The Future of Digital Platforms Smartphones, Streaming Video & Smart Speakers Local Online Advertising Conference 2018 Dr. Gian Fulgoni Chairman & Co-Founder For info about the proprietary technology used in comscore products, refer to http://comscore.com/about_comscore/patents
Topics A Time of Change The Mobile Revolution Digital Commerce The Connected Home Streaming Video Smart Speakers Direct-to-Consumer Brands comscore, Inc. Proprietary. 2
Time on the Internet has nearly tripled in the past seven years, led by massive growth in mobile usage Total U.S. Internet Usage in Minutes (Billions) by Platform 1,547 +185% 136 +1135% Tablet 543 957 +630% Smartphone 11 131 401 454 +13% Desktop December 2010 December 2017 comscore, Inc. Proprietary. 3
Total Hours (Billions) Millennials and Gen Xers now spend much more time on digital media than watching live TV, a sign of shifting media consumption dynamics Hours Spent on Platform by Demographics Source: comscore Xmedia (Custom) and Media Metrix Multi-Platform 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 19.1 Live TV Desktop Mobile 30.0 26.6 27.4 37.0 23.1 18.5 37.0 16.3 26.6 19.1 9.6 6.9 8.9 6.8 Live TV Digital Live TV Digital Live TV Digital Age 18-34 Age 35-54 Age 55+ * Time spent on desktop and mobile accounts for all content consumption on these devices (i.e. websites and apps), not just digital video. comscore, Inc. Proprietary. 4
ADVERTISING REVENUE ($ BILLIONS) Digital ad spend overtook traditional TV (broadcast, cable, satellite) in 2016 and has decimated print. TV has successfully shifted to legacy + digital distribution 140 120 100 U.S. Advertising Revenue by Media Category: Forecast ($ billions) $84.0 Digital $132.2 80 60 40 20 0 $62 $62.1 Television $60 $60.6 $17.8 Print $20 $11.4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 comscore, Inc. Proprietary. 5 Source: MAGNA GLOBAL, U.S. Advertising Forecast, September 2017
The Mobile Revolution comscore, Inc. Proprietary. 6
iphone or Android? comscore, comscore, Inc. Proprietary. Inc. Proprietary. 7
iphone users have 50% higher annual income than Android phone users Topline Platform Stats for App Usage iphone (46%) Android Phone (54%) 82 MM 40 $87,000 77 App Users Median Age Median Income Average Hours per App User 99 MM 43 $58,000 80 Source: comscore Mobile Metrix, U.S., Age 18+, December 2017 comscore, Inc. Proprietary. 8
Mobile (smartphone + tablet) now makes up over 2/3 of all time spent online and has doubled the total time spent online over the past 3 years Share of Digital Time Tablet 9% Desktop 29% Smartphone 62% Source: comscore Media Metrix Multi-Platform and Mobile Metrix, U.S., December 2017 comscore, Inc. Proprietary. 9
Digital media usage time is now driven by mobile apps, with smartphone apps accounting for over half of all time spent online Share of Digital Media Time Spent Desktop 29% Smartphone App 55% Tablet 9% Smartphone Web 7% Source: comscore Media Metrix Multi-Platform & Mobile Metrix, U.S., Total Audience, December 2017 comscore, Inc. Proprietary. 10
Average Daily Hours per Visitor App usage is heavier among younger users, with 18-24 yearolds spending 3.6 hours a day on apps Average Daily Hours per Mobile App Visitor by Age 3.6 2.8 3.0 2.8 2.5 2.4 2.1 Total Age 18-24 Age 25-34 Age 35-44 Age 45-54 Age 55-64 Age 65+ Source: comscore Mobile Metrix, U.S., Age 18+, December 2017 comscore, Inc. Proprietary. 11
Share of Time Spent on Apps Digital time spent on smartphones is highly focused; consumers spend half their time in their #1 app and nearly 9 in 10 minutes within their top 5 49% Share of Time Spent on Smartphone Apps Across Rank 18% 10% 6% 4% 3% 2% 2% 1% 1% 4% 1 2 3 4 5 6 7 8 9 10 11+ Individuals Top Ranked App by Usage Source: 2017 comscore Custom Analytics comscore, Inc. Proprietary. 12
Considering the significance of the top apps, Facebook & Google own 8 of the top 10 mobile apps, while Snapchat & Amazon are the only independently owned apps Top 10 Mobile Apps by Unique Users (MM) Facebook 154 YouTube 151 Google Search 134 Snapchat 128 Facebook Messenger 125 Google Maps 124 Instagram 107 Gmail Google Play Amazon Mobile 95 98 106 Facebook Google Everyone Else Source: comscore Mobile Metrix, US, December 2017 comscore, Inc. Proprietary. 13
The top apps vary by age group; Instagram and Snapchat rank higher among younger Millennials. Facebook is more popular among older segments Top Apps by Number of Unique Visitors Age 18-24 Age 25-34 Age 35-54 Age 55+ 1 1 1 1 2 2 2 2 Google Search 3 3 3 Google Search 3 4 4 FB Messenger 4 FB Messenger 4 FB Messenger 5 5 Google Maps 5 Google Maps 5 Google Maps 6 Google Maps 6 Google Search 6 6 7 FB Messenger 7 7 Gmail 7 8 Google Search 8 Gmail 8 8 Gmail Source: comscore Mobile Metrix, U.S., Age 18+, December 2017 comscore, Inc. Proprietary. 14
Digital Commerce comscore, Inc. Proprietary. 15
Billions ($) Retail Digital Commerce (Desktop + Mobile) reached a record high of $131.2 billion in Q4 2017 $48.8 Desktop Mobile $47.0 $45.4 $4.5 $3.8 $4.6 $44.3 $43.2 $41.9 $64.0 $7.2 $56.8 $56.1 $5.9 $4.7 $5.8 $50.2 $49.8 $47.5 Desktop + Mobile Retail Commerce Dollar Sales ($B) $54.5 $54.3 $71.4 $8.3 $63.1 $63.4 $61.6 $60.6 $7.3 $6.8 $6.7 $56.1 $54.8 $53.9 $82.8 $10.7 $72.1 $72.2 $70.9 $69.7 $11.1 $11.1 $11.4 $61.1 $59.8 $58.3 $92.5 $83.5 $15.6 $76.9 $15.6 $87.2 $17.3 $84.3 $16.9 $67.9 $69.9 $67.4 $109.3 $103.1 $100.1 $102.3 $22.7 $86.6 $22.3 $23.2 $23.7 $77.8 $79.9 $78.6 $131.2 $31.8 $99.4 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 +21% +17% +17% +17% +15% +16% +14% +12% +13% +13% +14% +16% +14% +15% +15% +12% +16% +23% +21% +18% +20% +18% +21% +20% Y/Y % Change Source: comscore e-commerce & m-commerce Measurement comscore, Inc. Proprietary. 16
Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 By the end of Q4 2017, Total Digital Commerce had grown to account for nearly 1 in 5 discretionary dollars spent by consumers 20% 15% 10% Desktop & Mobile Digital Commerce Share of Corresponding Consumer Spending* Digital s share of consumer spending peaks in Q1 and Q4 due to colder weather keeping people indoors and buying online. Q4 2017 saw a 19.2% share, the highest ever 17.0% Q4 16 13.5% Q4 16 19.2% Q4 17 14.5% Q4 17 5% Digital Commerce Share (desktop + mobile) 0% e-commerce Share (desktop) Q4 2017 Source: comscore e-commerce / m-commerce & U.S. Department of Commerce (DOC) for Retail *Note: e-commerce share is shown as a percent of DOC s Total Retail Sales excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores. comscore, Inc. Proprietary. 17
m-commerce is growing a rapid rate and accounted for 24% of all Digital Commerce dollars in Q4 2017 m-commerce Share of Total Digital Commerce Dollars 19% 20% 20% 21% 22% 22% 23% 24% 15% 16% 16% 17% 9% 9% 9% 8% 10% 11% 11% 9% 11% 12% 11% 11% 11% 13% 6% 7% 2% 4% Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Source: comscore m-commerce Measurement comscore, Inc. Proprietary. 18
In terms of discretionary spending, m-commerce growth significantly outpaced e-commerce & bricks-and-mortar in Q4 2017 Q4 2017 Y/Y Retail Spending Growth by Channel +40% +7% +15% Total Discretionary Retail e-commerce m-commerce Source: Dept. of Commerce, comscore e-commerce & m-commerce Measurement comscore, Inc. Proprietary. 19
Each of the top 10 online retailers have a majority of their digital audience visiting on mobile, with Amazon, Walmart, & ebay leading with the most visitors overall. App usage dominates time spent Selected Leading Retailers: U.S. Total Digital Unique Visitors Desktop vs. Mobile % of Time Spent Mobile Web vs. App* Amazon Sites 197M 22% 78% Wal-Mart 127M 26% 74% ebay 113M 16% 84% Apple.com 83M 23% 77% Target Corporation Apple Sites 64M 100% Kohls Corporation 59M 40% 60% The Home Depot, Inc. ETSY.COM 52M 50M 66% 44% 34% 56% Best Buy Sites 47M 33% 67% LOWES.COM 39M 66% 34% Desktop Only Multi-Platform Mobile Only Mobile Web App Source: comscore Media Metrix Multi-Platform, U.S., December 2017 * In past presentations, we used a version of this slide that showed Apple s browser/app split among its entire ecosystem of mobile sites and apps (e.g. itunes, Apple Maps, etc.). This current version of the slide only accounts for Apple s retail sites. comscore, Inc. Proprietary. 20
Apparel is the largest online product category, followed by Consumer Electronics 10 product categories had very strong growth rates of at least +15% Absolute Dollar Rank Product Category Y/Y Growth Rate 4 6 1 3 15 5 7 10 11 2 9 13 12 14 8 16 Consumer Packaged Goods Toys & Hobbies Apparel & Accessories Computer Hardware Flowers, Greetings, & Gifts Event Tickets Furniture, Appliances, & Equipment Home & Garden Books & Magazines Consumer Electronics Jewelry & Watches Sports & Fitness Office Supplies Music, Movies, & Videos Video Games, Consoles, & Accessories Computer Software Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Strong Strong Moderate Moderate Moderate Low Q4 2017 Total Digital Commerce Sales Category Growth vs. YA Growth rate definitions: Very Strong: +15%+ Strong: +10-14% Moderate: +5-9% Low: +0-4% Source: comscore e-commerce and m-commerce Measurement comscore, Inc. Proprietary. 21
The Connected Home comscore, Inc. Proprietary. 22
Nearly 9 in 10 U.S. adults now have home Internet access, with 7 in 10 having high-speed connections 75% Percent of U.S. Adults Using the Internet 87% 12% Home Wi-Fi Home Smartphone, No Wi-Fi Total Home Internet Users Source: Pew Research comscore, Inc. Proprietary. 23
A U.S. Connected Home With Multiple People Can Have As Many As 20 Internet-Connected Devices The Average U.S. Connected Home Has 9 Internet-Connected Devices comscore, Inc. Proprietary. 24
The modern living room features a multitude of connected devices, including significant innovation and adoption in the OTT and IoT landscape 90% 89% Media Device Penetration Among U.S. Wi-Fi Households 62% 44% 35% 31% 17% 8% 4% Smartphone Computer Tablet Streaming Box/Stick Smart TV Gaming Console Smart Speakers Wearables Home Energy DIGITAL OTT IoT Source: comscore Connected Home, U.S., December 2017 comscore, Inc. Proprietary. 25
Streaming Video comscore, Inc. Proprietary. 26
Consuming OTT content is becoming more popular, with well over half of Wi-Fi Households now using various OTT devices Over-the-top Streaming 55M U.S. Households OTT Households Consume 55 Hours per Month 62% Use a Streaming Stick/Box Of OTT Homes 48% Use a Connected TV 59% Of Wi-Fi Households Use OTT Devices Source: comscore OTT Intelligence, Total Home Panel, U.S., October 2017 comscore, Inc. Proprietary. 27
Roku is the most popular streaming box or stick but Amazon (especially), Google and Apple remain key players in this market TV Streaming Boxes/Sticks: Penetration of U.S. Wi-Fi Households 19% 18% 8% 6% Source: comscore Connected Home, U.S., December 2017 comscore, Inc. Proprietary. 28
Over 1/3 rd of the OTT audience is cordless and doesn t subscribe to pay-tv, with half of those being streaming only households Over-the-Top (OTT) Households by TV Service Type Cordless (No Pay TV) 33% Streaming Only 17% Streaming + Cordless Antenna 16% Cable 46% 62% of Wi-Fi Households actively stream using OTT Devices Satellite 22% * Households that use an antenna in addition to their cable or satellite services are included in those respective shares. Source: comscore Total Home Custom Reporting, U.S., December 2017 comscore, Inc. Proprietary. 29
The four major OTT streaming services account for over 75% of viewing time for OTT households Share (%) of Total OTT Viewing Hours Other 24% 32% 8% 12% 23% Source: comscore OTT Intelligence, U.S., December 2017 Note: Share may not sum to 100% due to rounding comscore, Inc. Proprietary. 30
Smart Speakers comscore, Inc. Proprietary. 31
Half of smartphone users engage with voice technology on their device, and many of them use the feature habitually 1 in 2 use voice technology on smartphone 1 in 3 voice technology users use voice technology daily comscore, Inc. Proprietary. 32
Smartphone voice usage is a leading indicator of smart speaker purchase intent 42% of voice tech smartphone users intend to purchase a smart speaker while only 15% of non-voice tech smartphone users intend to purchase a smart speaker Source: comscore Custom Survey, U.S., Q2 2017, Age 18+. Total n=851 with 92% having smartphones comscore, Inc. Proprietary. 33
2017 holiday sales drove a significant increase in homes with smart speakers, reaching 13% of wi-fi homes in early December. By the end of 2017 it had grown to 17% 11/1/2017 11/2/2017 11/3/2017 11/4/2017 11/5/2017 11/6/2017 11/7/2017 11/8/2017 11/9/2017 11/10/2017 11/11/2017 11/12/2017 11/13/2017 11/14/2017 11/15/2017 11/16/2017 11/17/2017 11/18/2017 11/19/2017 11/20/2017 11/21/2017 11/22/2017 11/23/2017 11/24/2017 11/25/2017 11/26/2017 11/27/2017 11/28/2017 11/29/2017 11/30/2017 12/1/2017 12/2/2017 12/3/2017 12/4/2017 12/5/2017 12/6/2017 12/7/2017 12/8/2017 12/9/2017 12,500,000 US Households with Active Smart Speakers Penetration of Wi-fi homes just over 13% on Dec 9 12,000,000 11,500,000 11,000,000 10,500,000 10,000,000 Thanksgiving Black Friday Cyber Monday +500,000 Smart speaker homes Dec 1 to Dec 9 9,500,000 comscore, Inc. Proprietary. 34
Index Index Smart speakers are more prevalent in households with higher incomes, children in the home and head of household age 35-49 years-old HH Income Index of Smart Speakers HHs vs. Wi-Fi HHs 181 HH Head Age: Index of Smart Speakers HHs vs. Wi-Fi HHs 116 Age 18-24 70 62 Age 25-34 95 < $75K $75K-$149,999 $150K+ Age 35-44 122 Presence of Children Index of Smart Speakers HHs vs. Wi-Fi HHs Age 45-49 111 95 108 Age 50-54 Age 55-64 84 100 Age 65+ 78 Children: No Children: Yes Index comscore, Inc. Proprietary. 35
While most smart speaker owners agree it is useful, only 40% say it s important for their everyday life. While not yet as ubiquitous as a smart phone, speakers have still made a big impact on the consumers who own them. % Who Agreed With Each Statement (Top-2 Box, 7-pt scale) 71% 54% 40% My smart speaker is useful My smart speaker makes my life easier My smart speaker is important in my everyday life Source: comscore Custom Survey, March 2018 Q: On a scale of 1 to 7, where 1 is Strongly disagree and 7 is Strongly agree, please rate your level of agreement with each of the following statements. comscore, Inc. Proprietary. 36
Weather, general questions, and music streaming are the top activities for which owners have used their devices. How Are Owners Using Their Smart Speakers? Top-5 Most Common Uses Bottom-5 Least Common Uses Checking weather 81% Sending / reading text messages or emails 15% Asking general questions 77% Ordering food / services 13% Streaming music 74% Getting stock prices / information 13% Timers / alarms 60% Translating languages 9% News / sports updates 48% Financial services not related to stock market 8% Source: comscore Custom Survey, March 2018 Q: For which specific tasks/activities have you used your smart speaker? comscore, Inc. Proprietary. 37
Uses of smart speakers: While general activities are the top use among owners, 30% have purchased an item online via their smart speaker, with 13% having ordered food/service. Checking weather 81% Asking general questions 77% Streaming music 74% Timers / alarms 60% News / sports updates 48% Reminders / to-do lists 44% Personal calendar 37% Playing games / finding jokes / entertaining 37% Streaming news broadcasts or news updates 33% Bluetooth audio from another device 30% Home automation 30% Ordering an item online 30% Traffic updates 27% Making phone calls 23% Streaming podcasts 19% Finding local businesses / making reservations 18% Streaming audiobooks 17% Sending / reading text messages or emails 15% Ordering food / services 13% Getting stock prices / information 13% Translating languages 9% Financial services not related to stock market 8% Source: comscore Custom Survey, March 2018 Q: For which specific tasks/activities have you used your smart speaker? Finance-related activities were among the least-used by respondents, who cited security and privacy concerns: 69% said they were concerned about security 36% said they had privacy concerns comscore, Inc. Proprietary. 38
While smart speakers are useful for consumers, they may also be creating a barrier to brand loyalty. 58% 42% When ordering, I asked my When ordering, I asked my smart speaker to purchase the smart speaker to purchase the brand (e.g. Tide) item (e.g. laundry detergent) Source: comscore Custom Survey, March 2018 Q: You indicated you have made a purchase via your smart speaker, which of the following best describes the process of your order? comscore, Inc. Proprietary. 39
During the ordering process, 1 in 5 respondents said their smart speaker suggested a different brand to them. When ordering my item, my smart speaker asked if I was ordering the one I have purchased before. 39% asked which specific brand was I looking for. 38% offered a deal or discount for a different brand for the item/service I was looking for. 25% did not ask me anything and just ordered my item. 21% suggested a different brand than the one I normally order. 18% Source: comscore Custom Survey, March 2018 Q: When thinking of the item you ordered via your smart speaker, which of the following describes the process? (select all that apply) comscore, Inc. Proprietary. 40
Direct-to-Consumer Brands comscore, Inc. Proprietary. 41
comscore, Inc. Proprietary. 42
The Direct-to-Consumer Economy Big marketers are facing a crisis Small and mid-sized brands, driven by data and digital marketing, are throttling growth for nearly every major consumer category. Giants like P&G and Unilever once had huge advantages in owning their own supply chains and shelf space in national retailers. Now, those advantages are liabilities. These companies need to shift their models to direct-to-consumer businesses ASAP or risk being disrupted. Randall Rothenberg CEO, IAB February 12, 2018 comscore, Inc. Proprietary. 43
Key Takeaways 1 Mobile Apps are the primary driver of digital media consumption, but activity is concentrated 2 The channel shift from in-store buying to digital commerce continues unabated 3 Digital advertising is surging amd TV is benefitting from content delivered via OTT The average user spends 2.8 hours per day using mobile apps Apps dominate mobile web in usage time, 87% to 13% Half of digital media time is spent via smartphone app Smartphone users #1 app drives half of their app time, and the Top 10 drive over 95% Digital commerce grew +20% Y/Y in Q4 2017 Mobile spend surged and grew +40%, while desktop spending grew by +15% About 1 in 5 dollars of discretionary spending now occurs online Apparel & Consumer Electronics are the largest online product categories OTT viewing is growing rapidly, with 62% of wi-fi homes actively streaming video content 17% of wi-fi homes have smart speakers 30% of smart speaker owners have used their devices for buying products Will smart speakers and direct-to-consumer sales threaten traditional brand loyalty? comscore, Inc. Proprietary. 44
Thank You! Questions? comscore, Inc. Proprietary. comscore, Inc. Proprietary. For info about the proprietary technology used in comscore products, refer to http://comscore.com/patents