Information Services R&D

October 29, 2010

Top 10 Technology Trends for 2011Impacting Marketing, Sales and Service

CONFIDENTIAL

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#10 - Microtargeting• Consider Issues with Traditional Analog Marketing

Assets (TV… Radio… Print… Direct Mail… Catalog…)– Carpet-bombing

• Given one thousand impressions (1 CPM), how many impressions go to the wrong segment or unqualified prospects?

• IOW, some level of waste is tolerated by definition– Lifespan

• Lifespan of marketing message extremely short (newspaper or catalog thrown in trash, commercial ends, etc.)

• Turns on, turns off --- very little latent measurable value

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#10 - Microtargeting• What if you could target the right customer at the right

time?• And not just for paid search ads, but for display ads too?• And you could do so through multiple media?

– Web– Mobile web– TV– Video– Search

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#10 - Microtargeting• Aggregators assemble demographic/psychographic

into packages available to advertisers• “I want to target a 40 Y/O M, IA $500K, HHI $100K, FICO

700+, married w/kids, in ZIP 45242, between 6 and 9p…”

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#10 - Microtargeting• Microtargeting addresses some of the issues related to

analog media:– Laser-guided

• All responses (acquisitions) are tracked• For every 1,000 impressions (1 CPM), once offer has

been “tuned”, vast majority should go to responsive segments

• Focus on CPA (cost per acquisition), not CPM– Lifespan

• Much longer lifespan for assets through retargeting• SEO, Video, Blogs, Mobile, Rich Media (e.g., Games),

Online Display…

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#10 - MicrotargetingYour online behavior also changes

advertiser targetingExample of personalized re-targeting:• Visit watch store online and check

prices of Invicta SubAqua diver’s watch

• Visit Cincinnati.com, see display ad for the watch

• Watch Dish Network, see TV ad for divers’ watches…

• 55 Y/O M

• 45242 ZIP Code

• HHI $100K

• IA $500K

• FICO 720

• Married, 2 Children

• …

• Diving

• Diver’s watches

• Invicta brand

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• Takeaways:– Marketing: response rates increase when offline and

online campaigns are developed in harmony– Marketing: online side should consider microtargeting

(example agencies include Aegis, AKQA, Dentsu, Havas, IPG, Omnicom Group, Razorfish, WPP, etc.)

– Marketing: creative and A/B testing (examples: Adroit, Bridge, ChoiceStream, Teracent, Tumri, etc.)

• Watch for waves of M&A in this space because it is highly fragmented

#10 - Microtargeting

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#9 – Privacy Wars

WSJ, 8/2/2010

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#9 – Privacy Wars• The 50 most popular websites installed an average

of 64 web trackers (cookies, Flash cookies, etc.)• These 50 sites account for 40% of U.S. page-views• A WSJ test found that they installed 3,180 trackers• Dictionary.com had the highest ‘exposure index’ of

the top 50 sites• MSN.com trackers included age, ZIP, gender, HH

income estimates, marital status, children, home ownership, etc. using Targus

WSJ, 8/2/2010

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#9 – Privacy Wars• ‘Flash cookies’ are used by ad networks to

automatically reinstall tracking cookies• They use Adobe’s Flash technology• Originally intended to remember user preferences• Can be used by data collectors to reinstall

conventional cookies that users had deleted• “Adobe condemns the practice”• Since July, six (6) lawsuits have been filed in CA

seeking class-action status alleging violations of federal privacy laws by tracking companiesWSJ, 8/2/2010

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#9 – Privacy Wars• Takeaways:

– Legal: ensure your privacy policy and related disclosures conform to best practices

– Marketing: make sure that the advertising networks, agencies and other intermediaries you adhere to IAB (Interactive Advertising Bureau) privacy principles and other best practices to ensure legal, ethical compliance

– General: keep abreast of changes in privacy features and requirements of the major platforms (e.g., Facebook)

• Stay tuned for – possibly – dramatic changes in the online advertising world related to privacy

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#8 – Cloud for Business• Yes, Cloud is a buzzword• But, yes, it’s real• Let’s define some terms:

– BaaS – Backup as a Service (rent cold storage)– CaaS – Computing as a Service (rent-a-VM)– IaaS – Integration as a Service (rent-an-ESB or ETL)– PaaS – Platform as a Service (rent a server)– SaaS – Software as a Service (rent an application)

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#8 – Cloud for Business• CaaS: typically targeted to large enterprise,

provides globally available, fault-tolerant server and storage that can be managed remotely (ex: Verizon)

• IaaS: Integration in the cloud (ex: SnapLogic)• PaaS: typical target is SMB; spin up servers and

pay for bandwidth and storage (ex: Amazon EC2)• SaaS: all sizes of business

– Productivity: Google Office, Microsoft Office365– Horizontal: Microsoft Hosted Dynamics, SalesForce– Vertical: Cloud9Analytics (for Sales), GridDynamics

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#8 – Cloud for Business• Takeaways:

– Legal, Compliance: ensure proper handling of PII and other regulatory restrictions

– IT: follow SEI or similar selection guidelines to vet/evaluate/compare SaaS/PaaS/CaaS providers

– IT: integrate identity management to minimize provisioning, access rights, audit (e.g., Centrify) issues

• Prediction (FWIW):– Solutions providers: offering professional services that

support turnkey integration of these solutions into businesses (of all sizes) will be an area of opportunity –for example, single sign-on

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#7 – Tablets for Sales and Field Reps• For many sales and other field reps, tablets will replace

laptops as the preferred traveling device• Why? Fast boot, lighter, “cool factor”, easier to use in

support of a conversation/presentation:

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#7 – Tablets for Sales and Field RepsTakeaways:• If they aren’t already, most sales and field reps will

demand tablets (especially those who sell 1-on-1)• Probably an incremental hardware spend for

organizations because a tablet doesn’t replace a laptop for a heavy keyboard user

• Hard to quantify an ROI, but it won’t matterPrediction (FWIW):• Android-based tablet with slide-out keyboard and pop-

up display will debut by end of 2012; could herald the end of the conventional laptop

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#6 – The Business of Social Networking

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#6 – Facebook’s ‘Like’ Button

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#6 – Facebook’s ‘Like’ Button• Introduced April 2010; as of 09/30/2010 ‘Like’ has

been added to over 2 million sites• A Facebook user who "likes" content has 2.2 times

the number of friends than typical Facebook user • 5 times more likely to click on external link• For news publishers: average age of Facebook user

who clicks on ‘Like’ within a news site is 34 (vs. 53 for typical newspaper subscriber)

• ABC News reported 190% increase in traffic; Gawker 200%; Sporting News 500%CNN, 09/30/2010

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#6 - Recruiting• LinkedIn used by 60% of Fortune 100 for recruiting• HP says it has staffed all levels including execs

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#6 – The Business of Social Networking• Takeaways:

– Pick a function: HR/Recruiting, Marketing, etc.– Move up the maturity chain: watch/listen; join;

comment/contribute; create; build community – Legal: plenty of regulatory hurdles for certain industries;

make sure your Legal partners are in the trenches with you

• Prediction (FWIW):– Social networking platforms will become the dominant

destination of advertising dollars by 2020, could be hastened by convergence of web and TV

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#5 – TV and the Web, Finally Together

• Old model: central planners at CableCo HQ decide what channels you receive and where you get them

• New model: consumers decide what channels they get and which devices they use to consume media

• AppleTV, GoogleTV, Slingbox, etc.

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#5 – TV and the Web, Finally Together• Google said to be flanking cable providers by

building alliances with TV makers, Dish Network, DirecTV and device manufacturers

• GoogleTV “harnesses the power of Google search to put traditional TV programming and Web videos all in the same place”

• Links TV, web, home entertainment devices, smartphones (the new remote) and apps

• Privacy factor: tracks viewing behavior on household basis – perhaps individual using phone

CNN, 09/30/2010

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#5 – TV and the Web, Finally Together• Takeaways:

– This is a situation to monitor for marketers– Learn about AppleTV, GoogleTV and Slingbox– Rapid changes could occur, similar to the rise of the

iPhone, if someone develops the right convergence device

– Mitigating factors: legacy content providers and cable providers aren’t happy (CNN: “Some networks blocking shows on Google TV”, 10/22/2010)

– Convergence will happen, but will be delayed only by some refusing to recognize digital reality (e.g., Napster)

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#4 - Open SourceQuestion: What do Digg, Facebook, Flickr, Google,

StumbleUpon, Twitter, Wikipedia, WordPress, Yahoo and YouTube have in common?

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#4 - Open SourceAnswer: All were created using elements of the open

source LAMP stack

What is LAMP?:• Linux OS (CentOS, RedHat, SUSE, Ubuntu…)• Apache Web Server• MySQL Database• PHP or Python Programming Languages

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#4 - Open SourceWhy is LAMP so successful?• Free to use; maintenance and support available in both

community-based and commercial forms• Massive development community means rapid

development cycles (consider the rise of Firefox as an example)

• Completely extensible and open to features suggested by anyone

• Security (e.g., SE Linux, AppArmor)• Scalability• Most of the “Cloud” is powered by open-source

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#4 - Open SourceRise of the Open Source Applications• BI: Jaspersoft, Pentaho• BPM: Intalio; Rules Engine: JBoss Drools• CMS: Drupal, Joomla, WordPress• CRM: SugarCRM, Centric, vTiger• Development Tools: Eclipse, NetBeans IDE• Enterprise Integration: JitterBit, Mule ESB, Talend ETL• ERP: Compiere, Openbravo• Learning Management: Moodle• Network Management: Cacti, Nagios• PBX: Asterix

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#4 - Open SourceTakeaways:

– Have an open source policy in your organization? If not, you probably need one

– Any medium- to large-company is using open source already (although management may not know it!)

– Open source is disruptive; expect continued upheaval in companies combating it:

• Ray Ozzie’s Departure• MSFT abandons its Windows Live Spaces blogging

platform (7 million blogs) to open source WordPress• Patch Tuesday: Spate of Zero-Days in ASP.NET

– Will significantly alter software CBAs

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#3 - Mobile Web

Annual shipments of web-enabled smartphones poised to outpace desktops and laptops combined in 2012 (source: MS)

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#3 - Mobile Web

Comparing time spent in media channel versus advertising spend yields significant disconnect

(Source: Mary Meeker/Morgan Stanley)

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#3 - Mobile Web

Dichotomy: Internet targeting for particular marketing segments superior to other media types, yet CPM remains depressed

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#3 - Mobile Web

Aside from game consoles, Apple iPad was fastest-selling consumer computing device in history (source: MS)

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#3 - Mobile WebTakeaways:• Mobile web search projected to surpass desktop/laptop

search by end of 2012; how will your website adapt?– Mobile search results with enhanced location awareness

(offer “proximity coupons”)– Monetization of local offers (e.g., FourSquare)– Adding a click-to-call feature in ad increases CTR rate

(reportedly 5-25%); increases relevancy of inbound calls• Expect more “instant shopping research” with frequency

of use correlating non-linearly to unit price minus $10

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#2 – Your New Wallet: the SmartPhoneStarbucks has now expanded its mobile payment

application (vendor: mFoundry) to 1,000+ stores

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#2 – Your New Wallet: the SmartPhoneTakeaways:• Monitor: watch for simultaneous upgrades to retail POS

systems and mobile apps from payment card industry• First to get it “right” will revolutionize the walletPrediction (FWIW):• If a mobile application could securely store and present

your key documents (e.g., driver’s license, social security card)… and if enough governmental momentum got behind the effort to accept this presentment… the physical wallet goes away

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#1 - Information Warfare• This is a Programmable Logic

Controller• Specialized computer that

controls manufacturing, processing and conversion operations in plants

• Programmed with ‘code-blocks’ that can turn valves on and off, check sensor levels, uhm, accelerate centrifuges…

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#1 - Information Warfare• In a large facility, scores of

PLCs may operate in a networked configuration to facilitate complex operations

• The PLCs are programmed, monitored and managed by control systems

• These supervisory control systems are called SCADA

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#1 - Information Warfare• In early 2010, researchers

detected W32.Stuxnet, which used four separate zero-day attacks

• Found to target Siemens WinCC SCADA software, modify code-blocks, install other back-doors, cover tracks

• Iran’s working centrifuge count reported to have dropped significantly

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#1 - Information Warfare• Stuxnet = Cyberweapon = covert warfare?• No reason that financial and corporate espionage

targets are immune from targeted attacks• Blackhat 2010 Conference: “SAP Backdoors”

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#1 - Information Warfare• Takeaways:

– Internal Audit: do your IT general controls meet best practices (policy, incident response, access rights, …)?

– External Audit: do they agree?– Organizational issues: how do your hard-dollar and soft-

dollar expenses match up with peer companies?• Prediction: it’s going to get much, much worse ---

lots of soft targets, increasing numbers of attackers, increasingly sophisticated tools to speed up attacks and little coordination between defenders

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QuestionsAnswers not guaranteed for timeliness, completeness or accuracy

CONFIDENTIAL

10. Micro-targeting 5. TV and the Web, Finally Together9. Privacy Wars 4. Open Source8. Cloud for Business 3. Mobile Web7. Tablets for Sales and Field Reps 2. Your New Wallet: the SmartPhone6. The Business of Social Networking 1. Information Warfare