Digital Strategy March 4, 2009 2008 Hewlett-Packard Development
Digital Strategy March 4, 2009 2008 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice We're living through a time frame when the explosion of digital content is significant, so it presents growth opportunities for HP. It sets the long-term course for the company. Mark Hurd, BusinessWeek, 25 Feb 2008 Ten years ago, there were almost no digital cameras. Now, digital is everything. Vyomesh Joshi, Wall Street Journal, 12 Mar 2008 We love when things go from analog to digital because the market is coming in HP's direction. Vyomesh Joshi, HP Securities Analyst Meeting, 11 Dec 2007 2 02/14/20 The technology industry is in the early stages of a big shift one that will transform how we access information, share content, and communicate people and businesses will use their Web browsers to access a wide range of cloud services available ondemand over the Internet. Shane Robison, The Next Wave: Everything as a Service, 05 Jun 2008 In the next five years there will be more content created than in the history of mankind and HP is there to help people connect to this content. Todd Bradley, Connecting Your World Launch Event, 10 Jun 2008 Digital information is doubling every 18 monthsit translates into, for us, a [TAM] that's $451 billion by 2010. Ann Livermore, HP Securities Analyst Meeting, 15 Sep 2008 3 02/14/20
The opportunity Shift to digital Customers migrate to digital at expense of traditional media: 120K blogs created/day 112M U.S. blogs, 73M Chinese 123.4M Facebook HP consumer visit web site 3-4 times before making decision IT decision makers spend less time consuming news/information via traditional platforms Value-based shoppers are online Economically induced channel strain increases opportunity to interact directly with customers: 49% will use internet for holiday shopping vs. 22% in 07 Conditions increase urgency to reach customers wherever they seek information research consumer electronics (PCs, etc) online before purchase Web-influenced store sales increased 38% Y/Y 58.4% HP investment 38% share advertising spend in 2008 vs. 10% in 2005 >1,000 campaigns online in though 2007: 44B impressions, .23% CTR significant, Digital viewed as a marketing channel not as a business Digital Media 2,000 purchase orders, 530 decision makers lacks Social Media primarily blogs, forums/micro-sites; engagement coordinated generally low HP.com 133M visits/month, $1B annual e-commerce, but HHO 4strategy
02/14/20 The strategy Strategically exploit five specific digital platforms to demonstrate innovation, industry leadership and brand differentiation, resulting in incremental revenue and/or reduced costs Revenue growth throughout the customer journey our competitors Become the leading consumer Mobile HP.com Social Media Partnerships Digital Media Investment Catch up to our customers, not experience throughout their journey with HP Digital strategy program elements Research Communicate Educate Enable Connect Facilitat e Consult Measur e Move from advertising-led approach to
business-like approach HP Corporate Objectives 02/14/20 engagement, instead of awareness leading to engagement Personalize the customer Measurement 5 Gain awareness through and commercial technology brand in the digital ecosystem Optimize our digital investment through an integrated approach Align efforts across business groups and regions Key objectives Targeted growth Improve the customer Efficiency Optimize marketing spend Targeted growth (media mix), resulting in media optimization of avg 18% reinvested into media Drive increasing brand to extend reach Reduce ineffective spend
value on market research and and incremental growth experience design based on guesswork. This will lead to better IT prioritization, faster time to market and decreased cost Efficiency implementation. of Negotiate marketing partnerships directly with the partners, limiting transactional costs 6 02/14/20 experience on HP sites to drive more conversions online sales, qualified sales leads Better manage the enterprise $62M SEM spend and integrate SEO to optimize and drive more traffic to improved HP sites Capital strategy Develop social Capital strategy network support communities to answer customer questions, redirecting $10M to cover increased volume in sales Y/Y
Market and competitive analysis Competitive state Key competitors fighting HP size and scale with focused betsinto an active listening digital Transforming and engagement organization, winning credibility with customers, prospects, and the media Why are they doing it? Competitor mentions on popular gadget blogs Endadget Gizmodo Apple 1,140,000 101,000 Dell 337,000 7,750 IBM 99,600 1,260 HP 317,000
7,240 Mutually beneficial relationships with customers Resource dedicated to those living and working remotely Compliment and complain about everything Dell Users gain access and can be heard Learn and discuss support topics Dell gains by gaining credibility and valuable insights (200+ idea developed from IdeaStorm & integrated into products, 11.3K+ submitted/700K voted on ideas, 85K comments Increasing brand loyalty and perception Negative brand perception decreased from 48% to 26% from 02/14/20 FY06-08* 8
Post, promote, and discuss brand ideas Competitive state Laser-focused on C-Suite enterprise lead generation MyIBM focused on customer issues, solutions, and personalized engagement Issue-focused marketing (environmental sustainability) Telling the IBM story Product/service promotion Almost zero media spending on IT Reinvented itself from dormant sites technology company into cultural force, with digital strategy designed to dominate the affluent and younger demographics Making a big bet on videos and tutorials Aggressively positioning Mac as the anti-PC Relatively little ATL media; rely heavily on PR and advocates to carry message and endorsement From hardware only to hardware + services App store, MobileMe) 9 (iTunes, 02/14/20 Market/industry analysis Engage advocates to influence Business brand perception and buying opportunities behavior Market our brand & advertise
products where people are already spending time online expect increasing functionality, convenience People want People & value India consumers Mobile social networks will be more, buying online will used by >140 million people especially in increase 623% to worldwide by 2013, with the 203 million by largest numbers coming from uncertain times 2010 BRIC countries 1 2 People advocate & recommend their preferences, and listen People more to peers Web sites and search 58% of internet 40% of consumer advertise engines are #1 users worldwide electronic buyers visit source for research consumer customer review & advocateinformation SMBs in mature and electronic purchases sites, emerging markets mobile People love119% device technology penetration in Russia more than one per
person6 10 02/14/20 3 57% of affluent U.S. households use mobile tech to access the Internet, 10% use to make purchases7 online4 Even in downturn, businesses continue to invest in tech that makes them more efficient, competitive8 1 in 6 visits blogs5 64% of Chinas Internet users have a blog and/or social networking space, 75% in Brazil2 Digital media growth U.S. media growth by segment Social network growth Digital media (interactive/Internet) is Social networks have begun to rise to the
CAGR of Hours per Person per Day 2005 - 2009(F) contributing to the decline in consumption of certain forms of traditional media, particularly print. 6.5% 5.5% 5.5% top, and continually shift in popularity. 2005 2007 Rank Website Rank Website 4.5% 1 Yahoo.com 1 Yahoo.com 3.5% 2 MSN.com 2
Google.co.uk 8 Orkut.com 9 AOL.com 9 Wikipedia.org 10 Go.com 10 Hi5.com 1.5% 0.1% 0.5% 0.3% 0.3% -0.5% -1.5% -1.5% -1.3% -2.5% Recorded Print BroadcastMVPD Radio Internet/ Music TV Interactive Social Networks 11
02/14/20 Do we have 2008 data??? Market & competitive analysis: Summary Proliferation & growth Shifting expectation s Influences brand preference, buying Both B2C and B2B customers are increasingly turning to the Web for purchasing decisions and to research purchase options1 Brand perception, preference, loyalty, and buying behavior are influenced by third-party Web channels (news sites, independent reviews, blogs, social networks) especially in times of uncertainty where customers expect companies to interact with them2 With customer preference online and our deliberate efforts at HP to shift more of our spend to digital, we must now optimize our B2B and B2C demand creation and drive more conversions from that demand Demand creation Yield management HP is one the largest advertisers in the digital media space. We could get significantly more value from our entire media spend and insist on more accountability for maximizing the value of our sales efforts. HP.com ranks last among our competitors3 in key Web site success attributes. This is a critical problem
since digital media initiatives (media buys and social media ) lead customers to HP.com. 12 02/14/20 Website comparison Success attributes Searc h OVERALL Key attributes Information Navigation Engagement Service eCommerce Relationship Building Globalization Branding Leading 3 Average 2 Weighted Average HP.com Lagging 1 0 Source: Accenture Analysis, an independent benchmarking exercise that compares top 350
Web sites globally 13 02/14/20 Digital strategy Developing the strategy: Three steps Our objective: Based on corporate objectives 1 Strategically exploit digital platforms to demonstrate innovation, industry leadership and brand differentiation to drive incremental revenue and/or cost mitigation Targeted growth Capital strategy Efficiency Discover HP purchas e funnel 15 02/14/20 Find
Awareness 2 Key insight: We need to transform our marketing 3 Strategic framework: Key insight + objectives We dont have to spend more Increase growth and efficiency on digital, just spend better to by digitally facilitating B2B and get us where our customers B2C customer journeys are Consumer Enterprise eBay Technorati,Blo Google gs, RSS Online Google HP.com reviews Amazon Webcast Yahoo! IT Resource Answers Center Forums MySpace, Blog Twitter comments Confirm/ Validate
Consideration Preference Transact Purchase Support Feedback/Share Loyalty Five pillar strategy Revenue growth throughout the customer journey Mobile HP.com Social Media Partnerships Digital Media Investment Measurement Digital strategy program elements Research Communicate Educate Enable Connect Facilitat e Consult Measur e Move from advertising-led approach to business-like approach
HP Corporate Objectives 16 02/14/20 Marketing activities span the digital channels to influence target markets (Consumer, B2B, external influencers, employees) Digital community program Opportunity: Lead, leverage and connect Bring the Digital Strategy to life by designing and implementing: Coordinated network of HP Digital professionals Digital Engagement Center of Expertise Engaging online Digital Community Additional interactive tools, resources and training Key elements: Digital strategy team Develop and evolve the HP digital strategy, collaborating with the business units and regions 17 02/14/20 Community portal Interactive gathering place where community
can learn, leverage and connect Digital council Review/ approve all best practices, standards and guidelines in the portal Digital media growth Media optimization opportunity: $45-53M* 3 prong programs strategy 1 Aggregate business media spend for digital to leverage buying power 18% better negotiated results on $250M spend over 23 years; Reinvested back into media see chart Tracked by GSCS 2 3 Upfront media buying as appropriate to secure high valued space Integrate SEO/SEM Integrate initiative specific communications and HP assets through common measurement/metrics Use SEO to improve organic placement, then supplement and integrate with SEM** Implement a closed-loop leads process for tracking from ad placement through to sale Integrate campaign data with the HP Enterprise Data Warehouse Enhance training to employees and agencies on media, digital strategy, etc. Current activities
18 Align via new agency compensation with media savings target $45M Media training modules completed in process of enhancing digital portion Working with HP.com on integration/enhancement of SEO/SEM Integrating media metrics from agency into HP metrics platform 02/14/20 Partnerships growth Opportunity: $200M Created by revenue-driven partnerships Identify and structure strategic B2B and B2C partnerships that result in direct and immediate revenue impact (shared revenue) Develop key partners on the basis of strategic value to HP across business groups and regions Form opportunities to sell our HP products and services Increase leverage from online to offline and offline to online Current activities = $150M projected revenue Facebook: CNET: 19 02/14/20 Engagement regarding photo print share application Discussing potential B2B partnership opportunities Social media growth Opportunity: $17M+ ($10M REINVESTED/$7M revenue). Created by targeted push in social media. Expansive approach as a business that encompasses not only marketing but also open innovation, customer support and intelligence Further commitment to listening and being responsive to our customer by establishing a sustainable social media presence, both on our web site and beyond Encourage and scale existing conversations/ contributions by making social tools,
communities and features ubiquitous on every page of HP.com Incubate and accelerate efforts across HP, including the coordination of one technology and design practice Create and mobilize a virtual salesforce of nonbadged HP advocates to promote and sell our products Reinforce our position as the leader in innovation 20 02/14/20 Mobile growth Mobile is a greenfield opportunity ($2M) Increasing penetration and data usage, high personalization potential, low entry cost Extend access to HP from wherever customers are and choose to interact Develop WAP content to meet the demands of mobile customer Leverage and extend current SEM/SEO activities and spend to extend to mobile: Mainstream mobile into HP marketing planning and executions Create mobile specific marketing services to enhance in-store experiences Store locator service via local search Product specifications, demos, video, feature and price comparisons Supplies and consumables matching Instant couponing, click to call, & proximity marketing with retail partners Expand mobile as an on the go device portal in support of HP strategy and BU priorities Mobile as an enabler of the always connected experience and access to cloud services
Branded application to print on-deck mobile content or cloud content via the device Develop mobile integration of photo printing and sharing via Snapfish Extend the reach of the social media strategy by including mobile interactivity Current activities Developing WAP site standards, content & wireframes rollout to 15 countries by June App development for printing Snapfish and IPG HP stakeholders, and successes/best practices 21 02/14/20 HP.com growth Opportunity: $200M Through deployment of next generation services Accelerate the HP.com next generation deployment Extend the reach of our Web site and content through widgetization Establish a closed-loop leads process Develop persona-based experiences for customers that recognize the multiple roles they play with technology at given points in time Drive conversations from other communities to HP.com Bring the customer voice to HP.com through ratings and reviews Improving HP.com conversion rate from .5% to 1% = $100M 30% improvement in total store conversion from 2% to 2.7% ~= $220M 22 02/14/20
Measurement Strategy: Integrated, consistent measurement across all digital initiatives, aligned with broader marketing Deploy B2B and B2C measurement best practices objectives Define consistent KPIs for use by all marketing teams and agencies Establish digital dashboard to provide insight across multiple dimensions (executive summary, campaign, product group, region, etc.) Ensure success targets are established prior to execution of any initiative Provide analytics consulting in business groups, regions, and countries Enforce agency/partner accountability, pay-for-performance model Standardize on metrics toolset(s) Charter cross-functional, cross-business group initiatives to drive alignment and accountability Enable customer tracking from impression to conversion, linked to EDW Continually assess value of media mix, adjust as appropriate to increase ROI Benchmark externally where applicable Current activities Study, evaluate, educate, consult: Define success criteria for initiatives within strategy pillars, set success targets, and establish viable, comparable KPIs Evaluate measurement programs for digital initiatives already underway (MySpace, NBA Insider, etc.) Study HP.com measurement programs, extract meaningful KPIs to expose through digital dashboard Evaluate current vendor measurement programs, validate output, and insist on visible, comparable KPIs across campaigns and programs within business groups and regions 23 02/14/20 Projected results Revenue growth throughout the customer journey $45M $200M $10M/$7M $200M
$2M Mobile HP.com Social Media Partnerships Digital Media Investment Over $400M Measurement Digital strategy program elements Research Enable Communicate Connect Educate Facilitate Consult Measure Move from advertising-led approach to business-like approach HP Corporate Objectives 24 02/14/20
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