2011 media and technology trends forecast

Each year, the IPG Media Lab issues its trends report. This year, on the heels of the Consumer Electronics Show, we are excited to announce our six big bets for 2011.

From mobile’s rapid transformation from a niche platform to one that is converging with all our online activities, to new technologies that enable brands to interact with consumers in groundbreaking ways, the implications in 2011 for marketers and brands are breathtaking. Twenty years ago, technologist Mark Weiser wrote, “The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it.” 2011 is the year our traditional media and consumer tools begin to disappear—2011 is the year loyalty cards, cable boxes, and feature phones jump the shark; at the same time, mobile, gaming, and digital behaviors are now majority activities across all demographics. As these behaviors become ingrained and interdependent literacies, they are changing consumers and brands for good.

The Lab’s 2011 trends examine the changing communications landscape through the prism of technology, industry, and consumer developments. Here are six trends that illustrate the convergence of these parallel forces:

A recap of the 2010 Trends and the 2011 IPG Media Lab Trends memo is available for download.

The Identity of Things
Until recently, the Internet has been a global network that allows any computer to connect to another. Within this system, a user types in the name of a website and the network translates the words into an “address” of the computer in order to return a page of text, photos and video.

In the mid 1990’s SUN Microsystems forecast a concept it called the “Internet of Things”. While the traditional Internet allows computers to find pages, the Internet of Things enables physical objects ranging from soda cans to cereal boxes to have unique identities that make them findable and trackable. In 1999, researchers at MIT’s Media Lab blueprinted the architecture for such a system. In 2011, new, sensory computing capabilities, combined with the architecture of the Internet of Things is producing a trend we call “The Identity of Things.” One possible implication of this system for advertisers is that consumers can now be connected with in-store objects to trigger related information, recommendations and reviews.

Mobile is Dead
This trend refers to the fact that mobile has become so critical to consumer behavior that it has progressed beyond being a “feature;” it is now a necessity for all hardware devices and services. This is clearly the case for tablets and smartphones but it also applies to cars, household appliances and even CPG retail merchandise.

The “Mobile is Dead” trend goes beyond devices and extends to “the cloud,” a general term describing content and software that no longer needs to reside locally on a device but can instead be accessed through the Internet. Using the cloud, any device can acquire intelligence in order to personalize a user’s experience based on context. A good illustration of the cloud from CES came in the form of LG’s new line of refrigerators, the ThinQ series. These appliances are manufactured to connect to a network, allowing owners to adjust temperature from outside the home and help reduce power consumption.

Cars offer another good example of mobile services on display at CES. Intel showcased a variety of “in-car” services while automotive companies like Ford and Hyundai showed off integrated services like Gracenote that combine geo-located services with entertainment.

The New Loyalty
Frequent flier miles are the world’s second largest currency, slightly behind the U.S. Dollar but ahead of the Euro. The reason for such scale is simple; loyalty programs work. Enabled by smart networks and devices, users are capable of using services like Foursquare to compete for rankings as they visit various businesses and locations. Similarly, consumers have become accustomed to redeeming virtual currency for discounts, coupons and entitlements. For brands, this marks the evolution of traditional loyalty programs, such as frequent flier miles. In the “New Loyalty” world, consumers are familiar with such entitlements and are willing to make large behavioral changes in order to earn rewards. Brands can now begin creating consumer-facing experiences that span broadcast, interactive, direct and outdoor media to inspire loyalty while integrating with existing CRM and loyalty systems.

Life Is a Game
This trend is both simple and nuanced. In the simplest sense, it refers to the increasing popularity of gaming as an entertainment genre and the relative aging up of the gaming generation. More importantly, products like Kinect and Zynga’s Farmville highlight massive, mainstream appeal for non-traditional, non-console based titles. Additionally, as the iPhone, iPad and other smartphones and tablets become more pervasive, the content marketplaces associated with them are revealing games as one of the largest categories.

At CES there were a variety of traditional game-related accessories like controllers and enhanced screens. More interesting was Nintendo’s 3DS handheld device which drew rave reviews. Additionally, some of the most compelling 3D content was game oriented on glasses-free screens from vendors like Sharp with its Galapagos mobile displays. Another exciting technology in this category is one that will not see broad adoption for 2-3 years; a pair of 3D goggles from Vuzix. The company demonstrated the eyewear for the popular first person shooter, Call of Duty, and the experience was breathtaking.

The more pervasive element of the Life is a Game trend refers to the idea that game design principles are clearly being woven into all we do. As mobile devices are built with location and context aware technology, the world is being turned into an arena in which consumers enjoy playing. For retailers and brands, this means creating advertising that recognizes users and knows their preferences, delivering messages of value and experiences in the form of rewards, rankings and other game-derived forms of incentives and virtual currency.

The Rise of Content Marketplaces
CES is traditionally an electronics hardware show. This trend reflects the merging of hardware, software, and content (last year referred to as The Plover and the Croc).

If there was a hardware theme for CES 2011 it would have to be “Tablets.” At CES, hardware manufacturers announced a total of 82 separate tablets, the majority of which are running Google’s Android operating system. While Microsoft’s absence from this market is noticeable, the larger story is the emerging battle between Google and Apple for tablet preeminence.

To date, Apple has sold 8.5 million iPads in the US, making up 88% of the market. iPad sales in particular, and tablet sales overall, will increase dramatically over the next two years. Nearly 20 million of Apple’s touchscreen devices will be sold next year, an increase of 127%, and by 2012 sales are being estimated to surpass 30 million. Our prediction is that despite the breadth of Android availability and pricing advantages on devices running it, Apple will control this market in the coming years. Forrester Research concurs, estimating the by the end of 2012, Apple will retain 80% market share.

The reasoning behind Apple’s projected dominance can be partially attributed to its head start, attractive design and ease of use. More importantly, however, is the deep integration between the device and the iTunes content marketplace. Because of this, and the billing relationship with the consumer, Apple will be able to maintain and extend its dominance, despite its higher price tag and smaller feature set.

One fascinating observation from CES 2011 was the relative absence of content companies. Hundreds of televisions were on display ranging, from 3D panels to Google TVs from Sony and Samsung, and cell phones and tablets were everywhere. However, the content users view on these machines was grossly underrepresented.

One notable exception was NBC Universal who had a large presence. NBC’s strong showing draws into focus the current tensions in the technology, content and broadband service market. In the wake of Comcast’s acquisition of the company, the company is now wrestling with how to view its future, one which disrupts its existing business model and places it at the junction of content creation and digital distribution. Will it be able to continue participating in Hulu, which it co-owns with other content companies? How will it price advertising for digitally distributed content relative to that shown on cable? IPG and its clients should watch NBC closely in 2011 to see how it copes with a future that demands content be distributed on a broad array of media and devices.

It is worthwhile to give a short overview of televisions on offer at CES 2011. Manufacturers are approaching the tail end of the demand cycle for LED high definition sets and in search of the next big thing. 3D seems to be one of their biggest bets and nowhere was this more clear than at the Sony booth. While the sets were very visually appealing, consensus opinion amongst attendees was that the technology is still young, the need for glasses an impediment to adoption and the price remains too high. If these problems are resolved in the coming years, a consumer market may well develop. In order to create content at the other end of the spectrum, Sony has begun to hedge its bets by releasing two consumer 3D video cameras including one called the “Bloggie” which is priced at less than $300. 2011 will nonetheless remain a wait and see year for 3D TV.

Google TV is another fledgling TV product that was on display at CES, with sets from both Sony and Samsung. The release of the service has been hampered by cable provider adoption, many of whom are threatened by the potential for disintermediation that over-the-top service allow. That said, the Google TVs being shown drew mixed reviews. Sony’s in particular suffered from a highly complex remote control. Once this was mastered, the built-in Chrome browser, access to Netflix, Youtube and hand-picked hyper-syndicated content from Sony and Google made for a very robust early stage product. In 2011, attractively priced media buys should be possible as Google attempts to establish market credibility.

Continuous Partial Attention
This term, originally coined by Microsoft researcher Linda Stone in 1998, refers to the continued fragmentation of consumer attention. This societal Attention Deficit Disorder is being driven by changes in the device, media and distribution landscapes. The hardware at CES reflects these changes; news and email may be read during breakfast on an iPad, and music might be streamed to a Pandora enabled 4G car on the way to work. During the day, a consumer may toggle back and forth between work email and Facebook, and upon leaving work may check into Foursquare to tell friends about the restaurant they are heading to. In the evening they may then watch Netflix on their Xbox while surfing the web on their laptop to Tweet about the movie. The day might end with an hour of play on an exercise game through the Xbox using Microsoft Kinect. In order to compete for consumer attention in this complex media environment, brands must develop immersive, empathetic communications to fully engage their audience.

For more information or to arrange for a 2011 Trends Presentation, please contact:
Jaime Melton, IPG Lab Marketing Director
[email protected] | 323.930.3504