.4% of US marketers think
interactive ads have lower ROI
Interactive vs. Traditional Marketing ROI According to US Marketers, 2007-2009 (% of respondents)
40.0%
34.0%
30.0% 28.7%
20.0%
13.9%
10.0% 9.0%
7.4% 7.0%
0%
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Source: PROMO magazine, "2009 Promo Interactive Marketing Survey" conducted by Penton Research, April 1, 2009 20
24. The effectiveness of Interactive marketing will increase
and interactive ads grow at the expenses of traditional
media
US Marketers Perception of the Effectiveness of Interactive Media in 9 Next Three Years
Chart the
Interactive marketing tactics
Created social media
Online video
Search engine optimization (SEO
Mobile marketing
Paid placement in social media
Email marketing
Paid search listings
Online classifieds or directory listings
Display advertising through Ad Networks
Display advertising directly through publishers
Traditional marketing tactics
Direct mail
Television
Magazines
Outdoor
Telemarketing
Radio
Newspapers
Yellow pages
0% 25% 50% 75% 100%
Increase Stay the same Decrease Not applicable
Source: March 2009 US Interactive Marketing Forecast Online Survey 21
25. Video Ads are up to 4x More Effective than Other
Types of Display Ads
Media Advertising Effect, % comparing to control group
Rich Media with Video 1.9 2.3 1.16
Rich Media without Video 0.9 0.46 0.5
GIF and JPG -0.15 1.08 0.41
Simple Flash 0.360.150.26
MarketNorms, All Display Ads 1 0.7 0.6
-1.00 0 1.00 2.00 3.00 4.00 5.00 6.00
Aided Brand Awareness Increase Brand Favorability Increase Purchase Intent Increase
Statistically significant difference between control
Source: Dynamic Logic MarketNorms®, 2008. Fixed frequency level of 1. and exposed groups at 90% confidence level 22
26. Technology enables opportunities
to improve fan experience
Replay Score update Food delivery
Replay
Technology is scoring in America's favorite sport, baseball, by making the
ballparks high-tech. Technology has made it to first base with fan
satisfaction. Many of the newly designed ballparks are attempting to make
the "Park Experience" the best spectator event possible.
Sandy Berger,
Technology Reporter
23
27. Is Opt-In Value Building Exercise?
Weʼre seeing about two-thirds of people take advantage of these
66% user-choice types of ads [ability to choose between two or three
ads].
Jean-Paul Colaco
Senior Vice President of Advertising, Hulu.com
Why such big
difference?
US Internet User Who Would Like Websites to Show Information Personalized
to their Interests, June-July 2009
Show you ads tailored to your interest 32% 66% 2%
32% Give you discounts tailored to your interest 47% 49% 4%
0% 25% 50% 75% 100%
Yes No Maybe
Source: Annenberg School for Communication, University of California Berkeley School of Law and
the Annenberg Public Policy Center
24
28. Opt-in Rate is High for “Relevant
Marketing”
Types of Products for Which US Mobile Phone Owners* Would Be Interested in
Receiving Location-Based Mobile Alerts, July 2009 (% of respondents)
Restaurants 53%
Movie/event tickets 43%
Weather 39%
Clearance sales 37%
Pizza 31%
Clothing 30%
Fast food 27%
Electronics 25%
Music 24%
Happy-hour specials 21%
0% 15% 30% 45% 60%
Source: 1020 Placecast survey conducted by Harris Interactive, October 15, 2009
25
29. In-stream has three times higher CPM
than banners
Average Direct Sales CPMs for Online Advertising Sold US Online Video Advertising CPMs and Sell-Through
by Select US Web Publishers, by Type, 2007 Rates, by Content Category, August 2008
Company A 98
17 Sell-
43 Example CPMs through
Company B 14 rate*
26 Video ads
Company C 15 Display ads Premium
FOX, NBC,
35
content $35-$50 90%
Company D CBS
6 creators
Company E 16
6 Content
MSN, Yahoo!,
aggregator $20-$35 50%
54 AOL
Comany F 24 s/creators
Company G 32 User- Bebo,
23
generated Metacafe, $10-$15 10%
Average 43 content YouTube
15
* Sell through rate - percentage of impressions sold
0 25 50 75 100
Source: YuMe and Collins Stewart LLC, "Global Internet: Search
Source: Bain & Company and the Interactive Advertising Bureau
Engine Strategies San Jose, Key Takeaways from Day 1," August 19.
(IAB), "Bain/IAB Digital Pricing Research," August 2008
2008
30. Tightly-targeted Impression costs 2x More than
Loosely-targeted, yet Cost Per Impact is 1/3 Less
Tightly-targeted Loosely-targeted
The Buy
CPM $10 $5
Total Impressions 10 million 10 million
Total Campaign Cost $100,000 $50,000
The Result
Reach 3 million 3 million
% Impacted (Ad index) 12% 4%
Impacted Reach 360,000 120,000
Cost Per Impact $0.28 $0.42
Source: Millward Brown March 2009
27
31. Creative Quality
“Regardless of how well a campaign is targeted,
its overall success will depend heavily on the
strength of the creative. In multiple regression
models we typically see creative quality
accounting for more than half of the overall
effectiveness.”
Millward Brown
28
