opportunity for brands to create competitive advantage rests squarely on their ability to achieve addressability at scale. Addressability at scale is enabled through the application of data and analytics to the digital audience platform marketplace that is now at massive scale. And CRM is all about using addressability to increase the targetability, relevance, and measurement of marketing impressions and experiences across the customer lifecycle, in all channels and media, both online and offline.
Consumers are changing every day in the ways they interact with brands – shifting their media consumption patterns and decision processes. We have observed three prominent macro trends emerging from these changing behaviors, which are driving the market toward more individualized interactions. The first is the scaling of digital media; the second is the proliferation and penetration of social media; and the third is the multiscreen, always-on mobile population. We will delve more deeply into these trends in Chapter 4, but it's important to note that, as they continue to increase in scale, so will our capacity for addressability – and our commitment to customer centricity and individualized digital experiences across media and channels.
Over the time period of 2010 to 2014, we've seen a marked downward shift in the consumption of traditional media such as radio and print; at the same time, consumers have drastically increased the number of hours spent on digital media, social in particular, with an increase from about 52 minutes a day to nearly 90.3 In 2010 Google didn't have a social media capability, and today, 540 million people have accounts on Google+.4 Pinterest is a 300-person company, and one in every four women in the United States is using it on a weekly basis…incredible.5
Mobile is scaling, too. Today, we've hit an inflection point, where mobile Internet use is actually eclipsing desktop use.6 Who would have thought that would happen so fast? So the shift is on from traditional media to new media. And marketers are trying to leverage the use of data to figure out to whom – and how – they should offer individualized digital experiences. Advertisers in particular are shifting their dollars into this effort. In response to massive consumer migration to digital, brands are scaling their mobile and social media advertising budgets across formats such as native and video.
All of this digital interaction is creating a tremendous amount of data. Each day, 182 billion emails are sent.7 Each month, 70 billion pieces of content are shared on Facebook.8 As Google Executive Chairman Eric Schmidt observed, “There were five exabytes (5 million terabytes) of information created from the dawn of civilization to 2003, but that much information is now created every two days, and the pace is increasing.” For one of our top clients, we manage a single database that contains over 8 billion page views and more than 24 terabytes of data for a single brand.
The exhaust coming from all of this digital movement is data. Lots of it. And it's scaling quickly.
To consider addressability in the context of this much data is overwhelming. It simply can't be achieved through traditional methods. Not only is the overall digital media marketplace going to be $61 billion by 2017,9 but a significant portion of digital media today is, in fact, being bought programmatically, meaning through an automated approach that uses technology to select audiences based on data and analytic insights. Real-time bidding on media is actually going to reach $10.5 billion by 2017,10 growing more than 50 percent. And we estimate custom audiences, or “identified addressability,” to reach the $8 billion mark by that time. So the shift is toward digital but to the individual addressability opportunity within digital as well. As marketers, we're trying to build strategies for first-party and third-party data to aggregate that information so that we can apply analytics to it and deploy on this abundance of digital platforms. Brands – and the marketers charged with driving their growth – cannot keep up with this pace without continually upskilling themselves to capitalize on the massive opportunity. You will make swift progress or you will fall by the wayside while other companies – and other marketing executives with them – pass you by.
The power of addressability to create competitive advantage, both for the organization and for the marketer, has been proven by history. To set up some context, it is meaningful to consider its roots, which are surprisingly deep. We observe, in general, two distinct eras of addressability at scale (see Figure 1.1). Each possesses three common criteria of scale and effectiveness to drive superior performance. The first is individual-level addressability, which goes beyond broad segments, demographics, or panel-level data to reach individuals directly. The second is that the addressable platforms must have massive reach. And third, you must be able to deliver via immersive formats; meaning media and channels that are accessible by the general population. We have found that marketers who tap into the opportunity presented by these three factors have outpaced market growth rates by two to three times and have enjoyed competitive advantage for a sustained period.
Figure 1.1 Drivers of Scale and Effectiveness
With “addressability at scale 1.0,” the individual-level addressability factors were limited mostly to name and address – and later phone number. The primary addressable platform at scale was the United States Postal Service (USPS), whose reach was basically 100 percent of the nation's households. The direct mail format allowed for the use of imagery and long-form content in a manner that was highly immersive. There were many different engagement tools that could be delivered on the platform, from direct mail to catalogs. The USPS and third-party providers offered solutions and standards that helped us optimize on the platform, like National Change of Address (NCOA), Delivery Sequence File (DSF), and numerous proprietary tools. Companies figured out how to take both first- and third-party data, deploy analytics to that data, and leverage it using those tools. We became (or hired) experts who lived and breathed the nuances of the USPS platform. We used a framework to help brands create competitive differentiation. For all practical purposes, this was the start of addressability at scale. We helped our clients figure out how to segment their customers and create experiences for them using addressability. We helped them optimize the performance of their marketing programs through accurate measurement. We built technology structures to implement those programs. And effectively, we helped them organize their businesses around the opportunity of addressability at scale.
Companies like Capital One, GEICO, and DirecTV were actually executing addressable strategies, just with a different framework than today's. The winners made marketing advancements like we had never seen before. Capital One, for example, had hundreds of people associated with its database marketing and addressability at scale functions. The company emerged as a clear market leader during the time period of 1995 to 2005 because of its strength in leveraging the USPS platform at scale.
If we look at the big picture, addressability at scale 2.0 has many parallels to 1.0, except they exist in an increasingly digital realm. We still have individual-level addressability; it has just expanded into new forms. Now we're dealing not only with name, address, and phone, but with cookies, mobile device IDs, and social IDs. We have seen the digital audience platforms scale to massive reach with immersive formats in site, search, display, and social media, with new channels such as addressable TV emerging. They are providing us with countless different toolsets and targeting products that we can use to optimize on their platforms. Google alone has given us an integrated addressable platform, inclusive of its own ad network, exchange, server, and, of course, search platform, that delivers addressable experiences across devices and formats, such as YouTube. For Facebook, targeting products include the Facebook Exchange (FBX) and Custom Audiences, which can be optimized through a number of certified third-party partner toolsets. For Twitter, it's products like tailored audiences, keyword targeting, and TV conversation targeting, in which audiences can be purchased directly or through third-party partner toolsets. Numerous unexpected players, including Amazon, eBay, and even Walmart, are following close behind with their own similar