2005

1
The Virtual Neighborhood Principle
Reaching the Portable Consumer in the 21st
Century
2005
2
Why Have We Built Virtual Neighborhoods?

• What happens when lifestyle demands and
  technology collide?
• Where are the connections that enable
  self-actualization?
• When did a typical day become so different from
  what it was even 5 years ago?
• How are we replicating or replacing the
  interactions that have been taken from us?
• What, exactly, have we lost and where are we
  going in order to find it?

Survival of the best adapters
These are the driving forces of social change.
Has your marketing changed with them?
3
Where Does Our Time Go?
And how has lack of control over it changed us?
What exactly IS time poverty?
What dont we have time for and how are we
making up for missing it?
4
Changing Workforce, Changing World
In the Total U.S.--

• In 2005
• 61 of women work, including two-thirds of women
  with children under 6.
• Between 63 and 74 of Women 18-54 and 55 to 65
  of Hispanic women 18-54 in any of the top 60
  markets work part or full time. 2/3 of all adults
  work.
• Single person HH outnumber nuclear HH for the
  first time in U.S history average household is
  under 2.6
• 74 of families are NOT nuclear
• Shift to dual-earner families, higher income
  households, and one vehicle per worker -- 87
  drive to work, 90 alone
• Less than 1 in 10 HH has no vehicle
• Hispanics are the largest minority segment at 14
  of U.S. population
• We have small, segmented mediaand few
  geographical neighborhoods.

• In 1960
• 38 of all women work, but few women with young
  children go to work
• 61 of families are nuclear
• The average household was 3.29
• Majority of families have only one worker
• Majority of families have only one vehicle only
  64 drive to work
• Nearly 1 in 4 HH had no car
• Hispanics were not tabulated in the census count
  (less than 5)
• America was neighborhood centric
• We had Mass Media and small, segmented
  neighborhoods

Source U.S. Census from June 2003, Report by
Nancy McGuckin, Travel Behavior Analyst Nanda
Srinivasan, Cambridge Systematics Inc. Horowitz
Associates, Inc Hal Kapp in American Way
1-15-2004 Scarborough data on 60 markets from
2003 Summary USBLS 2004 U.S.Census Am HH Comp
by Census 8/2005
5
What happened to socializing?
Source The New Yorker Magazine, July 2005.
6
How many times did you have a conversation with a
friend this week?

• How many of them live within
• 5 miles of you?
• How many did you see in person?

How many of you can name five of your
neighbors? How many of you have had dinner with 3
or more of them?
7
What is taking us away from our local
neighborhoods And what have we done to
adapt?
8
Drivers of Change
What creates lack of control

• Increasing traffic congestion
• Increasing percentage of population going to work
• Urban spread the end of the city, the
  realization of the urban area that encompasses
  multiple cities, even counties
• What creates ability to cope with uncontrollable
  change
• Shifting retail scene
• Radical changes in communications technology
• Evolution of entertainment and information
  delivery systems

9
The number of commuters has increasedthe number
of roads really has not.

• Between 1955 and 1980 we built most of our major
  roadways (in California, we stopped in 1970)
• No new roads. More new cars. From around 55
  million vehicles in 1960 to around 240 million
  today. (13.5 in L.A. alone)
• We drive 3,175 more miles per year, up 49 from
  1977. People and businesses retreated to
  outlying areas that were as far as 75 miles or
  more away from city center.
• The average minutes per day spent traveling went
  from 45.7 in 1983 to 66.2 in 1995 to 78.5 in
  2001.
• The average annual delay per peak road traveler
  climbed from 24 hours in 1982 to 62 hours in 2003
  in the top 11 markets. Its 93 in Los Angeles.

Sources U.S. Census and the National Household
Travel Survey, June 2003. NHTS, Polzin Chu
2004 Alan Piarski, reported in USA Today May
19, 2004. MIT report, DMV, Polk data. Energy
Information Administration Monthly Energy Review,
Oct 2002 U.S. Census. Texas Traffic Institute
2005 report.
10
You Get the Picture

• There are now three sure things
• Death
• Taxes
• Traffic

And youd better believe thataffects where and
how we spend our time.
To start with, we spend less and lessof our time
around our home neighborhoods and more time in
vehicles about 14 of our waking hours
Source Arbitron Edison NAB In Car Study October
2003.
11
To cope, we change lifestyle patterns we leave
home earlier than ever before.
Expect a shift in departure times as workplaces
become more flexible and people try to minimize
their travel time. NHTS 2005
What time do you usually leave home to go to
your primary job?
Nearly 65 of workers leave home before 8AM
Base Work Outside the Home
Source Arbitron Edison NAB In Car Study October
2003.
12
Certainly these are elements of Lack of Control
So what does that affect?
It creates a dramatic shift in where we are and
we need to and are able to do.
13
Cars arent just for commuting anymore.We stay
away from home longer each day making more, often
unplanned, shopping and social trips.
73 of Workerss trips are for Non-Work reasons
The average person makes 6.0 vehicle trips per
day, but only 1.1 of those happens in the morning.
Source Arbitron/SCBA Los Angeles DMA Lifestyle
Study Released February 2002 and NHTS Data
Series, June 2003 and Aug 2005 and Cal Trans 2005
14
The Shopping Factor --Peak Travel Period has
Shifted and Increased
Americans are spending more time in travel.
Source NHTS 2004 data is for 2001
15
So, shopping has changed.
16
New study topples long-held retailer assumptions

• 62 of shopping trips are quick trips
• 25 are fill-in trips
• Only 13 of trips are classic stock-up
• The average American spends 20 minutes each
  weekday shopping.
• Women spend on average 30 minutes each weekday
  shopping.
• 70 of all category-level purchase decisions are
  made before entering the store.

Source Trip management The next Big Thing by
Unilever reported in Progressive Grocer
4/15/2005 Source ATUS 2003 Study by Bureau of
Labor Statistics released February 2005
17
The consequences become clearer

• of more women working, travel and traffic
  growing.
• Whats for dinner? is one of the most
  stress-inducing phrases there is. And it comes
  up everyday. Usually on the way home, when we
  dont have a clue as to the answer or how to come
  by it.
• The Culinary Institute reported that by 1998, at
  4PM on any day 78 of people didnt know what
  they were going to have for dinner.
• Dominos Pizza says that when 74 of working women
  leave work, they dont know whats for dinner
  that night.
• We spend nearly every day deciding what to do
  with the rest of the day.
• Were making more through the windshield
  purchasing decisions.
• According to the ANA, 64 of the vacations booked
  last year were booked within two weeks of when
  they were taken.
• In fact, we are teaching consumers to move into
  the purchase patterns that are consistent with
  Plan B, or Last Minute Living.

18
More purchasing decisions are being made last
minuteoften under stress
In general, when do you usually make the
decision to stop at a store on your way home from
work?
Notice that they all add up to about 90 or more.
Base Work Full/Part Time
Source Arbitron Edison NAB In Car Study October
2003.
19
Shifting Retail Scene

• Retailers rethink their roles, their purposes,
  their place and places of business
• Big Box stores or Super Shopping Stores
• Cross over goods in drug stores, grocery stores
• Take Out Delis in grocery stores
• Curb delivery of food to go
• Movement of stores/brands to internet as well as
  brick and mortar sites
• Developing brands as destinations and experiences
  (or, virtual neighborhoods)
• We shop differently. We live differently. We
  have to.

20
Because We Can Changing Communications
Technology
Household Penetration
CriticalMass
Source U.S. Dept of Commerce Jupiter Research
Nielsen Net Ratings, 2004 and Borrell
Associates, April 2005.
21
What Happened to Neighborhoods

• We dont have much of an opportunity to
  participate in them.
• So we had to find a way to replace them. Why?
• Maslows hierarchy of human needs demonstrates
  our need to belong to and be accepted by groups
  that share the same values we have.
• If we dont live around themwe create ways to
  find or replace them.

Or, as Springsteen once said, Everybody has a
hungry heart.
22
So where do we go lookin for love?
23
Media
24
We look for connection.

• People relate to media in much the same way they
  relate to other people. To feel involved, they
  must benefit from the relationship. Its about
  connecting, and its more difficult than ever,
  because people are rejecting media that fail to
  meet their specific interests and lifestyles.
• Mike Drexler
• CEO
• Optimedia USA
• Adweek, February 9, 2004

We turn to media to provide the human connection
we lackwhen we lose the ability to participate
in physical neighborhoods.
25
Heres where V/S says well spend our media time.
Hours Using Media Per Person Number of Hours Per
Week
Radio
Cable/Satellite TV
Television
Internet
Newspaper
Video Games
Source Veronis Suhler, August 2005,
Communications Industry Forecast Hours are
projected.
26
And heres why it will be that way

• By 2009, media usage will continue to be
  influenced by longer commutes and more time spent
  with niche sectors of media (niche formats, niche
  magazines, internet sites, cable programming,
  etc).

• People will continue to create virtual
  neighborhoods to replace the geographical ones
  they cant participate in anymore.

Source Veronis Suhler Stevenson 2005
Communications Industry Forecast, released August
5, 2005.
27
What is a Neighborhood?

• Common values and interests (what entertains,
  amuses, inspires, horrifies)
• Common attitudes
• Comfort level of participation or inclusion (user
  friendliness)
• Ease of ability to interplay, accessibility
• A place to share buzz
• Ability to create an emotional connection
• Important elements
• Points of Connectivity and Ease of Access
• Relevance of Content
• Emotional Connection

You dont have to live there physically. You
just have to live there emotionally.
28
Let us define buzz ... It is foremost a
transfer of information from someone who is in
the know to one who isnt, or if you prefer, from
the hip to the less hip. The most important
factor is whether talk crosses community lines.
Communities can be any group whose members share
some commonality, from a physical community, a
town, say, to a college fraternity, to the
patrons of a particular saloon. David
Godes Professor Harvard Business School Dina
Mayzlin Yales School of Management August 2003
Here are your new neighborhoods
29
Where are we spending our media time?
30
How important is contact with other human beings?

Look at how much of our day we spend with media
that provide the opportunity for that contact.
In the last 24 hours, approximately how much
time did you spend? (Mean)
Base All Respondents
Source Arbitron Edison NAB In Car Study October
2003.
31
What are some virtual neighborhoods?

• Every Radio station
• Appointment TV programs that offer interaction
  (American Idol)
• TV Talk Show Hosts (especially Oprah and
  Cristina)
• Local TV news programs
• Themed Cable TV Networks (History Channel, HGTV)
• Internet chat rooms, interactive sites
• All connect emotionally to consumers and
  provide the opportunity for organic integration.
  

32
But is it really a neighborhood?

• The Neighborhood Test

• Points of Connectivity and Ease of Access
• Can I find it, how do I get in?
• Relevance of Content to ME
• Emotional Connection do I care? Do I feel
  accepted? Involved? Engaged?

33
Points of Connectivity

• Access

34
Is it available? Is it possible to access?Do
you want to be there?
35
Where Can You Find Us?

• As study after study has shown, broadcast TV
  viewership is falling, cable viewership is highly
  fragmented, people are spending less time reading
  newspapers and magazines, but listening to more
  radio and turning in ever-increasing numbers to
  the Internet.
• e-Marketing.com newsletter
• July 1, 2004

"The media habits of the two-income family
continue to evolve with the Internet, radio and
outdoor being the only media that indexed more
than 100 in the 80 markets we survey. Bob
Jordan President of The Media Audit March 2005
36
New Technologies Impact

• The new technologies are already changing
  consumer behavior. And the better the technology,
  the faster the change.
• The Forrester survey, of nearly 69,000 people in
  the US and Canada concluded that in the
  competition for consumers' time, the biggest
  loser is television. While newspapers and
  magazines will also suffer somewhat from Internet
  competition, radio and video games will not.
• Forrester Research The State of Consumers
  and Technology
• Benchmark 2005 July 29, 2005

Source eMarketer.com, August 24, 2005 quoting
from The State of Consumers and Technology
Benchmark 2005 Forrester Research July 29, 2005
37
Which medium do you spend the most time with?
Radio vs. Television - Weekday
The Impact of Accessibility
When we lack control, we go with the POSSIBLE.
Los Angeles Market
Source Arbitron/SCBA Los Angeles DMA Lifestyle
Study Released February 2002
38
Radio vs. Television - Weekend
On weekends, we regain some control and change
our media usage patterns. Media usage is a
product of what we are able to do more than what
we want or intend to do.
Los Angeles Market
A18 make only 3.2 trips over the weekend (1.6
per day)
Source Arbitron/SCBA Los Angeles DMA Lifestyle
Study Released February 2002, Adults 18.
39
New Technology Enables Participation
Cell phones provide ease of access to virtual
neighborhoods
Base Use Cell/Car Phone
Source Arbitron Edison NAB In Car Study October
2003.
40
Connectivity

• The greater the number of points of connectivity,
  the stronger the bond to the virtual
  neighborhood.
• American Idol or Rock Star INXS brings the
  people into the conversation, makes them
  participants in the neighborhood.

41
Relevance

• Common Values,
• Common Interests,
• Sharing the Buzz

42
Does it have communal values and experiences?

• "The one thing all cult brands have in common
  is that they understand they're not just selling
  a product or service, they're selling other
  customers to each other. When you buy a Harley,
  you're buying a ticket to a new communal
  experience.
• Its about appealing to people's emotional
  needs.

Theyre creating virtual neighborhoods.
Bolivar J. Bueno, with Matt Ragas "The Power of
Cult Branding How 9 Magnetic Brands Turned
Customers Into Loyal Followers (and Yours Can,
Too)."
Other cult brands include Oprah, Apple, VW, Jimmy
Buffet and Star Trek
43
What Happens When You Create a Communal
Experience?

• When compared to television ads, radio ads are
  seen as being more personally connected to the
  consumer.
• Radio listening is a one on one and emotion
  driven experience, and listeners believe that
  both the medium and its advertising are more
  relevant to them (compared to television and
  newspapers).
• We also seeradios ability to connect with
  people emotionally. When people cite radio ads
  greater association with honesty, trust, and
  reliability, we believe consumers have a more
  internal, more values-based relationship with the
  ads they hear on radio.

Similar traits would probably hold true for any
virtual neighborhood.
Source 2004 Wirthlin Worldwide Study Findings
Study conducted for Radio Advertising Effective
Lab (RAEL) a two-phase survey among adults 18-54
August 18, 2004
44
Emotional Connection
45
Halo Effect of Emotional Connection

• What happens when a virtual neighborhood calls on
  participants to
• Support a charity
• Turn out for an event
• Buy a product
• Use a service
• Get information about something

46
What happens when you put 70 DJs at Disneyland
attractions for one day?
Do neighbors interact?

• Record shattering attendance.

March 20, 2005 at Disneyland Park
December 13, 2003 at Disneyland Park
We didnt offer anything but the chance to come
by and say hi.
47
How do we react to neighborhood buzz?
While listening to the radio while in a car,
have you ever heard of a sale or special that
motivated you to visit a certain store?
Saying Yes
Base All Respondents
Source Arbitron Edison NAB In Car Study October
2003.
48
Does it pass the Backyard Fence Test?
49
This is word of mouth at work
Have you ever purchased a product or service
based on an endorsement by a favorite radio
personality?
Source Arbitron/SCBA Los Angeles DMA Lifestyle
Study Released February 2002, Adults 18.
50
Have you ever ____ because of an ad you heard
when Listening to the Radio
People respond to what they hear on the radio.
Source Arbitron Edison NAB In Car Study October
2003.
51
This is Neighborhood Word of Mouth at Work.
Source Arbitron Edison NAB In Car Study October
2003.
52
The Epitome of Emotional Connection
As Dr. Ed said.this is how people talk about
other people, not about things.
Dr. Ed Cohen VP Research Arbitron Inc.
I love my station -- Participant
Source Arbitron/SCBA Los Angeles DMA Lifestyle
Study Released February 2002, Adults 18.
53
Synergy of Linking Neighborhoods

• The Houston PPM test shows a link between viewers
  of reality TV shows to the morning radio shows
  they listen to the day after.
• Radio morning show personalities frequently talk
  about programs that aired on TV the night before.
  Reality TV shows, which feature unscripted
  outcomes or audience participation, are
  especially chat worthy for radio show hosts the
  morning after.
• For example, nearly one out of three listeners to
  the morning show of Contemporary Christian
  KSBJ-FM (which frequently discussed the program)
  watched the finale of Big Brother 6 on CBS the
  night before.

Source Arbitron Houston PPM Study September 29,
2005
54
Use Virtual Neighborhoods to Expand Yours
Organic Integration into our Virtual neighborhoods

• The most successful advertiser models are good
  members of the community.
• They provide solutions (like Saturn of Miami
  Dade, Expedia, Office Depot, State Farm
  Insurance, McDonalds, Tri-State Mercedes (We
  understand. We live here too.), Jiffy Lube, GM
  Onstar, Union Bank)
• They share information and enthusiasm (like Nick
  Alexander, AIS Auto Insurance, Universal Nissan,
  Lowes, Home Depot, Trader Joes, Pavillions,
  Albertsons or Kaiser Permanente)
• They do their part to entertain (like Mercedes
  Benz of Beverly Hills, Robbins Bros, IKEA or Bud
  Light)

55
The past 5 years have brought exponential changes
to how we live our lives.

• Were spending more of our time each day in
  Virtual Neighborhoods looking for connection
• Were spending more of each day looking for the
  information and solutions that will help us deal
  with Time Poverty
• Consider building or distributing in virtual
  neighborhoods and analyze them and treat them
  the same way you would geographical
  neighborhoods.

Be there for us. Move in!
56
Resources and References

• Trip management The next Big Thing by Unilever
  reported in Progressive Grocer 4/15/2005
• ATUS 2003 Study by Bureau of Labor Statistics
  released February 2005
• On Demand Study by Borrell Associates, April 2005
• Arbitron/Edison Media Research, Internet and
  Multimedia 2005 The On-Demand Media Consumer.
  Base Total Population 12
• U.S. Census and the National Household Travel
  Survey, June 2003 at www.bts.com (Bureau of
  Transportation Statistics) and update June 2005
• www.Arbitron.com www.arbitron.com/radio_stations/h
  ome.htm
• www.edisonresearch.com
• PreTesting Lab Study released 12/8/2004 by the
  Radio AdvertisingEffectiveness Lab
  www.radioadlab.com
• 2004 Wirthlin Worldwide Study Findings Study
  conducted for Radio Advertising Effective Lab
  (RAEL) www.radioadlab.com
• Bolivar J. Bueno, with Matt Ragas "The Power of
  Cult Branding How 9 Magnetic Brands Turned
  Customers Into Loyal Followers (and Yours Can,
  Too).
• Veronis Suhler Stevenson 2005 Communications
  Industry Forecast, released August 5, 2005
• U.S. Census. Texas Traffic Institute 2005 report
  www.ti.tamu.edu/
• U.S. Department of Labor Bureau of Labor
  Statistics www.bls.gov
• www.scba.com
• www.rab.com
• The Media Audit www.themediaaudit.com

57
Ad Campaigns in Synergy Study

• A fast food chain (TV 15, Radio 30)
• An over-the-counter allergy medicine (TV 30,
  Radio30)
• A car brand (TV 30, Radio 60)
• A cell phone service (TV 30, Radio 60)
• A credit card brand (TV 30, Radio 30)
• For complete copy of the study, go to
  www.radioadlab.com