How to capitalize on

Lifestyle Advertising in
a customer-centric world*

PwC Advisory
Performance Improvement
Table of contents Situation p. 02
The most fundamental shift in the history of media usage is upon us.
Consumers are empowered by new technology and distribution platforms
to engage with media and advertising in new ways. They are interacting with
content, not just taking it in. Advertisers can now gain far greater insight
into consumer preferences, interests, and the consumer point of view than
ever before. Yet, while the rumblings of change are resounding through
the industry, the advertising marketplace today does not fully reflect this
profound movement and the consumer control resident in these shifts.

Our perspective p. 14
PricewaterhouseCoopers believes that we are experiencing a technology-
driven social renaissance that is creating unprecedented opportunities for
the advertising industry to execute its core principles in powerful new ways.
We believe that instead of attempting to position themselves alongside
the segmented lifestyles of mass audiences, advertisers must now aim to
position their brands within the lifestyles of individual consumers. This is
an opportunity that we term Lifestyle Advertising.

Implications p. 42
We believe that companies must be as dynamic as the marketplace itself.
They must stay in constant communication with consumers, use the insights
gleaned to build and maintain the business backbone that will best support
company strategy, respond to changing customer demands, and regularly
evaluate their market influence. Lifestyle Advertising requires companies
to be always listening, always changing, always responding, and always
evaluating—the principles underlying any good, trusted relationship.

Methodology p. 66
 Your audience is on the move. Consumers are talking back. They want
Situation entertainment and real information, not advertisements. Are you listening?
More importantly, are you doing anything about it?

Consumers want The most fundamental shift in the history of media usage is upon us.
Consumers are empowered by new technology and distribution platforms
to engage with media and advertising in new ways. They are interacting with
entertainment and content, not just taking it in. Advertisers can now gain far greater insight
into consumer preferences, interests, and the consumer point of view than
ever before. Yet, while the rumblings of change are resounding through
real information, the industry, the advertising marketplace today does not fully reflect this
profound movement and the consumer control resident in these shifts.

not advertisements. The formerly crisp lines between content and advertising, distributor and
consumer are officially blurred. Consumer audiences now have the ability to
talk directly to companies as well as about them. Having gained the power
of a worldwide forum, consumers can very publicly impact brands, products,
and services. They can skip, ignore, or avoid whatever they do not wish to
view or engage. No longer limited by geography, they can participate in new
social worlds that influence their media and purchasing to an extent never
before witnessed.
PricewaterhouseCoopers’ consumer focus groups indicate that the single
most compelling factor driving ad or brand engagement is the entertainment
value of advertising content. Increasingly, the quality and innovation of an
ad’s creativity determines whether consumers will view the ad or ignore it.
“With the true emergence of an on-demand world, consumers are going to
be able to control content like they never have before,” says Amy Banse,
president of Comcast Interactive Media. “They have so many more options
available to them now—it’s the customer who is king.”
Media convergence is enabling consumer dialogue to happen in real
time, with unprecedented speed and volume, with or without the willing
participation of content providers, distributors, advertisers, or their agencies.
“There’s almost no subject, no product, that you can’t find people talking
about on the Internet,” says David Harkness, senior vice president of strategy
and development for VNU Media Measurement and Information, parent
company of Nielsen Media Research.

2 Situation 3
Convergence has blurred
the lines between content,
advertising, distributor,
and consumer.
 The adoption of broadband is, to a large degree, fueling consumers’
new media consumption behavior and online social activity. According
to PricewaterhouseCoopers’ Global Entertainment and Media Outlook:
2006–2010, in June 2006, 187 million households had broadband Internet
access, up from just 30 million in 2001. PwC predicts that, by 2010,
broadband adoption will increase by an additional 246 million households,
bringing the total to 433 million broadband households worldwide.
Further research around Internet penetration from the Pew Internet &
American Life Project shows that online social activity is also on the rise.
Seventy percent of American adults—roughly 147 million people—are
Internet users, and of that number 75 percent use instant messaging tools,
38 percent read blogs, and 22 percent maintain their own web pages.
Along with their newfound ability to talk back to companies, consumers
are, in effect, becoming their own media networks. User-generated, shared
content forms the backbone for websites such as Flickr, YouTube, and
a large, growing crop of similar online destinations, and while the life
expectancies of individual sites may vary, nearly all media and advertising
executives are in agreement that user-generated content is not a fad.
“You’ll see a lot of testing from companies looking at properties like
YouTube and MySpace as media properties for banner advertising, but
also for experimenting with lower-cost video production, allowing people
to interact with a brand and appealing to them in a more measurable way
than the traditional television commercial,” says Adam Lavelle, vice
president of strategy for search marketing agency iCrossing.com.
Content aggregation services such as Digg, Reddit, and Slashdot, as well as
personal media configuration technologies such as digital video recorders
(DVRs) and Real Simple Syndication (RSS), provide audiences with the tools
to aggregate, filter, and promote the media they want to experience.
8 Situation
According to the PricewaterhouseCoopers Convergence Monitor, a global
study of 8,000 PwC employees’ personal media and Internet usage in 17
countries in 2006, PwC employees are defining their own media schedules
and experiences. The respondents represent a desirable demographic
of educated, upwardly mobile, tech-savvy young professionals who are
adopting new, enabling technologies at an astonishing pace. Fifty-six
percent of US respondents said they either currently owned a DVR or
would own one by year’s end, 30 percent said the same of video-on-
demand technology, and 95 percent said they had broadband Internet
or expected to soon. Responses reflected potentially high growth rates
of Internet protocol television (IPTV) and mobile TV via mobile phones in
the year ahead.
Fixed, linear media schedules are clearly evolving into personalized,
customized media catalogs.
As consumers become enthusiastic participants in and editors of their
media experience, advertisers gain the ability to achieve greater insight
into consumer preferences, interests, and points of view. Enabled by online
discussion boards, chat rooms, blogs, and user-review forums, consumers
are now talking to and about companies in a voice nearly as loud as the
marketing messages being broadcast to them, leaving brands nowhere to
hide, with no safe haven for inconsistency.
On the other hand, brands that are transparent in their customer service,
communications, and advertising strategies can reap substantial competitive
advantage from this two-way transparency and enhanced consumer insight.
This feedback loop arms brands with a tremendous amount of new customer
information and enables them to respond in a more relevant and personal
way. Advertisers, content providers, and distributors can monetize this wealth
of information.
Thus, what was once a one-way, static dialogue with the consumer is now a
network of dynamic conversations. Consequently, campaigns built entirely
around broad messages, faceless audiences, and mass distribution are
becoming a thing of the past.
9
Figure 1
Media spending is disproportionate to consumption

When such massive cultural change occurs, direct economic impact is not
Print and newspaper revenues 35% far behind.
6% Today, the $16 billion US online advertising market is larger than that of
outdoor advertising and Yellow Pages advertising combined, and rising
rapidly. According to PricewaterhouseCoopers’ Global Entertainment and
Radio 16%
Media Outlook: 2006–2010, US Internet advertising spending rose roughly
30 percent in 2005, from $9.6 billion to almost $13 billion, and is predicted
24% to reach $25 billion by 2010.These dynamics are not limited to the US.
Global online advertising grew roughly 29 percent in 2006 to $29 billion,
and is predicted to grow another 22 percent to over $35 billion in the year
ahead. Globally, Internet advertising is poised to overtake commercial
Internet 9% radio advertising by 2008.
18%
Despite these forecasts and current trends in consumer media consumption,
our analysis indicates a significant disconnect between where advertisers
are spending their money and where consumers are spending their time.
Television 40% Data from Forrester Research indicates that consumers spend the lion’s
share of their media time with television, Internet, and radio. But an analysis
52% of spending shows that advertising investment skews disproportionately
toward print and newspapers today (see figure 1).1
Share of TV, Internet, radio, print and newspaper revenues This is not to say that traditional media is going the way of the dinosaur any
Share of monthly viewer hours time soon. Quite the contrary. The newspaper industry, for example, which
might appear to face the greatest challenge, is already beginning to embrace
cross-platform advertising opportunities as it evolves to meet new consumer
expectations. This is evidenced by recent ad sales initiatives between print
newspapers, Google, and Yahoo, as well as partnerships to publish classified
ads with Monster.com.
“We will see some major advertisers shift far larger percentages of their media
investment from traditional media to more experiential, digital, and social
types of media,” states Carla Hendra, co-CEO of Ogilvy North America.

Supported by new technologies, customers are adding new forms of media

consumption to their existing traditional media habits and, as a result, are
altering advertising models as we know them. Companies are grappling
with these changes, struggling to see the road ahead and mobilize their
businesses around new advertising models. Applying yesterday’s methods to
today’s emerging models is not the answer. The future is Lifestyle Advertising.

1 PricewaterhouseCoopers’ analysis is based on the time consumers spend with various types of media as
reported by Forrester Research, and North American advertising revenues as reported by Universal McCann,
Internet Advertising Bureau, and PricewaterhouseCoopers’ Global Entertainment and Media Outlook:
2006–2010 (June 2006).

10 Situation 11
Major advertisers will shift
far larger percentages of
their media investment to
experiential, digital, and
social media.
Carla Hendra
Co-CEO of Ogilvy North America

13
 PricewaterhouseCoopers believes that we are experiencing a technology-
Our perspective driven social renaissance that is creating unprecedented opportunities for
the advertising industry to execute its core principles in powerful new ways.
We believe that instead of attempting to position themselves alongside
What was once a the segmented lifestyles of mass audiences, advertisers must now aim to
position their brands within the lifestyles of individual consumers. This is
an opportunity that we term Lifestyle Advertising.
one-way dialogue with In effect, what we saw happening in media last year is happening in
advertising today, and Lifestyle Advertising is a natural counterpart with
consumers is now a a deep parallel relationship to Lifestyle Media, a trend we discussed in
The Rise of Lifestyle Media: Achieving Success in the Digital Convergence
Era (January 2006). Lifestyle Advertising is personalized, participatory,
dynamic conversation. and socially interactive. It is relevant, engaging, and trustworthy, offering
enhanced ad targeting, interactive brand experiences, and social networking
opportunities. It is built around dynamic, real-time conversations with
Welcome to Lifestyle consumers, rather than static one-way messaging. Transactions may no
longer be prerequisites to participation in these conversations. We are
moving from a world of impressions to a world of engagement and
Advertising. influence. Lifestyle Advertising is an important component of a forward-
looking business strategy that turns consumers into customers through
ongoing, sustainable relationships (see figure 2).
The Lifestyle Advertising approach will require new media strategies and
significant organizational changes, forcing companies to look away from
traditional advertising opportunities and toward the demands of today’s
converged media environment (see table 1). Certain sectors, historically
considered passive media and currently under threat, are already beginning
to embrace the future by tapping into cross-platform, “rich media”
opportunities.

14 Our perspective 15
 Table 1
Comparing traditional advertising
to Lifestyle Advertising

In television, for example, networks are working to meet customers on Attribute Traditional advertising Lifestyle Advertising
new terms, allowing them to access exclusive content on other platforms.
Last year, for instance, Twentieth Century Fox distributed 24: Conspiracy
exclusively to mobile devices as a companion series to the blockbuster
Fox television program 24.
Influence driver Message Conversation
To fully capitalize on the Lifestyle Advertising opportunity, advertisers must
engage with consumers in real-time conversations that are relevant and Communication One-way Two-way, based on interactive,
trustworthy (see sidebar, “Case study: Dove’s Campaign for Real Beauty”). ongoing feedback
And they must build their organizations around those conversations.
Furthermore, that direct dialogue between advertisers and consumers Messaging Static message Dynamic dialogue
impacts every participant in the media ecosystem. Lifestyle Advertising
offers all parties, including the content providers and media distributors Distribution Single media Converged/cross-media
who facilitate those conversations, a new way to build the sustainable,
personalized customer relationships that will support their long-term Targeting Broadcast Narrowcast
business strategies.
Relationship Brand to mass audience Brand to individual consumer

Customer information Limited and demographic Rich and psychographic

Directionality Linear path to transaction Non-linear, multiple paths to

transaction

Measurements Periodic Real-time

Brand control of message Fully controlled Control shared with consumers

and consumer communities

16 Our perspective 17
Figure 2
Lifestyle Advertising in
a media marketplace

Lifestyle Media Lifestyle Advertising

Socialization Trust

Participation Engagement

Personalization Relevance

Consumer Conversations Advertiser Content provider

Media distributor

18 Our perspective 19

Case study: Dove’s
Campaign for Real Beauty
A cross-platform campaign
that started an emotional
conversation among women
rather than peddling a product.
Dove’s “Campaign for Real Beauty,” a multi-media, cross-platform
advertising endeavor, aspired not to directly pitch the company’s beauty
products, but rather to influence an important conversation about a
pressing women’s issue.
One component of this initiative was a short digital film called Dove
Evolution, which shows, in fast-forward, the makeup and touch-up
techniques that turn an ordinary woman into a gorgeous billboard model.
Ending with the tagline “No wonder our perception of beauty is distorted,”
the video piece encourages viewers to share it among their friends while
pointing them to Dove’s Campaign for Real Beauty website. Once at
the website, the audience is invited to participate in a discussion about
how popular culture influences young girls’ perceptions of beauty. The
site also directs viewers to a clear path to action through the Dove Self-
Esteem Fund, a nonprofit effort to promote self-esteem programs for
young girls worldwide.
In less than 30 days, Dove Evolution generated more than 2.3 million
views on YouTube. Due to this massive, viral sharing, the 75-second
video received widespread news coverage and became a feature story
on broadcast television, appearing on popular daytime and prime-time
talk shows. The social interaction and viral distribution enabled by
YouTube delivered more than three times more traffic to the Dove website
than an expensive TV ad Unilever placed to launch Campaign for Real
Beauty during the 2005 Super Bowl. A similar result through paid media
placement would have come at a substantially higher cost to Unilever.
 The three principles of Lifestyle Advertising:
Relevance, Engagement, and Trust
The foundations of a Lifestyle Advertising strategy—relevance, engagement,
and trust—have been fundamental aims of the advertising industry since its
inception. But the manner in which brands strategize around, pursue, and
achieve these goals has changed and will continue to change dramatically
as new media and distribution platforms emerge.
Relevance
Relevance means advertisers have to understand the issues that are
important to customers’ lives and build strategies around them. Historically,
most marketers depended upon media companies and distribution networks
to create content and aggregate demographically segmented audiences,
around which they purchased and wrapped advertising messages. Brands
that understand relevance in the converged media era must acknowledge
the fundamental complexity of their audiences. This is an audience no longer
easily defined by a single or limited set of factors such as age, sex, ethnicity,
education, income, or postal code. The digitally driven social renaissance has
put the removal of such barriers, especially geography, into hyperdrive. It is
connecting people with similar interests, lifestyles, hobbies, and thoughts.
“If you just concentrate on traditional segmentation, you’re going to
miss people that could be interested in your product, but don’t fit into
your stated demographic,” says Geoff Ramsey, co-founder and CEO of
independent market research firm eMarketer. “The Internet allows you
to find better targeting clues based on actual behavior or actual interest,
as indicated by a search or a profile.”
Advertisers are already beginning to experiment with new ways of
delivering relevant brand experiences to niche audiences. BMW, for
example—already a pioneering advertiser oft-lauded for its innovative
2001 BMW Films campaign—was the first advertiser to partner with TiVo
to deliver customers a much-desired, non-interruptive, deeply engaging,
interactive viewing experience. The automaker targeted the car-crazed
customer with a television ad campaign leading up to the premiere of the
show Test Drive on niche cable network SpeedTV—a channel dedicated
exclusively to motor sports and automotive programming. By embedding
“interactive tags” in promotional spots leading up to and during the premiere,
BMW provided viewers with the opportunity to access more information,
schedule a program recording using their DVR, or view an exclusive BMW
video from the television program itself, rather than from an ad.2 This shows
one way that the DVR can actually become an ally to advertisers rather
than the threat it is viewed as today.
2 “TiVo Interactive Tags Increase BMW’s Visibility on Speed’s Test Drive,” press release (June 20, 2006).
22
Engagement
In theory, relevant advertising delivers a more engaging, effective
consumer experience. The Advertising Research Foundation (ARF)
officially defines engagement as “turning on a prospect to a brand idea
enhanced by the surrounding context,” but the term is still the subject
of heated industry debate. In practice, there are two main levels of
engagement: brand-level engagement between a customer and an
idea, and product-level engagement as the customer nears the point
of purchase. The former is an emotional consumer experience while
the latter is almost purely analytical.
Historically, different media have been used to drive either brand- or
product-level engagement with the consumer. A broad-reach media
platform such as broadcast television has traditionally been used for
brand-level messaging, while local, targeted media platforms—such
as radio, print inserts, or direct mail—have traditionally been deployed
more for tactical communications, such as specific offers and calls to
action. Converged media redefines engagement, as it enables advertisers
to combine both brand-level and product-level modes of engagement in
the same consumer experience. Marketers and content providers can
employ rich broadband media to engage consumers through messaging
and ideas and then follow up almost immediately with a specific product
offer or direct call to action.
Engagement in new advertising models and in converged media is, at
its core, characterized and measured by how much information and social
capital a customer is willing to contribute to energize a conversation with
a brand, often in pursuit of some kind of personal reward (e.g., free, ad-
supported media content). It is currently manifested and quantified through
site or service registrations, user comments, consumer profiles, and
information sharing with other customers or communities. Many advertisers
have identified the growth in user-generated content, social networking, and
digital interactivity as opportunities to leverage a new breed of consumer
engagement, whereby a brand’s consumer proponents do the heavy lifting
of viral marketing, touting the brand through digital word-of-mouth. What
this creates, in effect, is a dynamic co-creation of the advertising messaging.
Our perspective 23
Instead of attempting to
position themselves alongside
the segmented lifestyles of a
mass audience, advertisers
must now aim to position their
brands within the lifestyles of
individual customers.
 “One challenge with user-generated content is that it offers two changes to
advertisers: first, a different kind of advertising, and second, a different kind
of media,” says Bart Becks, senior vice president of new media for SBS
Broadcasting Group.
Forward-looking media companies and advertisers around the world are
stepping up to that challenge. In Hong Kong, for example, The Interactive
Channel (TIC) is pioneering an engagement-oriented entertainment and
advertising model. Available to nearly one million subscribers on Hong Kong’s
cable television system, TIC utilizes broadcast TV, Internet, radio, and mobile
networking technology to simulcast its programs globally across all media
platforms. TIC encourages the audience to interact directly with every show
via short messaging service (SMS) and web chat. “We even offer our audience
the ability to team up with actors in the studio on various shows as well as to
interact with each other,” says Robert Chua, TIC’s chairman and founder,
adding that involving the audience directly in the content pays off from an
advertising point of view. When the station goes to a commercial break, a
separate window continues to roll public chat comments that have been
coming in throughout the show. According to Chua, advertisers love the
feature because it offers solid evidence that the audience remains engaged
with the content during breaks.
28
Trust
The term “trust” also takes on new meaning and importance in converged
media. In this new interactive world, trust is a two-way street between
consumers and advertisers. The building blocks for an engaging, trust-
inspiring conversation are transparency and a willingness to allow customers
to play a role by producing advertising content or even directly shaping the
product-development process.
But today’s converged marketplace suffers from a notable lack of trust on
the part of both producers and consumers, which can create barriers to the
growth of new and emergent advertising models. On the consumer side, PwC’s
Convergence Monitor survey indicated that 82 percent of the survey’s US
employee respondents agreed or strongly agreed that they were concerned
about the security of their information on the Internet. Advertisers, content
providers, and distributors are also experiencing tension around trust. Deep
uncertainties around user-generated content and the economic models
supporting the social networking space are undoubtedly stalling, but not
prohibiting, growth and experimentation in this area.
Still, recent industry forecasts indicate that some companies have been
emboldened to make significant first forays into the space. To date, online
social networking advertising initiatives comprise roughly 2 percent of total
US ad spending, but are projected to grow to almost 9 percent of total
spending by 2010, according to research from eMarketer. Many companies
have already begun to test those digital waters and reap the rewards.
Our perspective 29
 American Express was one of the first companies to support the development
of social networking. The company’s “Open Network” enables owners and
executives of small- to midsize businesses to share business tips on topics
ranging from managing work/life balance to finding better health coverage
and managing inventories, among many other topics. American Express
does not benefit directly by selling products or services on the site, but
rather serves as a destination for consumer conversations. The company
does not interrupt the user experience with advertisements, but instead
surrounds it in a non-disruptive way with offers that might appeal to a
uniquely captive audience.
Social networks, however, may not always be limited to self-contained,
niche customer communities. German automaker Audi sought to leverage
social networking by venturing into the blogosphere. The company influenced
the conversation about its brand by running a blog component for its A3
campaign on more than 400 relevant blogs through the BlogAds network.
According to Audi’s agency partner, GMD Studios, blog advertising generated
29 percent of traffic to Audi’s A3 site. The car manufacturer listened closely
enough to its target market to understand how and where young, influential,
and interested buyers were spending their time. As a result, Audi was able to
leverage the consumer trust inherent in the blogosphere with a campaign
that purportedly cost one half of one percent of its overall media budget—
less than a single banner ad on a mainstream search engine.3
By devoting organizational resources to monitoring conversations about
the brand online (in the blogosphere, on social networking sites, etc.)
and by establishing strategic partnerships with vendors who provide
reporting and analysis of such conversations, companies can identify,
monitor, and connect with “key influencers.”
3 “Weblog Advertising Yields Audi Dramatic, Cost-Efficient Results.” Adrants.com (September 30, 2005).
30
In China, Pepsi and Motorola made bold entrances into this arena by
aligning themselves with the “Back Dorm Boys”—two Chinese college
students whose grainy video downloads spoofing the Backstreet Boys
and other pop stars attracted a huge following online. Identifying the duo
as key conversation influencers, Pepsi and Motorola were able to associate
their brands with the cutting-edge image of the self-made Web stars—
Pepsi by placing them in a commercial and Motorola by commissioning
the production and generation of viral videos.
Historically, marketers have trusted people to be consumers, but not
producers of content associated with their brands. This notion drives
News Corporation’s strategy of creating separate areas of MySpace that
are considered “safe” for brands that fear advertising placement near
incompatible or unsavory content.
“We’ve taken 50 years to develop local TV brands and relationships with
consumers,” says Terry Mackin, executive vice president of Hearst-Argyle
Television. “You can make one mistake by taking a piece of user-generated
video and not having it properly vetted for appropriateness and infringement,
and that hurts the brand’s reputation.”
Seeking engagement through creative collaboration with consumers is not
without risks, and most companies have yet to jump into the fray. However,
we believe that the level of risk associated with participating in conversations
in pursuit of engagement is not only acceptable, but critical to business
growth.
Our perspective 31
We are moving from a
world of impressions to
a world of engagement
and influence.
 “I can understand why an advertising agency would want to give its brand
a sense of comfort and safety in a wild environment, but that concern is a
bit of a cliché,” says Steven Starr, founder and CEO of viral video network
Revver.com. “We’re just not seeing the resistance, and I expect even more
advertisers will jump in as events prove that giving up control over the
context of your ad doesn’t have to have a dangerous outcome.”
Community filtering and editorial processes to engender trust between
advertisers, content distributors, and consumers are already in the
works. Magnify Networks, for example, is pioneering technology in which
peer review becomes a user-driven, collaborative filter, allowing online
communities to review and rate new video submissions, self-selecting the
videos that best fit the community profile.
To successfully engender trust, Lifestyle Advertising efforts must be genuine
and transparent. Any attempt by an advertiser to pump up a contrived
conversation in order to attract an audience—through fake blogs (“flogs”),
for instance—is likely to be rooted out and exposed, to potentially brand-
and trust-damaging effect.
4 Paul Bond, “New TiVo Menu: Ads on Delete,” The Hollywood Reporter East (November 29, 2006).
36
Investment shift and profiles/measurement
We believe that as advertisers begin to focus on building relevant, engaging,
and trustworthy conversations, they necessarily will shift substantial spending
into Lifestyle Advertising (see table 1). This will likely result in a rebalancing
of advertising spending into digital media, which offers greater measurability
and accountability. This does not mean the demise of traditional television
advertising or traditional newspaper publishing, but rather the evolution of
traditional media towards Lifestyle Advertising.
For example, rather than lamenting the advent of the DVR and mourning
the “death of the 30-second spot,” some television advertisers are embracing
new technologies. A number have joined TiVo’s “Program Placement”
initiative in order to reach audiences in an increasingly time-shifted viewing
environment. This innovative approach, announced in November 2006,
allows advertisers to tie their commercials to specific programs in the hope
that the consumers they’re targeting will engage in the advertising experience
they may have previously skipped. When viewers choose to delete certain
shows from their hard drives, they are presented with the option of viewing
commercials they may have previously skipped, before confirming the full
program’s deletion.4
In traditional media—television, print, and radio—key measurements have
focused on reach and frequency, often measured as “cost-per-thousand,”
or CPM. On the Web, where search-driven advertising has built a robust
market, key metrics have focused on cost-per-click rates and there is now
strong interest in developing measures around cost-per-action (e.g., a phone
call or sale). Each of these measurement models will certainly contribute to
the development of new metrics around consumer engagement.
Our perspective 37
 But Lifestyle Advertising goes far beyond impressions or transactions. It is
about influencing and enhancing every unique customer relationship. It is
about knowing your customers, and having them know you. Therefore, we
believe that consumer profiles will be an integral and important component
of the portfolio of new media ratings.
Recent PwC focus groups comprised of consumers in the 18–34 age
group revealed that many young consumers are surprisingly willing to
give up information about themselves, their interests, their hobbies, habits,
and lifestyles, in exchange for free content and free media experiences.
The ability to incent consumers to provide even more specific, useful data
will help advertisers monetize those profiles, deliver increasingly relevant
advertising, and build stronger, more sustainable customer relationships.
As companies become more adept at harvesting, culling, and analyzing
consumer profiles, they will also seek out metrics that more accurately reflect
the effectiveness of new media platforms. At the same time, as advertisers
move from delivering messages to influencing conversations and creating
brand awareness in social contexts, the ultimate goal must be to measure
influence at every customer touchpoint.
For example, influence in the blogosphere, as reflected by how buzz
marketing and viral campaigns are generated, has already garnered
considerable attention. Measurement companies such as BuzzLogic and
Onalytica in the US and Culture-Buzz in Europe are making first forays into
the realm of measuring influence by defining the term as it applies to social
media, and surfacing what they determine to be the “key influencers.” Such
providers have devised their own measures for influence, most commonly
equating it with the number of links directing Web users to individual blogs.
This is not unlike the methodology Google employs to compute PageRank.
38
While these measures may serve the text-graphic Web (“Web 1.0”) universe
well, how influence will be measured in a converged media environment
remains uncertain. Technologies such as video browsing (which allows for
hyperlinking video content) will provide the stepping stones for developing
and formalizing new measurement standards around influence.
One alternative method of measurement currently under discussion is
“cost-per-influence”—a way of assessing the impact of conversations
and social networks. Although at a nascent stage, such initiatives offer
fresh promise that measures of influence will emerge and provide the
foundations for currencies—both social and economic—on which further
Lifestyle Advertising initiatives can be built.
Enhanced measurement will create greater transparency in consumer
relationships, business partnerships, and reporting to increase accountability
of advertising spending. “By creating efficiencies in a very complicated
buying process, you’re making advertising more transparent so that it’s less
mysterious and less anxiety provoking,” says Jason Malamud, vice president
and general manager of Verizon FiOS Media.
Our perspective 39
The term “trust” takes on a
new meaning and importance
in converged media.
 We believe that in today’s media marketplace, companies that adopt
Implications Lifestyle Advertising will be best positioned to influence conversations
about their brands, drive consumer purchasing behaviors, and monetize
ongoing customer relationships.
Embrace Lifestyle Without a doubt, advertising has always aimed to be relevant, engaging,
and trustworthy. From sales announcements unearthed among the ruins
Advertising as a of Pompeii to watchmaker Bulova’s sponsorship of the first television
commercial in 1941, advertisers, content providers, and distributors have
together focused on delivering the right messages to the right consumers
continuous process in the most efficient ways possible. In other words, advertising has always,
fundamentally, been about influencing the transaction.

within your business. In this digital renaissance, Lifestyle Advertising strategies must account for
the realities of a converged, multi-platform media environment—realities
that change the ways consumers engage with media and can be influenced.
In turn, methods of monetizing media through advertising, discussed
throughout this paper, will necessarily change as well. Advertisers, content
providers, and distributors must mobilize consumer communities around
conversations to more effectively measure and unleash their power.
We believe that companies must be as dynamic as the marketplace itself.
They must stay in constant communication with consumers, use the insights
gleaned to build and maintain the business backbone that will best support
company strategy, respond to changing customer demands, and regularly
evaluate their market influence. Lifestyle Advertising requires companies
to be always listening, always changing, always responding, and always
evaluating—the principles underlying any good, trusted relationship.
Companies that treat Lifestyle Advertising as a continuous process, not
just a one-time initiative or campaign, will be best positioned to drive the
all-important shift to thinking of every individual consumer as a customer.
The most successful Lifestyle Advertising companies will create the brand
loyalty and engagement that turns conversations into transactions and,
ultimately, relationships.

42 Implications 43
 1. Listen
Figure 3 2. Evaluate
3. Respond
The dynamic Lifestyle 4. Repeat (constantly)
Advertising cycle

Listen

Respond Evaluate
 Listen to the market: Optimizing conversations
If the market is tapped appropriately and frequently, it will reveal how
advertisers, content providers, and distributors can most effectively
influence consumer behaviors to drive transactions.
We believe that companies along the advertising value chain must view
their audiences not as a collection of consumers, or even as a portfolio of
demographic profiles, but rather as individual customers. When engaged
in relevant, meaningful brand conversations, consumers become customers
and, as such, their relationships must be clearly understood, constantly
analyzed, and expertly managed.
Optimizing conversations: Knowing your customer
The recent explosion in user-generated content, combined with the
proliferation of readily accessible professional content, has made every
consumer a discerning viewer, shrewdly and quickly able to filter out
uninspiring advertising and actively seek out innovative brand experiences.
That means meeting customers on their own terms, at touchpoints
where they will be most willing to interact and engage with the brand.
Consumers who have opted into a conversation with the brand offer the
best prospects for monetizing relationships through ongoing, relevant,
non-disruptive advertising.
“If advertising is incorporated naturally into another means of viewing—say,
the way Massive is doing with in-game advertising—and people aren’t literally
turning it off or walking out of a room, there will arise a better way of tracking
it and advertisers will pay a premium for it,” says Blair Westlake, corporate
vice president of Microsoft’s Media, Content & Partner Strategy Group.
46
Some forward-thinking companies are taking listening to the next level,
moving their conversations with consumers off the Internet and directly into
the boardroom. Belgian telecommunications provider Belgacom Skynet
actively involves users in the development and subsequent testing of their
online products, TV programs, and related media services through a program
called “Skybrain.” Almost quarterly, Skynet invites selected representatives
from its consumer testing community to participate in its board meeting and
provide input directly to the company’s executives. Skynet has found this
model of consumer involvement to be very effective, as it helps them create
and close a direct feedback loop. The consumer participants enjoy a unique,
personal relationship with the company, and executives receive ideas that
may not have surfaced in-house. Skybrain has become a platform for open
innovation that brings customers into the highest levels of decision-making.
Other companies are harnessing the power of direct consumer feedback
by connecting with “key influencers” to gain insight into changing consumer
demands, receive early feedback on new products and services, and build
awareness about the brand within well-defined social networks. Procter
& Gamble, for instance, recently established the Vocalpoint network for
influential mothers. In exchange for receiving advance product information,
samples, and discounts that can be shared with friends, individual mothers
identified as “key influencers” have an opportunity to participate in product
trials, provide feedback directly to P&G, and get the word out about products
they enjoy using. To date, more than 600,000 mothers have enrolled in the
Vocalpoint network.5
5 “I Sold It Through the Grapevine,” BusinessWeek Online (May 29, 2006).
Implications 47
 Actions to consider:
• Devote organizational resources to monitoring conversations about the
brand online (in the blogosphere, on social networking sites, etc.) to track
these powerful participants in the media ecosystem.
• If it is not within your core competency, establish strategic partnerships
with vendors who provide reporting and analysis of such conversations.
• Implement robust customer relationship management technologies and
processes, such as cross-product or cross-platform customer information
management tools. Engage customers on their own terms to create
non-interruptive, non-intrusive, dynamic advertising experiences.
• Identify, connect with, and leverage “key influencers.”
6 Peter Boatwright, Tridas Mukhopadhyay, Rahul Telang, Sunil Wattal, “Examining the Personalization-Privacy
48
Optimizing conversations: Respecting customer boundaries
The ability to influence this newly empowered breed of consumer rests
almost entirely on an evolving and often implicit social contract. In
exchange for personal information about their interests and purchasing
habits, customers expect to receive free, ad-supported content and
targeted, relevant advertising to enhance their media experiences.
But without transparency into that exchange—adequate and upfront
agreement as to how that information is collected, used, and distributed—
the delicate social contract between consumers and corporations will be
under constant pressure.
“We have to focus on making sure we get the privacy issues right from the
beginning, at the same time as we’re making measurement and targeting
systems work better. It’s a balance; we need to be able to measure new
ad applications for them to have value, but we don’t want to invade our
customers’ privacy in the process,” says FiOS Media’s Malamud.
A recent Carnegie Mellon study reported that while personalized greetings
and product-based personalization of online advertising can help create a
unique purchasing environment for each individual customer, the success
of investments in personalization ultimately depends on whether and to
what extent consumers perceive a privacy violation in the acquisition and
use of personal information. The study showed that, on average, more than
85 percent of consumers react negatively to personalized greetings in an
e-mail, suggesting that consumers are likely to perceive a violation in privacy
if they see their names in e-mail advertisements. Acquired customers—
those whose information is purchased from the outside—always react
negatively to personalized greetings, even if they are followed by targeted
product recommendations. As the study reported, the economic value
of personalization depends on which effect is stronger—the benefit of
relevant, personalized product advertisements or a perceived infringement
of personal privacy.6
Tradeoff—an Empirical Investigation with Email Advertisements,” Carnegie Mellon University (November 2005).
Implications 49
 Actions to consider:
• Understand customer information-sharing decisions and privacy
expectations. If necessary, go beyond basic legal requirements to
ensure consumers become and remain comfortable doing business
with your brand.
• Increase transparency in customer communications around information
usage and privacy to increase the value proposition of personalized
advertising initiatives.
• Understand your business’s information supply chain—who touches each
piece of sensitive customer data and why that person is charged with the
task—as well as the information lifecycle, from collection through disposal.
• Structure contracts with third-party information providers so that all
parties have a vested interest in making sound data decisions about
consumer privacy.
50
Change and respond: Organizing around Lifestyle Advertising
The strategies and organizational structures of businesses across the
advertising value chain must mirror the new media market itself. If they
are to maximize and, indeed, monetize their Lifestyle Advertising potential,
businesses must be open, have real-time flexibility, and enable informed
risk-taking. They must organize around and execute on the ongoing
conversations in which they are participating. When they respond with
action—whether through a strategic shift or a change to product or service
offerings—companies must make those responses clear to the very
consumers who influenced the decision-making.
“The media industry has new expectations, and there’s an education
process—analyzing, configuring, building, and supporting—that takes time,
effort, and expense,” says Karl Spangenberg, vice president of Integrated
Advertising and Commerce at AT&T Entertainment Services. “It all starts
with the vision and the commitment that the vision is worth pursuing.”
The overarching vision of a Lifestyle Advertising strategy must be developed
collaboratively. Every part of the organization responsible for generating
advertising revenue must participate in the strategy’s ongoing evaluation and
revision. This may sound fundamental, but we see many companies that do
not break down the organizational silos, build the agile business platforms
that allow them to act with real-time speed, and prioritize new revenue
strategies in a collaborative way. Developed from the ground up, a strategy
that accomplishes those three business goals ensures everyone involved
in the vision’s execution has participated in its creation and is prepared to
respond to the market’s ongoing demands proactively, rather than reactively.
Implications 51
 Organizing around Lifestyle Advertising: Breaking down silos Actions to consider:
We believe that in this era of media convergence, the open business model • Consider establishing a growth council among those in the company
is a new economic imperative.7 Tactically speaking, this means that to responsible for managing the advertising process. Growth councils
succeed at Lifestyle Advertising, companies must eliminate the walls that can be effective venues for collaborative strategizing and high-level
exist between the company and the customer, as well as internal walls or decision-making.
silos within the company itself. This is a profound and difficult internal • Prepare to alter the organization so that internal business functions
change to a much more collaborative business model. and processes are aligned with changing consumer demands and
market dictates.
Some of our clients have found success by creating “growth councils”
among those responsible for both managing existing forms of advertising • Organize leadership and staff to create balance between traditional
and creating new ones. Members of a growth council commission research, and new media experience in collaborative environments.
review market findings, challenge each other’s assumptions, and together • Pursue consistency in brand experience to influence the conversation
develop new strategies. In this collaborative environment, executives across across all customer touchpoints, as customers can now enter the
businesses, platforms, and channels decide which strategies to pursue, and purchase process at any stage.
what steps are indicated to execute on these strategies.
Whether it is with a growth council or some other form of internal
management structure that includes leaders from across the business,
companies must support innovation in ways that mirror new consumer
demands. For instance, if consumers want to experience media across
platforms and engage with relevant, customized advertising, cross-platform
media campaigns could be established to send targeted messages to
individual consumers, regardless of whether they’re watching television,
using their PC, or viewing content on a mobile phone. As noted earlier,
Lifestyle Advertising organizations should mirror the market.
In approaching such strategic and operational reorganization, executives
must review staffing and carefully consider who is leading their company’s “Advertisers are going to have to
charge with respect to the new market environment. “When you’re trying
to grow a new media business, put somebody in charge who is not also respond very quickly, much faster
responsible for the traditional platforms. Otherwise, the person wearing two than they’re responding today.”
hats often has a tendency to suppress new ideas and simply ‘think outside
their typical boxes.’ They’d rather stay in the same space—the comfort
factor. That will likely result in missing opportunities and growth,” says Blair Westlake
Microsoft’s Westlake. Corporate Vice President
Microsoft Media, Content &
Partner Strategy Group

7 See Breaking Down Walls: How an Open Business Model Is Now the Convergence Imperative,
PricewaterhouseCoopers (May 2006).

52 Implications 53
 Organizing around Lifestyle Advertising: Building in agility
To stay in sync with consumers, companies must act and react with speed—
an essential feature of Lifestyle Advertising organizations and infrastructures.
Companies built around agility can pursue innovation, experiment with new
ad models or methods of monetization, and build business relationships
rapidly and in an informed way.
Within organizations, this means building agility into every back-office system
and decision-making process. According to Shawn Strickland, vice president
of FiOS TV Product Management, the company’s broadband television
initiative is one example of such a holistic approach to building agility into
business infrastructure. “Building products and capabilities as opposed
to building specific features has been a big enabler for us. When we set
up this initiative, we set it up with very small teams and people have been
accountable since day one because you didn’t have ten people to rely on
to get something done.”
Agile back-end business platforms enable companies to execute on
innovative, customer-facing, Lifestyle Advertising initiatives with the speed
the market requires. Today, the ability to deliver targeted ad content in
a dynamic, responsive manner is critical and largely dependent on agile
platforms and the interactions within the Lifestyle Advertising ecosystem.
Real-time data collection and analysis, for example, enables informed
responsiveness to consumer demands. Companies are just beginning
to establish the strategic partnerships that facilitate those capabilities.
In the video-on-demand environment, media measurement provider
Rentrak Corporation is developing a specific product for the advertising
community that will allow ad effectiveness to be measured and analyzed
on a near real-time basis. “Advertisers will be able to track actual views of
their content, and if the audience isn’t there, decisions can be made quickly
to switch out an ad using dynamic insertion so that the message will be seen
by a more targeted audience,” explains Cathy Hetzel, senior vice president
of Rentrak’s OnDemand Essentials.
8 Josef Adalian, “Ads Feel at Home Online: The Art of Commercials,” Variety (November 17, 2006).
54
Forward-thinking companies are just beginning to test the waters of
dynamic ad insertion. For instance, in-game advertising network Massive,
Inc. allows advertisers to run dynamic, customized campaigns targeted
by both user geography and game genre, aggregating audiences in an
otherwise fragmented market. According to Massive, the company
experiences 90 percent approval ratings of in-game advertising among
gamers. It has helped advertisers and game publishers—who receive
incremental profits of $1 to $2 per connected gaming unit—to tap into
previously uncharted territory and monetize their relationships with
uniquely engaged consumers.
Indeed, companies are beginning to conceive of content aggregation in
a new way, recognizing that aggregating advertisers around fragmented
audiences to increase reach and relevance on a real-time basis may be
the next frontier in optimizing advertising budgets. As a result, companies
are partnering with advertising content aggregators to reach audiences in
a new way.
One such aggregator, Internet TV platform Brightcove, hosts its own
broadband advertising network, which aggregates and organizes IPTV
channels—from small vertical programmers to the largest media channels—
simultaneously offering advertisers both reach and targeting across
splintered, niche online audiences.
This type of rethinking is driving the development of broadband channel
AdTV. The site will aggregate advertising in ten-minute packages—such
as “Must-See Spots” and “Before They Were Stars”—that can be sought
as content by audiences in a dedicated, cross-platform environment. AdTV
executives have noted that the site will operate like a real network, giving
marketers a new way to meet with individual consumers on their own terms.
The hope is that such aggregation will create a compelling, non-disruptive
environment for consumer ad viewing. It offers advertisers a new opportunity
for monetization of ad content, as well as enhanced measurability and
accountability, as they gain greater control over and insight into how their
commercials are being viewed.8
Implications 55
Pursuing innovation is
as much about informed
risk-taking as it is about
organization.
 Actions to consider:
• Commit to a focused, overarching vision, but create a business
infrastructure that supports tactical experimentation with new
advertising models in response to changing market demands.
• Focus on testing new ideas in new media environments rather than
attempting to fit traditional concepts into new business models.
• Integrate the ad planning and purchasing processes to realize buying
efficiencies in a multi-platform media environment. Consider bundled
advertising opportunities that will increase reach and flexibility across
platforms.
• Cultivate an environment that encourages innovation and supports
the rapid changes of course evolving business models demand.
• Where a function is not within your core capabilities, form strategic
partnerships with service providers who offer converged advertising
and audience aggregation opportunities.
58
Organizing around Lifestyle Advertising: Taking informed risks implies
taking risks
Organizational agility can expedite experimentation on both the content
and advertising sides as surely as fear can hamper it. But in the nascent
world of Lifestyle Advertising, innovation can require bold moves by
management that may impact a brand and its bottom line in the short term.
Some initiatives may thrive and others may disappoint, but to sustain a
competitive edge in the long term, advertisers must embrace open-source
creativity now. They must tap into new sources of content and test evolving
business models to align themselves with the most influential people and
ideas in the marketplace.
As discussed earlier, user-generated content and online social networks
are areas ripe for monetization, but tapping into them will require informed
risk-taking and experimentation with emerging advertising models, at least
in the early stages of Lifestyle Advertising.
According to Steven Starr, founder and CEO of Revver.com, the online video
network is one example of an attempt to monetize a social network. The
company shares 50 percent of its video advertising revenue with the creators
of the video that is shared. From the remaining 50 percent of ad revenue,
Revver shares a portion with affiliates who distribute content from the
company’s video library to friends or other networks.
Syndication within social networks is another model emerging as a new
means of harnessing and monetizing the consumer trust resident in
communities. For instance, an online service launched by Rainbow Media’s
Independent Film Channel (IFC) is enabling syndication of ad-supported
content. Evan Shapiro, executive vice president and general manager of
IFC TV, explains, “We are going to allow users to syndicate our Web content
onto their Website, so they can grab four or five films and plug them into their
site, but they’ll have to take a sponsor or two with them as well. It’s a whole
new kind of user-generated syndication.”
Implications 59
 Other approaches to advertising within online communities employ automated
messaging among members of networks. Facebook.com, for example, is
testing one such new, networked advertising model. When users click on
ads in their personalized newsfeed sections, their entire network of friends
is automatically alerted and given the chance to interact with that particular
marketer’s profile or group.
Without a doubt, robust risk-assessment processes are essential to business
growth. But the market is ripe for informed experimentation now, and with
sound strategic planning, investment, and implementation, calculated
risk-taking can offer leading-edge companies a remarkable competitive
advantage.
Actions to consider:
• Though it may require a degree of risk on new media platforms, focus
on the creation of innovative, highly creative, participatory advertising
to deeply engage customers in a unique brand experience.
• Rather than shying from experimentation with new business and
advertising models, work with platform owners and content providers
to ensure that adequate editorial filters are in place to prevent brand
incompatibility.
• Participate in the conversation about the brand with consumers, either
responding directly to them or responding indirectly by revising products
or services to better meet their needs.
• Design payment structures, such as ad revenue sharing models, that
monetize engagement within social networks and encourage the viral
sharing of both advertising and media content.
60
Evaluate your efforts: Measuring the marketplace
As noted, one of the single greatest imperatives for the success of Lifestyle
Advertising is “real-time speed”—that is, the real-time speed with which
a content provider or an advertiser can capture data about an audience
or individual customer; the real-time speed with which it can analyze and
communicate based upon that data; and the real-time speed with which
analysis-based action can be taken. Organizing around speed fulfills the
imperative to more dynamically act on ideas and innovations. It shifts the
strategic emphasis squarely to evidence-based decision-making, which in
turn makes all members of the advertising value chain more accountable
for their performance.
Despite the pursuit of enhanced accountability through real-time measurement
among advertisers, content providers, and media distributors, the lack of
widely accepted measurement standards among new distribution platforms
remains a significant barrier to the effective evaluation of marketing efforts.
While the online platform has raised the bar on the measurability and
accountability of advertising spending, many online advertising and
marketing efforts—particularly around user-generated content and social
networking—are so new that there is no clear consensus on how to best
measure them, nor what emerging measurement methodologies truly
indicate about their monetization. Forward-thinking companies, along
with their measurement provider and agency partners, now have a unique
opportunity to pioneer new measurement standards, increase advertising
spending accountability, and lead the industry in investing in the technologies
and processes that will better gauge the effectiveness of advertising in this
era of converged media.
Implications 61
 Measuring the marketplace: From periodic measurement to
real-time feedback
As Chris Dobson, vice president of international sales for Microsoft’s Online
Services Group, pointed out, “We’re intending to create tool sets for agencies
and clients that give them real-time access to consumer behavior data so
that they can adjust their campaigns in real time, because it’s a much more
dynamic marketplace than, say, buying a TV campaign and then waiting till
it’s over and examining what’s happened.”
As data around consumer behavior becomes more abundant and readily
accessible, companies must be more discerning about the measures they
choose to use as true market indicators. “Engagement” is a buzzword in
the advertising community, but has yet to be fully embraced or developed
as a single, clear metric of ad effectiveness. “I don’t think of engagement
as something that can be measured like an impression, as it can take many
forms,” says FiOS Media’s Malamud. “There are other measurements around
viewers’ actions and interactivity that can be used as a proxy for engagement
to define value for an advertiser.”
New standards are understandably slow to evolve. The Nielsen television
ratings system, for example, took more than a decade to gain widespread
industry acceptance, status, and negotiating currency. “For video-on-
demand, there hasn’t been a measurement solution across the entire
footprint like there is a Nielsen solution in linear television, and I think
advertisers have been clamoring for that,” says Ryan O’Hara, president of
TV Guide Channel and on-demand for Gemstar–TV Guide International.
“Video-on-demand is a big business, something consumers enjoy using,
and cable is fully behind it, but the measurement of it is still evolving slowly.”
As new measurement proxies, new metrics, and, eventually, new standards
emerge, it is imperative that advertisers, agencies, and content providers
shift their focus from sheer reporting to rigorous data analysis. With an
overabundance of readily accessible user data in the digital space, industry
players must learn to separate the wheat from the chaff and quickly turn
volumes of information into actionable intelligence.
62
Actions to consider:
• Build an information technology and process infrastructure within the
organization to support necessary, near real-time data collection, filtering,
and analysis.
• Establish strategic partnerships with measurement vendors who provide
incisive reporting on relevant, emerging concepts such as engagement
and influence, as well as vendors who offer substantial analysis of data,
not just adequate reporting.
• Experiment with new media metrics that go beyond reach and frequency
to serve as proxies for audience engagement and purchase influence.
Using available technologies, aim to identify metrics that link consumer
media consumption and purchasing behaviors to monetization. Indicative
metrics or proxy measures might include online video advertisement view
time, ad interaction rates (e.g., click-throughs or click-to-purchase), or
expansion rates for expandable digital ads.
• Develop internal key performance indicators (KPIs) that accurately reflect
the evolving marketplace, effectively motivate employees, and strongly
encourage business growth.
• Assess payment structures to ensure all participants in the value chain
are being adequately incented to deliver the most desirable outcomes.
Rewards might take the form of higher direct payment or increased
payment on an ongoing basis.
• Once you’ve measured the marketplace and responded to the consumer
conversation through action, close the feedback loop by providing
transparency into decision-making. Tell consumers how and why your
company took feedback into consideration and acted upon it.
Implications 63
Reassessing the sales funnel and rewarding on delivery of influence

At its most basic level, every advertising strategy is In some incentive and reward models, advertisers Advertisers will reward media partners for higher levels of delivery
fundamentally about influencing consumers to move might pay a minimal level of compensation or none
from awareness of a brand, product, or service to at all for mere viewership or “reach.” Engagement—
a transactional event. Historically, this process of measured by click-throughs, for example—would Viewership $
influence has been depicted or described as a sales provide a higher level of compensation, and a full
funnel. But in the converged world, this traditional transaction could garner an even greater reward. Engagement $$
view is becoming increasingly less relevant. In such models, advertisers might offer a continuous Transaction $$$
payment stream for the delivery of an ongoing
Advertisers, content providers, and distributors relationship with a new customer. Relationship $$$$
must shift their focus from guiding specific consumer
behaviors—brand awareness, consideration, Paid search advertising has made the business case
decision-making, and purchasing—to strategically for this concept. It is a clear example of a payment
managing the conversations that take place model that directly leverages the principles of
simultaneously, in great number, on every plane. Lifestyle Advertising. The advertising presented in
response to a keyword search must be relevant and
With consumers incented through enhanced ad engaging enough to spur some sort of consumer
targeting and empowered to enter the process at any action (e.g., click-through or click-to-purchase), which
stage in their individual purchasing cycles, the volume triggers advertiser expense commensurate with the
of consumers that advertisers need to manage at value assigned to the action. Advertisers are able to
each purchasing phase no longer shrinks as it would receive rich reports on their campaigns and, when
making its way down an ever-narrowing funnel, but supported by agile, enabling infrastructures, can
remains constant throughout the entire purchase change their ad messaging and strategies (keywords,
process. This shift in consumer purchasing behavior bids, etc.) on an almost real-time basis based on
is driving companies to change their systems desired performance metrics and outcomes.
of incentive and reward across the advertising
value chain.
There has never been a more opportune time for
content providers and media distributors to deliver
thoroughly engaged consumers who are ready
and able to buy. As a result, digitally converged
companies, enabled by new technologies, are
completely altering their payment models in ways
that better reflect the aims of Lifestyle Advertising.
We are seeing advertisers start to offer content
and communications providers greater financial
incentives to deliver higher levels of engagement with
target audiences, at every purchasing stage. While
media was traditionally rewarded for delivering large
viewership and broad brand awareness, advertisers
must now reward those providers who encourage
individual consumers to engage with their ads, give
up personal information, or engage other consumers
in their networks against the backdrop
of the brand’s offering.

64 65
Methodology

This white paper is the culmination of study and analysis of the advertising
industry on a global basis. It builds on a series of white papers previously
published by PricewaterhouseCoopers. These papers include:
Breaking Down Walls: How an Open Business Model Is Now the
Convergence Imperative (May 2006)

The Rise of Lifestyle Media: Achieving Success in the Digital Convergence Era
(January 2006)
Global Entertainment and Media Outlook: 2006–2010 (June 2006)
Additional insights were gained through interviews with members of senior
management at more than 40 companies. To delve more deeply into some
of the new dynamics of the market, we conducted a number of focus groups
with media buyers, advertisers, and consumers.

66 Methodology 67
For further information, please visit:
www.pwc.com/convergence

© 2007 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP (a Delaware limited
liability partnership) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which
is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).
Performance Improvement
Lifestyle Advertising

*connectedthinking