Consumers and the Recession: Crisis or Opportunity?

The Recession

On December 1, 2008, the National Bureau of Economic Research declared that the U.S. economy was in a recession that began in December 2007. While it took these experts a year to make this official determination, consumers have most certainly had a cloud of economic uncertainty hanging above them. The economic news in 2008 has come in constant waves of news, with increasing severity. From talk early in the year about plummeting home values and mortgage defaults, gas prices that peaked to record highs in July, the collapse or financial bailout of major banking and insurance institutions, to trillions of dollars of lost investments, and the potential for major bankruptcies in the U.S. auto industry, consumers have been buffeted by bad news. No wonder, therefore, that consumer confidence, as measured by the Conference Board Consumer Confidence Index™ hit an all-time low in October 2008, with only a slight rebound in November.

Parks Associates Consumer Research in 2008: Understanding Consumer Buying Changes

Our consumer research in 2008 has understandably had more of a focus in understanding potential changes to consumer spending and entertainment habits because of economic conditions. One nice thing about running many surveys throughout the year is the consumer sentiment tracking that we're able to pull together. For example, we included consumer sentiment and behavioral tracking questions in a number of studies this year, including:

• National Technology Scan (Q1);
• Consumer Electronics Purchases: Quarterly Monitor (Q2);
• TV 2.0: The Consumer Perspective (Q3);
• Entertainment 2.0 in Europe (Q3); and
• Digital Media Evolution (Q4).
  

How is the Economy Impacting Consumer Spending?

I'll give you an example of where the tracking has been useful as we've asked some consistent questions in each survey. When we ran the National Technology Scan in January 2008, economic concerns were already quite prevalent. In this study, we asked consumers about whether they had already changed their spending habits as a result of economic uncertainty. At that time, about one-half of those surveyed indicated that they had not yet made any changes. However, about a quarter of respondents – in response to the higher gas prices – were indicating that they were driving less. In categories that would most directly impact the cable industry, smaller percentages of consumers indicated that they had cut back for outside entertainment.

By April, our Consumer Electronics Purchases: Quarterly Monitor indicated a significant shift in consumer mindset regarding the economy and the impact on consumer spending. Nearly two-thirds of consumers surveyed indicated that they had changed spending habits. It is notable that expenditures for outside-the-home entertainment (such as going out to the movies) was taking a bit hit at this time. In terms of spending that was likely threatened, the top three categories were dining out, travel, and out-of-home entertainment.By the time our Digital Media Evolution survey was fielded (late November 2008), the full effects of the economic situation were being felt fully by businesses and consumers alike. Nearly 50% of consumers surveyed indicate that they will be spending less on consumer electronics because of the economic conditions. And, although Black Friday and Cyber Monday both showed growth over 2007, there is no guarantee that spending for the rest of the holiday season will remain as healthy. For household services (such as Internet and pay TV), recessionary concerns appear to have less impact. Consumers are far more likely to cut back on travel, dining out, and outside entertainment expenses before trimming household services such as home telephone, pay TV, and Internet. Only 4% of consumers with home phone service and pay TV service, respectively, plan to cancel their services because of the economy. More recession-proof are services such as Internet and mobile phone.

Where are the Opportunities?

Although all companies should rightfully be concerned about the impact of the economic slowdown on their businesses, can there be opportunities, particularly among service providers? Interestingly enough, there are dynamics within the industry that point to potential gains among broadband, communications, and entertainment providers.

One key data point that comes out of our surveys (and the surveys of industry players) is the continued growth of entertainment-at-home (at the expense of outside-the-home entertainment). One interesting finding from our TV 2.0: The Consumer Perspective study is the self-reported changes in video habits. As was indicated earlier, consumers are far more likely to reduce expenditures for outside entertainment like movies in a recessionary period. Video-on-demand leads the way in increased video consumption, while DVRs and on-demand programming appear to have taken a significant bite out of renting or buying television series on DVDs.

Verizon recently reported some research that confirms this finding, noting a rise in what they call "Home Enterstayment." In a December 1 press release, the company reported that a majority (57 percent) plan to spend more time at home turning to their television instead of events outside the home.

Focus on Cost Savings: Customer Support in the Digital Home

In these uncertain economic times, revenue-growth strategies may take a back-seat to more of a back-to-the-basics approach of cost savings. Chief among OPEX reductions should be strategies that work on streamlining customer support, which could be a huge cost liability for service providers. Our own research, for example, finds that service provider costs for supporting home networks alone could run in the hundreds of millions of dollars annually. By implementing self-diagnostic and troubleshooting solutions and building remote support capabilities, service providers can actually turn customer support from a liability to an opportunity, reducing OPEX costs initially and perhaps growing revenue-generating customer support businesses in the long-term.

I'm actually at the Cisco C-Scape analyst event right now, and the customer support enhancements are a key strategy that is being communicated by the company's executives as they look at their roadmap from 2009 and beyond. It's clear that they will be taking the Pure Networks assets and tying them more closely with both their customer premise equipment and their service provider solutions. OPEX cost reductions, their executives argue, will be a critical factor in service provider strategies.

Concluding Thoughts

Although there is no such thing as a truly recession-proof business, we are encouraged by what the data we've collected this year indicates how companies can take advantage of opportunities to solidify and plan for future growth. For service providers in particular, two key opportunities are bringing a high-quality and convenient entertainment experience to the home and improving customer support. If you look at the key service provider strategies today - customer retention, customer acquisition, and revenue growth per subscriber - these two areas alone will drive significant long-term benefit.

In 2009, Make Consumer Ad Preferences Priority One.

As 2008 ended in a bang (I’m talking flames not fireworks), industry analysts scrambled to revise their advertising forecasts for 2009 and beyond. The current economic recession has caused increased uncertainty in the minds of advertising industry executives (as well as anyone who eats, breathes, and sleeps in the U.S.). I’ve read countless articles related to the advancement of new digital advertising technologies specifically targeting TV, online, and mobile. And while the opinions and predictions are fascinating, they also make my head spin especially when considering recessionary setbacks.

Most digital media advertising forecasts have been reduced from double-digit growth to single-digit growth for 2009 and beyond. Even so, all forms of digital media will see continued growth in advertising revenues at the expense of more traditional forms of advertising. Good news for digital media during a recession.

While the ad industry (content providers and publishers, technologists, advertising/media agencies, and media companies) contemplates which new forms of advertising will dominate in the future, I suggest all involved consult the consumer first.

Why? Digital media has created a consumer-centric world. It’s about what the consumer wants, when they want it, and how they get it. No longer does the Field of Dreams adage, “If you build it they will come” apply. Especially, when considering Generation Y/Millennials/Net Generation - depending on the source the monikers represent persons age 11 – 31. This generation is accustomed to a two-way communication approach since childhood – this applies to advertising as well. They’ve “grown up digital.” Advertisers are already looking at this generation in order to understand future purchase processes and preferences as this group matures into legitimate consumers.

Targeted, Addressable Television Advertising via Set-top Box.
Although I stated earlier on that ad revenue on digital media will grow at the expense of traditional mediums, I’m not predicting the death of traditional TV advertising. However, I do believe television advertising will eventually evolve into a targeted, addressable form delivered via cable and/or satellite set-top box.

In late October 2008, I posted a blog suggesting 2009 would be the year for advanced cable television advertising. However, until the economy stabilizes I highly doubt major cable companies, through the creation of Canoe Ventures LLC, will be financially positioned to advance and build-out targeted, addressable TV advertising via set-top box in 2009. Daily announcements of job cuts, operating budget cuts, and overall conservative spending in 2009 will halter the advancement of new forms of cable TV advertising. So, now is the time to ramp up efforts to better understand what types of targeted TV advertisements consumers will embrace and the forms they will not.

Online Advertising
The online advertising space will fare well in 2009. With that said, the online advertising ecosystem is still evolving. There was much discussion in 2008 regarding how online ads are bought (ad networks, traditional advertising agencies, marketers, content providers), where ads are placed (professional sites, video-sharing sites, social networking), what online ad formats to use (linear video, non-linear video, banner, search), and most importantly, online audience measurement and effectiveness (ROI, CPM, CPC, CPA). The online ad industry is still trying to figure out the most efficient and effective best practices and guidelines and delivery solutions. As the advertising industry clutches its purses during the recession, focus will be placed on predictable mass audiences, performance-based advertising solutions (effectiveness and trackability), and brand safe content. All of which points back to the consumer.

Mobile Advertising
2009 will be a year of continued development, advancement, and revenue growth for mobile advertising. Continued growth will be spurred due in large part to the proliferation of smart phones (iPhone, G1, and Blackberry). Again, consult the consumer first. Avoid unnecessary build-out costs and ineffective mobile ad formats/solutions by enhancing your knowledge of consumer mobile habits and ad preferences.

It's Simple: Make Consumer Ad Preferences Priority One

In 2009, top priority should be given by all companies in the digital advertising space to consumer advertising preferences. Consult the consumer during development and prior to deployment of the ad technology, format, and/or solution. I review a lot of data regarding audience measurement, new advertising technologies and formats and their utility but as advertising evolves in a digital age the industry must consider what ad forms and ad placements consumers prefer. I don’t suggest the industry is unaware or unresponsive to consumer demand in regard to advertising, but I question the importance as relatively little is reported or discussed regarding the ad preferences of the consumer.

P.S. This article validates my point.

Home Theater Systems are Recession-proof?

Here is an interesting data cut from our recently-released study Consumer Electronics Purchases: Quarterly Monitor. In this survey, we asked respondents in 1,090 U.S. Internet households to tell us which consumer electronics products were most-likely to be purchased in 2008. We then followed up with questions related to their concern about the country's economic situation and whether that would impact their specific purchase intentions.

When you look at the percentage of likely buyers remaining after stripping out those lost because of economic concerns, MP3 players, digital cameras, and personal computers top the list. These are logical findings, as these products tend to have high replacement rates and are commonly gifted. As the MP3 players and digital cameras continue to fall in price, the impact on the consumer's wallet is less severe.

One interesting finding was how home theater purchases are high on the list in terms of more recession-proof. One theory I have (based on qualitative work that we did several years ago) is that consumers view home entertainment as a cost-saver! We talked to consumers who had purchased higher-end home theater systems, and I was really surprised at the people who indicated that they were motivated by cost-savings – spending less money out at the movie theater by bringing the entertainment experience in home. I think that the notion of cocooning also resonates well in hard times. We certainly saw this after 9/11 and the economic slide after the Internet bubble burst. People want to come home, relax, and forget about their troubles!

On the converse, high-definition televisions and high-definition DVD players are less recession-proof. I can certainly understand the consumer mentality. Despite the major decrease in high-definition television prices the past few years, these are still bigger-ticket purchase items. And, although the high-definition DVD format battle has been settled (and we're expecting sales of stand-alone players to grow about three times of what they were in 2007), consumers may view these as optional, particulalry with average price points north of $500, and with lower-cost upconverting DVD players available. The good news for the CE industry is that the tax rebate checks are out there, and we expect them to spur at least some consumer spending. So, the rebates may perform exactly as intended - to offset concerns about the economy and encourage consumers to spend more freely. The Scherfs got their rebate deposited today, and if the e-mail back from my wife is any indication, that check is all but spent already!

Holiday Purchase Intentions and Recession-proof Gaming Industry?

We now have incredibly fresh data on consumer purchase intentions between now and January 1, 2009. We put a survey into the field late last week titled Digital Media Evolution, and a significant focus is on consumer electronics purchases made this year and those planned for the rest of 2008. I've organized the data under some major themes.

What Will Consumer Electronics Purchases Look Like this Year?

About half of consumers surveyed (49%) indicate that they will purchase fewer consumer electronics this year due to economic uncertainty. Interestingly enough, 17% of consumers plan to spend more on consumer electronics this holiday season, even as they reduce gifting for other products.

How Much are Consumers Planning to Spend?

Twenty-eight percent of consumers don't plan to spend for any consumer electronics this year, but 19% plan to spend more than $500. For gaming software, 49% don't plan to buy, but 16% plan to spend $100 or more.

Top Planned Holiday CE Purchases

When asked "How likely is your household to purchase any of the following products before January 1, 2009," gaming software (either for the console or the PC) tops the list. Smaller electronics look to be more popular this year.

There was in interesting article in CNET today about the gaming industry and whether it's recession-proof. However, here's a stat that was cited that simply cannot be true:

"[Forty-six] percent of consumers expect to purchase a video game system of some kind on Black Friday, the day after Thanksgiving."

That simply cannot be 46% of all consumers. Maybe 46% of consumers who plan to purchase a consumer electronics product? Even that seems way too high.

We'll see come Monday what the end result of Black Friday was. The wife and I had discussed buying an HDTV for the bedroom, but I'm convinced that we may see even better deals right after the Christmas holiday, so I'm waiting. Plus, who in their right mind wants to crawl out of bed at 4 a.m. the day after Thanksgiving?

Parks Associates finds monitoring revenues keeping home security industry afloat during recession

New report reveals monitoring makes up 75% of home security revenues --

Monitoring revenues are still the financial bedrock of the U.S. security industry, constituting 75% of all revenue, according to Home Systems: Home Security Update, which reports monitoring will cushion this market during the recession.

This new report from Parks Associates finds the number of monitored security households intending to cancel their service is only 4-8% higher than normal due to the economic downturn. The report also warns that the resilience of this service category will attract new competitors.

Home Systems: Home Security Update reports the number of monitoring service subscribers will not increase as quickly now as in past years due to the drop in new starts and the lower number of households moving into new residences. However, the current base of customers shows a predilection to keep their monitoring services and will even tolerate a small fee increase.

For more information, click here.

3D TV – Coming to a Living Room Near You

Last night’s trial run of an NFL broadcast in 3D was not without hiccups, but nonetheless an exciting experience, so we are told. Four experiences over the past year have convinced me that 3D will land in our living rooms within the next two years.

First, while at last year’s CES, TI was demonstrating 3D programming on two DLP TV models. The experience was very impressive, but more amazing was to hear all 16 people in the demo area say “wow” at the same time. This spring I spent some time with representatives of 3ality Digital LLC, the L.A. company that not only enhanced 3D display technology for the TV, but elevated the filming of 3D content to a true art form. They are the talent behind National Geographic’s amazing U2 3D IMAX production – a visual experience so stunning that you can count the fillings in Bono’s back teeth while he belts out Pride. In a pre-release sneak peak of U2 3D, the room quickly filled with curious onlookers whose only words were again, “wow.”

This fall at the IFA conference in Berlin, the German national think tank and technology lab Fraunhofer Institut demonstrated 3D technology on TV which did not require stereoscopic glasses and which displayed 2D content which had been enhanced to add 3D effects. While not as rich as previously mentioned examples, the demonstration was evidence that 3D will soon be offered without glasses and costly 3D videography.

Lastly, as we carefully watch consumer purchasing habits while the economy collapses around us, we see that TVs and TV services are holding up fairly well. Today’s news in TV Week states that over half of adults surveyed for Verizon plan to beat the recession by spending more time at home with TV-based entertainment. Parks Associates’ consumer surveys confirm that CE products and services are low on the consumer cut list.

Greater emphasis on the home entertainment experience suggests that the very powerful Wow! factor of 3D will find fertile ground in the home. After all, for those that have owned 3D capable TVs for more than a handful of years, isn’t it time to find a reason to upgrade? 3D will be your answer.

How Cable Might Fare in the Recession

Cable operators such as Comcast and Time Warner Cable might be hurt during this economic downturn by fewer revenues from DVRs, high-definition channels, and premium channel subscriptions (such as HBO), but they should fare okay, according to Saturday's Wall Street Journal. There are some interesting factoids in the article worth noting:

• Comcast reported average monthly revenue per subscriber of $110.71 for the third quarter, 8.8% higher than the year-earlier number. Video accounts for about $64 of the number, up $3.20 from a year earlier, with $35 coming from Internet access and phone combined, up nearly $6.
• Only about $4 of per-subscriber monthly revenue at Comcast comes from DVR and HD revenue, estimates Sanford C. Bernstein analyst Craig Moffett, while pay per view contributes less.

Broadband and voice services are the real profit centers for cable right now, and we don't necessarily see consumers cutting the cord for these services right now.

Apple 4Q08 Sales Highlights

Apple released its calendar year 4Q08 earnings this afternoon. Here is a quick recap of the numbers and growth I care most about:

iPod: 22.7 million units for the quarter, slightly higher than my projected 21.9 million units. This gives Apple total sales of 55.3 million units in 2008, up 5% year over year. Average selling price dropped slightly from $150 to $149, indicating that holiday sales did not help Apple sell more high-end models. As a result, iPod revenues in 2008 dropped 4% year over year. Apple said in the earning release that iPod growth came mainly from the international market.

iPhone: 4.36 million units shipped during the quarter, down from 6.9 million in 3Q08. This was lower than my estimate of 5 million units, and it looks like the recession did have some impact on iPhone demand. But more than 11 million iPhone sales in two quarters is still a great achievement

Apple TV: The Company reported 300% yoy volume growth in 4th quarter, but volume was still low overall. Tim Cook, the acting CEO of Apple, referred to Apple TV as “still a hobby.”

Other Music Related Products and Services: This is where the iTunes sales are reported. Revenue topped $1 billion for the first time, up from $832 million in 3Q08 and a net increase of almost $200 million over 4Q07. A large portion of the contribution should come from Apple App store sales, if we assume modest increase in year-over-year iTunes music and video sales. Of course, rental revenues also helped.

It looks like not a bad quarter for Apple, except for the weaker unit sales of iPhones. Since this is only the second quarter of iPhone 3G on the market, its seasonality and demand strength is a bit difficult to model. Given the disappointing mobile handset shipment numbers from Motorola, Palm and Sony Ericsson reported last week, the first half 2009 could be tough even for the smartphone market.

CE purchases low in first half of 2009, but consumer intentions higher for the second half

PCs and flat-screen TVs remain popular; netbooks starting to generate consumer interest

The recession continues to limit CE shopping, as nearly 50% of U.S. broadband households did not buy a CE product in the first half of 2009, according to Parks Associates’ Consumer Decision Process.

This ongoing service, which surveys consumers on their past purchases and future intentions for over 35 CE products, found consumers are still hesitant to buy, with fewer households overall buying CE than in 2007 and 2008.

The most popular purchases in the first half of 2009 were desktops, laptops, and LCD flat-screen TVs, with 14-17% of households buying these products. With 5% of households purchasing in the first half, netbooks are showing a strong market start. Intentions to purchase netbooks are fairly high for the second half of 2009; this new product category will be in over 10% of broadband households by New Year’s.

Parks Associates’ Consumer Decision Process service provides comprehensive tracking and analysis via multiple surveys throughout the year on consumer purchases, intentions, brands, brand loyalty over time, shopping processes, information sources, prices paid, future budgets, and triggers to purchase phases. The next survey will measure holiday shopping intentions of U.S. consumers.

Tricia Parks will present data and analysis from Consumer Decision Process at the upcoming Webcast “Year-end Outlook for Consumer Electronics Purchases.”

Casual gaming revenues to top $1 billion by 2013

Social networking and community features enable gaming companies to expand --

Online gaming companies should embrace social networking and community features as key strategies in continuing the rapid growth of the gaming market, according to international research firm Parks Associates. In its new report Networked Gaming: Driving the Future II, the firm forecasts the market for premium casual games will exceed $1 billion in revenues by 2013.

Parks Associates notes that social and community features can help companies in casual gaming expand beyond their traditional target demographic of women ages 35-54. Offering features such as a persistent identity and integration with social network sites allows companies to maintain their core audience while broadening their appeal.

Game companies should use social networks and gamer communities as marketing and distribution channels for their new and existing games. Gaming has proven remarkably recession-proof, so as companies try to capture subscriber dollars, these offerings will serve as differentiators in a very competitive market.

These features can also build gamer interest and loyalty among the growing number of free-to-play MMORPGs, which will include over 20 million gamers by 2013. The report recommends large game publishers should build cross-platform, gamer-centric networks. Online publishers should also leverage open-platform efforts like Facebook Connect and MySpaceID, allowing users to enter online gaming websites with their social network ID and share their online activities with their network of friends.

Networked Gaming: Driving the Future II analyzes a variety of networked gaming technologies and business models. The report includes company profiles, consumer data, and market forecasts.

Parks Associates survey identifies impact of education and income on consumer PC purchase habits

For each $1,000 in income, U.S. households will pay on average $1 more for a PC, according to the Consumer Decision Process Annual Survey, which has quantified the influence of income and education on the amount consumers spend on specific CE products.

International research firm Parks Associates recently completed this survey of over 5,000 U.S. consumers on their 2008 purchases and 2009 purchase intentions. The research, part of the Consumer Decision Process Service, examines ownership and attitudes toward product categories such as PCs, MP3 players, LCD and connected TVs, home networks, and Blu-ray players.

Results from the survey show that consumers with a graduate degree spend, on average, $100 more for a computer than consumers with only a high-school degree. Income levels also affect the final price for computers, as households with $200,000 in annual income spend over $150 more for a laptop compared to households with $50,000 in annual income.

“The prices consumers pay for PCs and laptops are remarkably elastic, especially when compared to products such as DVD players, game consoles, and home networks, where prices are basically flat across different income and educational groups,” said John Barrett, director, research, Parks Associates. “These results allow us to measure the impact of specific consumer attributes, such as level of education, and use that to predict both the products consumers are interested in and how much they’ll pay for certain items.”

For example, Barrett says, higher-income households would be more willing to pay a little extra for a better laptop, whereas they see less value in paying extra for a high-end DVD player. As a result, high- and low-income households pay basically the same for a DVD player.

Tricia Parks, CEO, Parks Associates, and Vipin Jain, CEO, Retrevo, presented research from the Consumer Decision Process Annual Survey on June 3 at CONNECTIONS™: The Digital Living Conference & Showcase. Their presentation, Navigating the Changing CE Purchase Process, discussed the impact of the recession and the need for flexibility in selling CE to consumers, especially as the power of brand has diminished.

For the full press release, click here.

Q&A: What to expect for consumer electronics shopping this holiday season?

What are we expecting from consumer electronics sales this holiday over last?

• Consumers are feeling more confident in their CE spending. A higher percentage of broadband households expect to spend more in 2010 on consumer electronics than last year.
• Based on a released study Consumer Decision Process – 2010 3Q Summer Updates, a total of 68% of U.S. broadband households made at least one CE hardware purchase between January 1 and mid-August, a rate 10% higher than that tracked for the same period in 2009.

What devices/companies will drive advertising spending for consumer electronics this holiday season?

The major consumer electronics brands – from Sony, Samsung, LG, VIZIO and the like – will drive foot traffic at retail simply because of the advertising they are doing for 1) 3D TVs and 2) connected TVs. We expect Sony’s Google TV and Logitech’s Revue (also a Google TV product) to capture at least attention, if not overwhelming sales.

Why, during the depths of the recession, were people still willing to pay out for expensive CE devices such as HD TVs?

A big trend was consumers pulling back on outside-the-home entertainment (dining, movies, theater, etc.) and thinking of ways to “cocoon” and bring entertainment home. In many cases, consumers view the purchase of a large HDTV and/or a home theater system as a cost-saver, because it allows them to recreate the sights and sound of the theater without the expense. Add in an $8.99 Netflix subscription with unlimited streaming – including HD content – and consumers really feel like they’re getting a value. I think that smartphones are success for many reasons, but one key thought is that for the on-the-go consumer (younger, or older heavy business traveler), that smartphone augments or outright replaces multiple devices for communications, entertainment, and Internet access. So, in a sense, it could almost be considered a cost-saver.

What do you expect from the iPad - how much will sales kick up during the holiday compared to earlier this year?

We expect strong sales of iPads to cut into sales of netbooks and mid-range laptop computers. iPad has expanded its retail channels (e.g. Target, Verizon), and the supply issue that bottlenecked iPad sales during the summer is history. So we are going to see higher rate of iPad sales in 4Q compared with 3Q10 for Apple.

What will be some other hot consumer electronics buys?

• smartphones
• e-Readers
• iPads and other tablet computers
• Roku Video Players
• Apple TV
• Products such as the Western Digital WD TV Live Hub
• Kinect/Xbox 360 and PlaystationMove
• digital SLR cameras
  
  
  
  
  
  

Parks Associates forecasts advanced TV, mobile advertising, and social networking to lead long-term recovery in U.S. ad spending

Targeted and interactive TV advertising will lay the foundation for the long-term recovery of U.S. ad spending, while spending on broadcast network TV will return to pre-recession levels in 2010, leading the more immediate recovery, according to Advertising Outlook: Shifting Dollars.

This new report from international research firm Parks Associates features a survey of U.S. advertising and media executives and found this group optimistic about 2010 ad spending as well as the long-term impact of advanced advertising formats. A majority would pay a premium for addressable TV ads, with almost 40% willing to pay upwards of 20% more over traditional TV ads.

Addressable TV ads, defined as TV commercials delivered via set-top box to viewers targeted by demographic information, viewing interests, or geography, represent a small portion of current ad budgets but will command higher premiums as more digital TV service operators add addressability within their offerings.

Advertising Outlook: Shifting Dollars also found almost 60% of media decision makers expect spending increases in broadcast network TV in 2010 and over three-fourths expect a budget increase for social networking advertising. Spending on all major mobile advertising formats will likewise increase, with branded microsites, mobile video, and text messaging expected to reap the largest year-over-year percentage gains.

For the full press release, click here.

Security Monitoring Fees for U.S. households have increased 15% since 2007

Home security companies have avoided the worst of the recession due to a stable core of consumers who have kept their monitoring services despite rising fees.

In a recent report Home Systems: Home Security - Analysis and Forecasts, Parks Associates finds the average monitoring fee for a U.S. household increased from $28.60 to $32 between 2008 and 2010. This rise has kept revenues from home security relatively stable, despite declines in overall sales due to weak home sales and catastrophic drops in new starts. This strategy relies on a group of existing customers who will retain their service despite rising monthly costs, which has been successful but has its limits.

IP technologies open the door on all industries to new, nontraditional competitors. Moving forward, the security industry must be careful not to raise monthly fees too quickly, or it risks accelerating entry of these new players. Continued aggressive fee increases may create short-term benefits but risk long-term turbulence. Instead, security companies need to reposition to win new customers, rather than expecting their existing customers to carry the burden.

Which Consumer Electronics Products May do Well this Holiday Season?

There's an interesting Reuters article today that provides a pessimistic outlook for consumer electronics sales this holiday shopping season. Given everything that consumers have faced this year - high gas prices, news about bank failures and financial institution bankruptcies, falling home values, and a $700 billion government bailout that may or may not occur - consumer sentiment regarding their purchase intentions these days is probably more negative than at any other point in the last few years.

We tested some consumer electronics purchase intentions with a survey in Q2 called Consumer Electronics Purchases: Quarterly Monitor, and I wrote a couple of blogs about which CE products appear to be more recession-proof than others. We currently have a survey in the field in five major European countries that is, among other things, looking at purchase intentions for a variety of CE products, including Blu-ray players.

Now, we're preparing a Holiday Intentions Survey that will be a specific look at consumers and what they may or may not planning to buy in the next few months. That should provide some interesting data.

Angling for a Father's Day CE Gift? Think Again.

Christopher Lawton at The Wall Street Journal writes today that economic worries and high prices for just about everything have consumers thinking about buying less-expensive consumer electronics products instead of splurging for the huge and expensive high-definition television. He used the data from our recent study Consumer Electronics Purchases: Quarterly Monitor. Despite the millions of tax rebate checks that have made their way to U.S. consumers, we have a feeling that many have simply been saved or used to pay down debt or perhaps more mundane purchases. Heck, ours went to get our fence replaced following a spring storm!

So, which consumer electronics devices are more recession-proof than others? Follow our blog to some of the data from the study.