State of the Netessential eBusiness intelligence for Irish managers

A quarterly bulletin on online activity in Ireland ISSN: 1649

Compiled by AMAS in association with the Irish Internet Association

w w w . a m a s . i e

However, the rise of social media hasn’t dented the popularity of email, a format used by two out of every three marketers.

The choices such marketers make have a direct effect on the commerciality of Irish media, offline and online, which rely on advertising for much of their revenues. Last year, the Irish advertising market is estimated to have been worth slightly more than €1 billion, some €897 million of which was accounted for by traditional channels. Online or digital advertising, as it is variously called, was the only category to show growth, of the order of 20%, compared with a 4% average decline across other media types, according to research from PwC/IAB Ireland and Nielsen.

Previous MII/AMAS surveys have recorded a gradual shift among Irish marketers from traditional to online channels. But the latest survey shows emphatically that digital is core to the marketing strategies of the Irish marketing profession, and in many cases is delivering greater value than

traditional channels.

Desktops, mobiles and increasingly tablets are transforming users’ media habits and their engagement with commercial messages and offers. That trend is likely to accelerate. The dizzy numbers from Facebook’s debut stock market valuation are as much about the anticipated future growth in digital advertising globally, as they are about the phenomonenal reach of the social network. The recessionary environment presents challenges to Irish marketers, not least how to ensure that depleted marketing budgets can deliver tangible results. Asked about why they

used online marketing, 95% of the sample said value for money was a key driver, either “very important” or “important”.

High rankings were also given for customer engagement (97%), optimising reach (93%) and for online being more measurable than other forms of marketing (89%). Less relevant were reaching an international market (56%) and selling directly online (50%). A majority of the sample – 59% – reported a higher return on investment from online marketing than from traditional marketing.

Online’s gain has been at the expense of other media. Press appears to be the biggest loser,

issue 25 Summer 2012

Aileen O’Toole, Managing Director, AMAS

Irish marketing professionals are diverting more of their advertising and promotional budgets online, because of better opportunities for customer engagement and greater return on investment than they experience with traditional channels. One in five marketers currently spend 50% or more of their budgets online while 60% have invested in mobile channels, mobile sites, apps and/or QR codes.

These are among the main findings of the fourth annual Digital Marketing Sentiment Survey conducted by AMAS in partnership with the Marketing Institute of Ireland (MII). The survey aims to establish how the internet is affecting the Irish marketing profession, the channels they use and the marketing budgets they control.

Social media has gained in popularity, with 70% of Irish marketers maintaining a business Facebook presence and 44% with their own YouTube channels.

More Irish marketers switch budgets online

© AMAS graphic (www.amas.ie)

None at all

Less than a quarter

A quarter to half

More than half20% 10%

48%22%

2012

14%

13%

56%

16%

2011

Proportion of Irish marketing budgets being spent online

2012 Irish Digital Sentiment Survey

Methodology: online questionnaire

Sample size: 348

86% 82%

of sample have budget planning responsibilities

have budget spend responsibilities

© AMAS graphic (www.amas.ie)

Figures may not add to 100% due to rounding

continued on page 4

1. Digital advertisingDigital advertising is now the third largest category of advertising in Ireland behind press and TV, new data from Nielsen and IAB Ireland reveals, and is reporting robust double digit growth. The recession is taking a considerable toll on the advertising marketplace, as budgets are cut and media owners are forced to reduce their rates to earn their place on the advertising schedule.

Nielsen data shows that the overall advertising market, excluding digital, fell in value in 2011, by 4% to €897 million. The most significant category drops were in outdoor and radio, each down by 9%, followed by cinema (8%) and press (6%).

Source: 2011 IAB Ireland/PwC Adspend Study, survey of online properties, advertising networks and sales houses.

€132mIreland

42%Paid forsearch

38%Display 20% Classified

Digital media mix 2011

© AMAS graphic (www.amas.ie)

Newspapers TV Radio Outdoor Magazines Cinema Online excluding UTV & C4

0

50

100

150

200

250

300

3502010

2011

400

450

€ In

mill

ions

400

286

10181

22

132

8

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280

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23 9

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Irish adverting market

© AMAS graphic (www.amas.ie)

However, new research from PwC for IAB Ireland shows digital bucking the trend – showing growth of 20% in 2011 and placing a value of €132 million on Irish digital advertising. The beneficiaries of this upswing are multinationals, like Google and Microsoft, a range of overseas sites that are visited by Irish audiences as well as a slew of established and relatively new Irish players on the media landscape.

Search continues to remain the largest slice of the digital advertising pie but new formats, such as social media, are winning favour. PwC/IAB Ireland places a value of €5.8 million on Irish social media advertising in 2011.

The number of Irish consumers buying online continues to grow, with more purchases being recorded across all major eCommerce categories. Ireland is on a par with the EU27 average, with 43% of Irish consumers saying that they had made an online purchase within the previous 12 months. This represents an increase from 36% in 2010.

Travel and holiday accommodation remain the most popular eCommerce

category, with 34% of Irish consumers turning to the internet to book holidays or business travel. Clothing and sporting goods showed significant growth, with 17% of the Irish population making an online purchase compared with 13% the previous year. Irish consumers continue to prefer to physically do the weekly shopping, with just 4% of the population saying they had bought food and groceries online.

Irish eCommerce adoption levels

continue to be modest compared with those of our nearest neighbour where 71% of the population made online purchases last year. In the UK, the online marketplace has been valued at £68 billion by industry association IMRG, making it the second largest eCommerce market in the world. The largest gaps between Irish and UK eCommerce are in groceries and food – one in five UK consumers now buy them online – and in household goods, where 33% of UK consumers buy online, compared with just 8% in Ireland.

2. eCommerce

Top Trends

the opportunity to win online

Smartphones and tablets are transforming consumers’ media and buying behaviour, with implications for every business from large corporates to the corner shop. A series of both local and international studies has tracked the explosive growth of smartphones and tablets and the implications for businesses which are targeting the “always on” consumer.

RedC puts Irish household smartphone ownership at 49% of the population in 2011, but predicts it will accelerate to 71% by the end of the current year. Google-commissioned research produces a galaxy of new Irish statistics on smartphones and drills behind the data to provide fascinating insights into how these devices are changing consumers and businesses.

3. Mobile Smartphones in numbers

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59% Watching TV54% Listening to music35% Using internet28% Watching movies21% Reading papers/magazines14% Playing video games12% Reading book

89%Use smartphone

while...

Smartphone multitasking

Putting individual smartphone adoption at 43%, the Google research charts the growing reliance on smartphones for email, social media access, reading news and either researching a purchasing decision or actually making it on a phone. A third of Irish smartphone owners have bought something through their phone, while four out of five have used their phones to research a purchasing decision. Smartphone owners like to multi-task, with three out of five watching TV while using their phones.

For businesses, the main takeaway is that mobile needs to be core to their strategy,

a message that is as relevant to larger companies as it is to SMEs. For the latter, the Google research shows how vital smartphones are when consumers are searching for local services – 89% seek out local businesses and 90% take action, such as making contact or transacting business.

Tablets are also transforming consumers’ relationship with business. RedC puts tablet ownership in Ireland at 16% at the end of 2011, but anticipates it will be as high as 41% by the end of this year. Meanwhile, Adobe is predicting that tablets’ global share of website traffic will exceed smartphone traffic by early 2013.

EU 27

UK

Ireland

Any goods or services

Travel & holidayaccommodation

Clothes & sports goods

Books, magazines& e-learning

Householdgoods

Music & Film

Electronic equipment

Food / Groceries

43 22 22 16 16 13 11 6

71 38 41 32 33 33 19 19

43 33 17 15 8 14 13 4

Source: Eurostat 2011, respondents asked if they have bought or ordered goods or services for their own use over the past 12 months.

Bought or ordered goods online by category % © AMAS graphic (www.amas.ie)

Sources: Our Mobile Planet; Ireland, understanding the mobile consumer, May 2012, commissioned by Google, research by Ipsos MediaCT among 700 Irish online adults in Q1 2012. Connecting the World: World Independent Network of Market Research, Irish research by RedC, late 2011

Sample: adoption level, Irish online consumers. Other statistics:smartphone users only.

www.amas.ie

0

10

20

30

40

50

37%

25%30%

42%

Mobilewebsites

Mobileapps

QRcodes

None

Use of mobile channels

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Yes

No

Don’t know

%59

18

24

Online offers more ROI than traditional marketing

a trend that was also evident in previous MII/AMAS surveys. 45% of the sample said they had moved spend from press to online, 39% said that they had moved it from direct mail, 39% from PR and 37% from magazines.

Social media use has matured among Irish marketers, with a majority maintaining a business presence across the prime channels. Asked why they used social media, building relationships with customers was the most popular reply (86%), followed by building brand awareness (82%) and listening and monitoring (62%).

Irish marketers see both the benefits and the downsides of social media use. The primary benefits are:• Understanding customers better (75%) • Building contacts (75%)• Delivering cost savings (54%)But social media can be hard work, with 70% of the sample saying that it has added to their workload. Reputational risks for their companies were a concern with 56% of the sample, while 61% had difficulties keeping up to date with social media developments.

The full 2012 Irish Digital Marketing survey is available on AMAS’s SlideShare channel – SlideShare.net/AMASinternet. Graphs from this and previous issues of State of the Net are also available through our SlideShare channel and can be reused once AMAS is credited.

continued from cover

Yes

No

55

4439

61

39

61

30

70

%

Use of social media sites by Irish businesses © AMAS graphic (www.amas.ie)

0 10 20 30 40 50 60 70

Mobile

Audio (e.g. podcasts)

Video

Online display advertising

Blogs / social networking

Online classifieds

Email campaigns

Games

Online PR

Search engine marketing

Search engine optimisation

Website sponsorship

Viral marketing

Other

29%

18%

44%

47%

63%

15%

67%

6%

38%

39%

59%

17%

17%

4%

Preferred online formats

© AMAS graphic (www.amas.ie)

© AMAS graphic (www.amas.ie)

Figures may not add to 100% due to rounding

Top Trends

Mobile apps can be a major business opportunity, but what of their staying power and return on investment? There are over a million apps out there, but once downloaded many are – in a fit of app overload – promptly deleted. Before adding your app to their growing number, ask yourself: “What customer need will it satisfy?”

Quotes for the development

of an app can also vary wildly and widely – anything from €2k to €100k – so you need to know what you’re getting into before making that kind of investment.

Gartner believes that the winning apps of 2012 will have unique features that cater specifically for a mobile environment, rather than simply mobile adapted versions of their online originals. Mobile internet use is set to overtake desktops by 2014, and this mobile environment will increasingly define the user experience of your brand.

Advertising spend will increase in tandem as brands increasingly shift marketing budgets to mobile and experiment with cutting-edge apps

to capture marketing and sales opportunities. Mobile advertising is the fastest growing element within online advertising, even if its current share of digital spend is still only a tiny proportion in Ireland overall. Furthermore, while many of our favourite apps are free, apps themselves will generate solid revenue – Gartner predicts $15.9 billion in end-user spending in 2012.

The Yappy mobile advertising agency estimates that less than10% of brands have an app. Yet the fact remains that you don’t necessarily need one to run a successful mobile campaign. Marketing directors face interesting challenges in 2012. Do you invest in your own app while being clear about how it

enhances the customer experience and brings anything “extra”? Does its shelf-life deliver the required return on investment?

If it’s not going to be a “much-loved, can’t-live-without” app, would you get a better return from a mobile campaign with alternative solutions such as click to video, to Facebook, to landing page or to download a voucher?

The IIA will continue to recognise the importance of mobile trends in our annual awards next September, so watch out for announcements of categories and key dates. The IIA will be running a free mobile event in early September – see www.IIA.ie for more details.

Appy days for Irish Business

Joan Mulvihill CEO, Irish Internet Association

Cloud computing adoption in Ireland37%

Have deployed cloud solutions

56%With cloud solutions experienced cost

savings77%Believe cloud will help economic recovery

© AMAS graphic (www.amas.ie)

4. CloudIrish businesses and organisations are tuning into the cloud computing buzz, but adoption levels remain relatively low. The cloud, a range of hosted services that can be accessed via the internet, has been deployed by 37% of Irish businesses and public sector organisations, according to research commissioned by Microsoft.

Adoption levels are highest among larger businesses, defined as those employing more than 250. At 53%, that contrasts sharply with the 21% deployment levels recorded among SMEs, those employing less than 50. Among public sector bodies, cloud computing is used by 39% of the sample.

For many of those early adoptees, the much-trumpeted benefits of the cloud are a reality – 56% say they have seen cost savings and 47% recorded productivity gains. For all that, the research indicates that Irish businesses and public sector organisation are only at 3.2 on a 10-point scale of cloud adoption.

Source: Microsoft/Amárach Cloud Index Research, based on online survey among 151 businesses and public organisations April 2012

© AMAS Ltd.Published by AMAS Ltd., 38 Lr. Leeson Street, Dublin 2, Ireland. Tel: +353 1 6610499

Email: info@amas.ie Web: www.amas.ie

Who would start another social network in the face of Facebook’s dominance?

Its flotation in mid-May set new stock market records but caused jitters and doubts about a possible social media bubble.

But for all that, Facebook is in a commanding position. With over 900 million accounts worldwide, and over two million in Ireland, that position looks unassailable.

For many young people, Facebook is the internet. It is where they socialise, meet, play games and spend the majority of the increasing amount of their media time that is spent online. Even when they venture

outside Facebook to news or discussion sites, very often one of the simplest ways to log in to these other sites is to use their username and password from... Facebook.

So who would be optimistic or naive enough to try to compete with such a dominant player? Well Microsoft for one. Its latest take on a social service so.cl

was unveiled within days of the Facebook float.

Will so.cl itself sink or swim? Time will tell, but it’s very far from alone in competing with Facebook. In some markets, especially non-western ones, local social networks are very strong. China’s most popular micro-blogging site Sina Weibo has a reported 300 million members.

Globally, Google+ has gained more traction than its previous social services and is credited with 90 million members. With Google’s popularity and strength behind it, it has every opportunity. LinkedIn has carved out a strong identity and loyalty as a professionally oriented network.

Pinterest – the online pinboard to “organise and share the things you love” – has a visual interface that has won it a lot of attention (although it has also been called “a solution in search of a problem”).

And there are many more. Wikipedia lists over 200 current social networks, from 43 Things to Zooppa.

In a survey just before its flotation, half of Americans said Facebook was a passing fad and even more said they did not trust it to protect their private data. General Motors passed a vote of no-confidence in Facebook advertising by pulling its $10 million ad-spend on the network.

So is Facebook vulnerable? No, but neither is it invulnerable – nothing can guarantee long-term dominance in technology or online. Ask Novell, WordPerfect, AOL, MySpace or Bebo...

If you’re a marketer, should you bother about emerging or lesser-known social networks? Yes, if only to protect your brand on such networks and, potentially, to develop an early presence on relevant networks used by your target audiences.

Social networks – who would want another one?

AMAS: what we doAMAS is an internet consultancy with a simple goal – help our clients to exploit the internet. Large corporates, government bodies and, increasingly, high-potential businesses retain us to develop and help implement internet strategies.

We cut through the clutter and the complexity to allow our clients to capitalise on the unlimited opportunities offered by the internet.

Services:• Strategy• Research• User experience• Content• Training • Marketing• Project management

Fiachra Ó MarcaighDirector, AMAS

Leading Irish brand Dubarry has upgraded its eCommerce facilities and launched digital marketing campaigns, following an internet strategy project completed by AMAS. Dubarry, whose iconic boots are favoured by Queen Elizabeth and Bruce Springsteen among others, is pursuing an international growth strategy targeting discerning buyers of quality marine and country clothing and footwear.

The AMAS project was designed to improve the brand’s online visibility, boost eCommerce sales and support traditional sales and marketing activity.

The work programme varied from evaluating its existing websites to specifying new eCommerce functionality and providing content, search engine optimisation (SEO), online marketing, training and other services.

The first sites in a series of multi-lingual, multi-country websites have been launched by Dubarry, supported by traditional and digital marketing campaigns.

Follow us:For digital research and insights, follow AMAS on Twitter @AMASinternet

Contact Us: Aileen O’Toole, Managing Director on +353 1 6610499 or info@amas.ie

eCommerce core to Dubarry’s growth plans

Pinterest: visual

Like us on Facebook: Facebook.com/AMASInternet