Sean Cho

shdcho@gmail.com

Key Trends 2014

This presentation demonstrates key trends 2014. Report contains understanding of consumer, marketing, technology trends, and Recommendations.

I. Marketing Trend

II. IT Trend

III. Recommendation

1. Top 10 hot consumer trends

City life will be transformed by 2016

Users prefer fingerprintsTo passwords

40% want to log theirphysical activities

Quality of experience when using internet is falling behind that of voice

The smartphone is the primary internet device

The rise of streaming services allows people to view content on the movie

60% believe sensors will be commonplace by 2016

48% use apps. to checktheir data consumption

38% watch video clipsrecommended by theirfriends several times a week

People minimize risk by being more cautious online

Source : Ericsson Consumer lab

2. 7 Marketing trends 2014Trends Description

The second Screen 88 % of consumers use their mobile phones while watching television*, and savvy marketers are already designing campaigns with this 2nd screen in mind.

All hail the imagesBetween Facebook’s redesigned News Feed ads and the emergence of Instagram and Pinterest ads, it’s clear that highly visual content is driving the future of digital advertising

Video is the new King The # of online video watchers is expected to double to 1.5B by 2016, yet just 24 % of national brands are using video to market to consumers.

The rise of the feedSocial media now accounts for the majority of time spent on the internet, with 60 percent of that time being spent on mobile devices. The primary format for engaging on these social networks? The news feed.

Small data is the new big data

Small data is timely, meaningful, & actionable without a lot of in-depth analysis. It’s comprised of all the bits of information that consumers send out both on/off line, such as search traffic, shopping habits, and social media interactions

Go Hyper-local or go home

Small businesses have relied on hyper local for years to pull in traffic andconsumer dollars. But with Facebook and Twitter both stepping intothe game, larger companies are starting to pay attention, too.

Mobile still matters The number of mobile broadband connections worldwide is expected to hit 2.1 billion in 2013, nearly three times the total of fixed-line Subscriptions

3. Digital marketing trends

1. Form of metadata tag for msg., social text etc, 2. interactive advertising bureau

US digital marketing spending is $50B, 28% of marketing spending.Digital marketing trends to watch in 2014….

Trends Trends

Content is a king - Regular, interesting and personalizedContent targeting!

Video consumption will still grow thus create many for your brands.Rise of video based landing pages!

Search marketing is still #1 tool to invest in (Google+ will help to get better ranking)

Real-time marketing in actionSocial marketers must act & react according to current situations

“Mobile optimized” is a must.“Designed for mobile” is trend

Hashtags will become a leading search tool.

Email is not dead!Email with social sharing will rock!Rise of responsive Email design

Increase in geo-targeting and location based services.Push : opt-in, Pull : users interact with mobile

Pictures, pictures, pictures – use everywhere! Choose different format depending on the platform.

Bot traffic

Bot traffic reaches 62% of all internet traffic & advertisers waste $9.5B (‘13)– 34% of online & 38% of mobile ad

inventories are fraudulent (IAB1)

4. 7 eCommerce trends 2014Trends Recommendations

1 True, real-time personalization for everyone Adapting marketing campaigns, site language

2 Mobile payment gets easier ($235 → $325 38%↑,‘14)

Mobile payment friendly, integrating with 3rd party apps like PayPal

3 Multi-device redefines point of sales → 32% of e-Commerce traffic by tablet in US

Apply for responsive design & optimize mobile site for browsing

4 Multi-channel selling (39% of AMZ sales, merchant)→ BBY & Tesco use eBay

Alternative places to additionally sell your products (eBay & Amazon)

5 Data + Analytics (Walmart, Target, Amazon)→ Core biz. practice & investment

Customer data analytics can improve up-sell, cross-sell & retain customers

6Shopping gets social (Tumblr, Facebook)→ Content marketing is to attract & retain customers

by creating & curating valuable content

Use analytics to understand the ROI on social activity & the channels with highest conversion

7 Delivery 2.0 (20M Prime users spent 53% more) → Next day delivery, Amazon Prime, eBay shutl

Evaluate the importance of deliveryConsider outsourcing fulfilment

5. US eCommerce market

US e-Commerce Market Growth US e-Commerce forecast by category

source: exclude travel & event tickets, eMarketer, April 2014US e-Commerce sales growth (‘12 ~ ’18, CAGR) : 13.9%

US retail e-Commerce sales, 2012 ~ 2018, $ billions

US eCommerce sales $265B in 2013, computer & CE is the largest category in sales ($57.4B), mobile commerce becomes 16% of retail eCommerce sales

6.US eCommerce key players (1/2)

Source : The internet Retailer 2013 top 500 guide

Growth rate in 2013 US e-commerce sales

How much the Top 500 grew in 2013 ?$216.2 B → $ 263 B

Amazon’s 2013 growth rate (27.1% → 30.4%)

13.4%

21.6%

30.4%

Top 10 online retailer ($ Billion)

Amazon($56.4 → $67.9)

Apple[3 → 2↑]

($14.7 → $18.3)

Staples [3 → 2↓]

($10.3 → $10.4)

Wal-Mart($7.7 → $10)

Sears[6 → 5↑]

($4.2 → S4.9)

Liberty Interactive[5 → 6↓]

($4.3 → $4.8)

Netflix[10 → 7↑]

($3.6 → $4.4)

Macy’s inc[14 → 8↑]

($3.2 → $4.2)

Office Depot [7 → 9↓]

($4.1)

Dell[8 → 10↓]

($3.9 → $3.5)

The top 10 merchants accounted for 50% of all top 500 sales.$133B out of $263B(30%↑: Walmart, Macy’s, 20%↑: Apple, Amazon

Retailers invest eCommerce & hire marketing/IT staffs.leaders move to mobile commerce & leveraging Omni-channel

6.US eCommerce key players (2/2)

Case Description Revenue

▪ Amazon leading US e-Commerce- Digital e-Commerce innovator (Digital = Cash Flow = Low price)- Data Driven Automation, Dominates Digital goods market

$67.9 B (‘13)1st online

▪ Commerce guided by human accommodation- 800 M iTune accounts (3X amazon, 7X eBay accounts)- Integrate 2 ecommerce sites (iTunes,apple.com) and apple store

$14.7 B (‘12)→ $18.3B (‘13)2nd online

▪ Digital innovation & Transformation : Walmart.com (1,600)- Build own shopping search engine “Polaris”- Build warehouse for web order, acquires 12 digital tech ventures

$7.7B (‘12)→ $10B (’13)4th online

▪ 50% of total revenue generated by online- e-Commerce expert (Faisal Masud EVP), focus on ecommerce $10.4B (‘13)

▪ Macy’s (8th online) hires IT staff and invest for ecommerce- average 30% online growth past 3 years (14th → 8th)- Omni-channel success (aligning inventory offline with online)

$3.2B (’12)→ $4.2B (‘13)

▪ Expand sales product from PC/CE to athletic product- Own fulfillment (2013), Partnership with Puma for china- Open B2B marketplace (2014)

$2.7B (‘13)

7. Amazon vs. BBY historyAmazon Sales surge while Best buy stalls & declines

Annual* revenue, billions of dollars.

*BBY’s 2013 revenue really represents the 12 months ending March, 2014, 1) Business Insider, Aug. ’13, 2) KIVA : Warehouse Robotics Company, 3) CE products, toys, games, SW etc.

BBY reaches 250 stores

BestBuy.comlaunches

BestBuy acquiresGeek Squad.

BestBuy opensfirst china store

Circuit City closes

Kindle Launches

Amazon Web service launches

1-click shopping

Amazon Prime Launches

Kindle fire launches

4G LTE starts in USUS Smartphone market

saturates in 20151)

∙ Innovator 1st 2.5% (‘07), ∙ Early adopter 13.5% (‘10),∙ Early majority 34% (‘12),∙ Late majority 34% (‘15)

Instant video Launches

Price Check apps. Launches

Buy KIVA Systems2)

Fire phone Launches

iPhone launch

Sell books Sell music & movie

Sell other goods3)

Sell HA & digital goods

Sell office products & starts free shipping

MP3 Launches

App store Launches

8.Amazon “show rooming” riskMale show roomers retail index : Computer & CE relevant retailersFemale show roomer retail index : Home goods & clothing

Amazon Show rooming – Retailer Risk Indexshowroom visitor index, index of 100 = average representation

1. IT trend outlook 2014

Source Trend 1 Trend 2 Trend 3 Trend 4 Trend 5 Trend 6

Gartner Mobile Devices battle

Mobile Apps. & application

The Internet of Things (IOT)

Hybrid Cloud & Personal cloud

S/W defined Anything

Smart Machines

IDC Mobile platform/OS battle

Smartphone/Tablet vs. others

Socialnetworking/Biz.

IOT (Internet of Things) Big Data Cloud Service

Deloitte CognitiveAnalytics

Digital Engagement

Socialactivation/Crowd source

Cloudorchestration

In-memoryrevolution

Real-time DevOps.

Accenture Digital-physicalblur

Data supply chain

ArchitectureResilience

Business of Application (S/W)

Harnessing Hyper scale Crowd source

IBM Big Data Mobility Cloud Computing Social Networks Security

PWC Business Analytics

Socially enabled biz. processes

Mobile customer engagement Cybersecurity On-demand biz. &

technology serviceSensors/3D print/wearable

Insights1. Mobile computing & Service, 2. Cloud computing & on-demand service, 3. Social Network for biz. Adoption, 4. Data analytics & Big data,5. IOT (Internet of Things), 6. Security

Moving back office to the front office lines. CIOs are focusing ontechnologies that support closer customer engagement.

2. IT shifts from back office to front office

CIOs focus on customer side topics

New turf: CIOs spend more time on customer-related activities

Frontal assault: CIOs adopt technologies for connecting with customers

CIOs, three specific issues (top of mind), are....

Insight story: CIOs are shifting their focus to tools that turn data into intelligence

• Engage with digitally enfranchised customers• Excel at the basics• Boost internal and external collaboration

Source : IBM CIO survey

Walmart invested heavily in back end systems, now focus on front end digital marketing to understand consumers

3. Case study : Walmart (1/3)

Back End (~ 2010) Front End (2010 ~ )

Invested in Data driven IT & communication- Track sales and merchandise inventories in stores- Owned the largest & most sophisticated computer systems in the private sector (incl. MPP1)

- All information related to sales &inventories was passed on through an satellite comm. System

Key Back End SystemsRetail Link System ($4 B)- Monitor the sales of goods at stores & replenish

inventories of 10,000 suppliers- Details of daily transactions (10 m↑/day) were

processed via this systemCPFR2, TPS3 (Transaction Process System)DSS4, Satellite System, EDI5, UPC6 code, RFID7

Hub(distribution center) & Spoke(store) system

Moves from Big Box retailer to e-Commerce Innovator (CEO drive)▪ Handles consumer data

- 1 million customer transaction data/hr.- 245M customers walk in store/week▪Walmart.com grows CAGR 30% since 2011

- 4th US online commerce in 2013- Expecting $13B of e-Commerce in 2014 ▪Walmart uses big data analytics

- Walmart labs use social media analytic platform→ taxonomy : products, people, locations, events,

and interests- Halloween and black-Fridays

▪ Acquires 12 digital/analytic firms since 2011- mobile, social, big data, e-commerce etc

1.Massive Parallel Processor, 2. Collaborative planning, forecasting & replenishment, 3. Transaction process systems, 4. Decision support system, 5. Electronic Data Exchange, 6. Universal Product Code, 7. Radio Frequency Identification

Apple has achieved biz. Success through the use of IT & invested not only core tech., but also front end system for consumer service

3. Case study : Apple (2/3)

Product Core technology Customer-centric Front End service

Invested in key technology for product differentiation1 (39 out of 61 in M & A)- Platform : iOS, iTunes, iCloud, iWork, iAd, iBook- Application : music, picture, video, voice, map,

data, internet, search engine etc.- H/W : Chipset, micro LED display, Flash memory,

firewiire chipset

IT aligned business strategy▪ iPod : iTunes music service platform ▪ iPad : App Store launched to support device ▪ All devices : iOS is standard OS platform ▪ iCloud : support All apple product support and web service (incl. email/file share/storage)

Build up consumer service infrastructure ▪ Evolution of consumer service in apple

- iTools (2000) : Internet S/W service for apple- .MAC (2002) : email, disk storage service- MobileMe (2008) : expand service to mobile- iCloud (2011) : $1B to build consumer service

cloud data center▪ Expand data center for future service (4 → 72)

- Plan 3 more DCs in NC, Reno, China- Plan to buy internet infrastructure to boost

performance and future TV content service ▪ Acquires 31 digital/Web tech. firms since 1988- 513% of total M&A in apple since 1988- 714% of total M&A in apple since 2010

1.Core technology H/W + Core technology S/W, 2. 7 Data Centers : Cupertiino, Newark, Santa Clara (CA), Maiden (NC), Reno (NV), Prineville (OR) , Beijing (China) 3. 31 out of 61, 4. 22 out of 31

Amazon leverages IT & digital technology to make BMI1 of online store → eMarketplace → Web service (AWS2, MT3) → Digital content service → OEM manufacturer → Logistics & distribution (1 hr. Drone delivery)

3. Case study : Amazon (3/3)

1. Business Model Innovation, 2 Amazon Web Service, 3. Mechanical Turk : Human Intelligent Service4. Chief Logistics Officer

1 Great execution & business innovation by digital technologyData driven automation & digital technology provides a significant advantage to outperform one’s competitors▪ Digital enables limitless inventory : starts 1 category (books) to 16 main categories ▪ Digital boosts customer care

- Invest data & human driven customer service- Acquires Zappos (#1 customer care know-how, new audience – young women)▪ Customer centric e-Commerce innovation (Invest IT to create seamless & integrated shopping experience)

- 1-click ordering, multi-device support, price check, next day delivery for prime

2 Invest 6% of revenue focus on Distribution & LogisticsAmazon’s secret recipe : Leverage its digital advantage to optimize supply chain & logistics▪ Buy KIVA systems : Warehouse robotics & automation technology ▪ Digital driven supply chain : hires C-level from Walmart (CIO, CLO4)

- Computerized supply chain, supply & distribution network (50 fulfillment centers over 8 countries)▪ Developing Drones delivery : US delivery within 60 minutes

4. Big Data trend 2014

Source : http://practicalanalytics.wordpress.com/2011/12/12/big-data-analytics-use-cases/

1. Big Data Grows Bigger: The growth of social media, mobile devices, & machine sensors is generating a wealth of bits that either didn't exist or weren't accessible a few years ago.

2. Support for New Analytic Apps: Demand for new analytic apps (incl. automated reports, dashboards, predictive analytics, & decision support) putting on Data Scientists & Developers.

3. Hadoop Matures: With the open source projects like YARN, Hadoop functionality improves &enables new capabilities, such as real-time analysis. Now consider it for mission critical apps.

4. Security/Privacy: CEOs want security. Users want privacy. CIOs make a greater effort to build security, privacy, and governance policies into their big data systems and processes.

5. Designing for Cognitive Computing: Data Scientists begin to design for cognitive capabilities such as sense-finding, natural language, decision-automation & semantic search functions.

6. Big Data in Marketing: Marketing is a sweet spot for adoption, but CMOs and their staffs are not able to handle all the big data and analytics requirements

7. Chief Data Officer: Expect more companies focus on developing a corporate data strategy &a data-driven culture with an emphasis on data security & LOB self service capabilities.

8. Data Scientists: Big data demands a new breed of data scientists who can make sense of the data coming in from mobile, social, and sensing that require design & architecture of applications

9. Data Quality: Data quality is at the heart of all data initiatives. The old saying garbage in = garbage out still holds true today.

2014 trends summary

Key Trends Recommendations

Front end investment tops for Mobile, social, big data, cloud etc

3

Marketing/Digital Marketing Trend → Digital engagement & adoption

1

▪ Mobile/Social dominance, cloud based service▪ Big Data : Data ↑ (social/media, mobile, IOT) ▪ Security : cyber security, security of IOT etc

▪ Personalization : content targeting, User experience, responsive design etc▪ Marketing : email → multi media

1

Sell the holl, not the drillFocus on front end system for business▪ Apple invests on cloud center ($B’s)▪ Amazon invests on warehouse &

logistics (6% of total revenue)

2

Digital marketing adoption is popular Digital Marketing practices are soaring▪ outsourcing → in-house among leaders

Ensure core competency & performance▪ Increase bot traffic by faulty marketing

3

Set up digital transformation strategyWalmart : Bigbox retailer → ecommerce innovatorApple : Manufacturer→ retailer & content service Amazon : e-commerce (direct sales → marketplace),

IT infra. Service (AWS), OME manufacturer with service (Kindle, TV, Phone)

e-Commerce Trend → consumer interface & insights

2

▪ Personalization, multi device, Social ▪ Omni channel selling, Data analytics

Digital marketing trendRise of responsive email design Rise of Video based landing design

SOCIAL MEDIA IS BECOMING MORE

VISUAL

Digital marketing analysis

Bot traffic

Bot traffic 2013 Using Data to prevent traffic fraud

Collecting Metadata

Spotting Patterns

Sorting Traffic

Optimizing Spend

There are hundreds of pieces of metadata tied to every click & conversion that provide valuable information about the identity of the person behind the click

Using advanced pattern recognition technology, we can analyze click lead & downstream sales data to identify trends that indicate bot traffic

Traffic sources for each campaign are categorized as low intent or high intent based on the presence of bots & the likelihood of conversion

Campaigns can then be optimized for hight intent traffic only. Allowing advertisers to reach real consumers with high lifetime value

Theft of content/email

Data(Credit cart) theft, Malware infection, site hijack

Marketing intelligence gathering, Performance down

Posting of irrelevant content, Search Engine blacklisting

Global advertisers are expected to waste $9.5B on bot traffic in 2013- Some publishers create or buy fraudulent bot traffic to increase ads revenue

Source : Incapsula

Digital = Cash Flow = Low price

Leveraging its high positive cash flow, Amazon is able to maximize margins and beat all other retailers when it comes to pricing.

Average a product stays; 70 days on Best Buy’s shelf33 days on Amazon’s one

Amazon use digital technology to leverage its high positive cash flow- Average a product stays : 70 days BBY’s shelf vs. 33 days on Amazon

Amazon : Digital goods dominating underway?In each Digital market, Amazon fights for its monopoly

Walmart : Digital goods dominating underway?Walmart has been building an internet technology company with world-best-class ecommerce capabilities inside the world largest retailer

2011 2012 2013 2014

Kosmix : Walmart LabsWeb search & data analyticsOneRiotSocial/mobile media campaignGrabble

Mobile receipts technologySet Direction

Mobile commerce app dev.

Tasty LabsSocial S/W incubatorOneOpsCloud computing PaaSInkiru

Predictive Data AnalyticsTorbit

Web acceleration technology

Small SocietyiOS mobile app developmentSocial CalendarFacebook social reminders app.

YumprintRecipe & meal planningAdchemyecommerce product search

Walmart digital technology acquisition history(12 acquisitions since 2011)

Apple M & A history

1988 1989 1997 1999 2000 2001 2002 2005 2006 2008 2009 2010 2011 2012 2013 2014

Network InnovationOrion Network Sys.

StylewareNashoba systems

Coral S/W

NeXTPower Computing

Corp.

Xemplar educationRaycer Graphics

√NetSelectorAstarte-DVD

authoring SW√SoundJam (MP)

Bluefish Labs√Bluebuzz (ISP)

Spruce technologies√PowerSchool

√Nothing RealZayante (Firewire)

√Silicon Grail Corp.√Propel Software√Prismo Graphics

√Emagic (music production S/W)

SchemasoftFingerWorks

Silicon ColorProximity

P.A Semi

√Placebase√Lala.com

√Quattro Wireless (iAd)Intrinsity (SoC)

√Siri (Voice control S/W)√Poly9 (Web based map)

Polar RoseIMSense

√C3 TechnologyAnobit

(Flash Memory)

√Chomp (Search)√RedmaticaAuthen Tec

√Particle (web)

√Novauris Technologies√WiFiSlam (location)√Locationary (Maps)√HopStop.com (Maps)Passit SemiconductorPrimeSense (Chipset)

√Matcha (Media discovery)√Embark (Maps)

Algo Trim (Data Comp.)√Cue, √Topsy(Analytics)√BroadMap, √Catch.com

SnappyLabs√Burstly (app test)

LuxVue technology (LED)√Spotsetter (Social Search)

√Swell, √BookLamp √Beats Electronics

core technology H/W (11), core technology S/W (28), Front end application/platform/service (22), √ Digital/Web tech (31)

Acquires 61 technology firms since 1988, 39(64%) are core technology for business and 22 (36%) of M&A are front end service for consumer

Gartner IT prediction 2014

IDC predictions 2014

The IT Industry's 3rd Platform for Innovation & Growth

Trends

Mobile platform/OS battle

Smartphone/tablet vs. others

Social networking/Social business

IOT (Internet of Things)

Big Data

Cloud service

Data Center Transformation

Innovative Industry solutions

Deloitte Tech. Trend 2014

Enablers DisruptorsCIO as venture capitalist- CIOs should manage IT portfolio in

a way that drives enterprise value and evaluate portfolio performance

Social activation- The focus of social business has

shifted from measurement to monitoring sentiment & perceptions

Cognitive analytics-Cognitive analytics bridge the gap between the intent of big dataand the decision making.

Cloud orchestration- Tactical adoption of cloud is giving way to the need for a coordinated,orchestrated strategy

Industrialized crowdsourcing- Enterprise adoption of the crowd allows special skills to be sourced from anyone, anywhere & anytime.,

In-memory revolution- Move from analytical to transactional

systems, the potential to fundamentally reshape biz. processes grows

Digital engagement- Enterprise core products become augmented or replaced with digital intellectual property

Real-time DevOps- By standardizing & automating envr., build, release & configuration – tools like deployment mgrs, auto build etc

Wearables- Wearable computing has many forms such as glasses, watches, smart badges, and bracelets

Accenture technology visionDescription

Digital-Physical Blur- Wearable devices, smart objects and machines are providing us with real-time intelligence that is changing how we live and how biz. operate

From workforce to crowdsource- Using advanced digital tools and platforms, organizations can now tap

into pools of people across the world (immense, agile, even for free)

Data Supply Chain- Data needs to be something that is transported through a supply chain, is shared, used and repurposed – just like other products.

Harnessing Hyperscale- Hardware world is now a hotbed of innovation with demand soaring for

performance in storage, processors and specialized servers.

Business of Applications- Software as a core competency in the digital world

Architecting Resilience- “Built to survive failure” - the mantra of the nonstop business

PWC top 10 tech. trends for businessTrends Description Trends Description

Business Analytics Sensors

Socially enabled business processes

Robotics

Mobile customer engagement

Battery and powertechnologies

Cybersecurity 3D printing

On-demand business and technology services

Wearablecomputing

Rise of social commerce

Source : mobstac, Feb 2014

Social Media Fact in 2013 Tips to get started for Social Media

75% of social generated e-Commerce sales from Facebook, Twitter, Pinterest

39% of Facebook users like brand pages to research products

74% of consumers rely on social media to guide their purchases

40% of social media users have purchased an item after sharing it on Facebook, Twitter or Pinterest

▪ Build brand awareness

▪ Reply to customer queries

▪ Promote seasonal sales

▪ Drive fan engagement

▪ Create sharable hashtag

▪ Provide exclusive merchandise

▪ Organize previews

75% of social generated eCommerce sales came from top 3 players. Social traffic of eCommerce led to increase a revenue (17.8% 1st half, 2013)

Consumer Journey

Shopper Marketing

ENGAGEMENT/PLAN SHOP

PURCHASES

AWARENESS

INFLUENCES USAGE

Consumer Marketing

Shopping plan

Channel / Retailer choice

Category conversion

SKU selection

Product experienceBrand image

Media & other

influence

Pre-shop information

Get help

Trust

Use

EvangelizeFriend

Share

Personalize

Discover

Search Research Compare

Decide

Web

Company websiteMobile

Branch/store

Call centerSocial

Purchase

1. Moment of Truth

Marketing opportunities exist in shopper’s journey through various touch points when analyzing the different phases in the MOT1

IOT ecosystem and landscape