Some Not So Secret Secrets of eMarketing

The Power of eMarketing

eMarketing Association September 5 th , 2002

Not So Secret Secrets:

1. The Internet Opportunity (Still) Remains Huge 2. Consumer Media Habits Are Changing (Duh!) 3. Broadband is Here… Now… Today 4. The Ultimate Marketing Machine 5. Great (Creative) Ideas Win

Not So Secret Secrets:

The Internet Opportunity Remains Huge

-- In spite of the stock market -- In spite of the ad slump -- In spite of the economic slowdown -- In spite of Worldcom, Enron, Adelphi, etc.

-- In spite of what the pundits have to say

1,000 800 600 400 200 128

A Large and Growing Community…Worldwide

1053 United States Worldwide 837 942 731 615 500 394 232 201 208 217 175 145 0 2000 2001 2002 2003 2004 2005 2006 Source: IDC, February 2002

Users Are Spending More Time

Average Time Spent – Home/Work Users 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 N ov -9 8 F eb -9 9 M ay -9 9 A ug -9 9 N ov -9 9 F eb -0 0 M ay -0 0 A ug -0 0 N ov -0 0 F eb -0 1 M ay -0 1 A ug -0 1 N ov -0 1 F eb -0 2 M ay -0 2 3 hours 5 mins Source: Comscore Media Metrix

And Spending More Money 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Less than $50 $50-$99 $100-$199 Adults 18+ Fall 2000 $200-$499 $500-$799 Adults 18+ Fall 2001 Source: Mediamark Research Inc, Fall 2000 and 2001 studies $800+

In More Places

Top Category Choices January 2000 Top Category Choices February 2002 News/Info/Entertainment: 59M users News/Info/Entertainment: 93M users Automotive: 5M users Travel: 22M users Automotive: 29M users Travel: 49M users Shopping: 51M users Search Engine: 56M Shopping: 87M users Search Engine: 90M Source: Media Metrix, January 2000 & February 2002 – My Metrix

The Internet Has Become An Essential Part Of People’s Lives

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 67% 43% Sunday 90% 66% Monday 91% 64% 90% 65% 90% 64% Tuesday At Home Wednesday At Work Thursday 90% 63% Friday 66% 46% Saturday Source: Nielsen Netratings, IMS Services, February 2002

And It’s Only Just Begun…Globally

$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $608 2001 B2C Revenue $1,031 2002 $1,725 2003 B2B Revenue $2,859 2004 $4,608 2005 Total Revenue $6,501 2006 Source: IDC, February 2002 (ICMM v8.1)

Not So Secret Secrets:

1.

The Internet Opportunity (Still) Remains Huge 2. Consumers Media Habits are Changing.

Online Advertising’s Growth Follows History

250% Internet Television Cable 200% 150% 1999: Peak of the dot-com bubble 100% 50% 0% -50% 1 2 3 4 5 6 2001: Dot-com demise coupled with overall advertising growth of -2% 7 8 9 Internet Television Cable 240% 195% 122% 112% 94% 81% 141% 37% 56% 66% 34% 62% -19% 33% 35% 6% 28% 19% 13% 18% 13% 13% 5% 24% 13% 8% 28%

Source: Universal McCann, IAB, and Forrester Research, Inc .

More Time Online Than Magazines & Newspapers Combined

% Weekly Media Minutes 12-64

Internet 12% Newspapers 5% Magazines 3% Radio 31% TV Radio Internet Newspapers Magazines Source: SRI, Media Mentor – Fall 2001 Usage Measured between 6:00AM and Midnight TV 49%

Internet = 12% of Media Consumption and 3% of Ad Expenditures Media Vehicle Television

*TV Total with Cable*

Print

(Magazines+ Newspapers)

Outdoor Radio Internet Total U.S. Adults 18+ Total # of U.S. Media Consumers (Fall 2001) 195M 188M 199M 169M 122M 203 Million % share of Media Minutes 49% 8% NA 31% 12% 100% 2001 % Ad Expenditures By Media 50% 42% 2% 3% 3% 100% Source: U.S. Adults 18+; Mediamark Research Inc. Fall 2001; Internet – Comscore/MM Ad Spending Source: CMR – Ad Spender, 2000 * 2001; U.S. only

Today… More People Are Using Online Travel Than Their Daily Newspaper Spring 2002 Online Travel Spring 2002 Newspaper Travel Section Spring 2000 Online Travel Section Spring 2000 Newspaper Travel Section 0 10 20 30 40 Millions Of Readers Users 50 Source: Daily Newspaper Section Readership/Travel Section – MRI Spring 2000-2002, Adults 18+; Online – Comscore Media Metrix ~ 2000 & 2002 July data sets, U.S. online Users 2+ 60 70

Same Is True for Classified

Spring 2002 Online Classifieds Spring 2002 – Newspapers Classifieds Section Read Spring 2000 Online Classifieds Spring 2000 – Newspapers Classifieds Section Read 0 10 20 30 40 50 60 Million of Readers/Online Visitors 70 Source: Daily Newspaper Classifieds Section Readership – MRI Spring 2000-2002 Adults 18+ Online – Comscore Media Metrix ~ 2000 & 2002 July data sets, Online Classifieds include: Classifieds, Careers, Personals, and Real Estate Categories Only – U.S. Online Audience 2+ 80 90

If Your Target Is Teens & Young Adults… The Internet Can’t Be Ignored Age Group Total Time Spent with Media Internet Magazines Newspapers Age 12-64 (Total Audience) 60.9HRS

Age 12-17 Age 12-24 Age 12-34

57.82HRS

60.13HRS

62.09HRS

7.2HRS

1.9HRS

2.87HRS

8.55HRS

8.37HRS

8.21HRS

2.65HRS

2.31HRS

1.99HRS

2.41HRS

2.16HRS

2.22HRS

Source: SRI, Fall 2001, Average Hours Spent with Media within an average week U.S. 12+ audience average time spent per week

What’s Wrong With This Picture?

- Nike target audience reading magazines: 29MM -- Nike advertising in magazines (2001): $81 MM -- Nike target audience online: 23MM -- Nike Online ad budget: $4 MM Source: CMR; Nielsen

The Value of Adding the Internet to the Magazine Plan

MAGAZINE only Media Plan MAGAZINE+INTERNET Media Plan Reach: 76.8% Reach: 83.1% GRPs: 845 GRPs: 936 Total Cost (Magazine Only): $5.2M

Magazine Cost: $3.5M

Internet Cost: $1.7M

Total: $5.2M

Demo: Age 12-24 Budget: $5.2M

Budget per Week: $400K Time: 13 Weeks +

What About TV?

Reach Light TV Viewers with the Internet TV Only Media Plan TV & Internet Media Plan Reach of Target Audience: 51.2% Reach of Target Audience: 75.5% Total 13 weeks GRP: 962 Weekly GRPs: 74 Total 13 weeks GRP: 1612 Weekly GRPs: 124 Demo : Age 18-49 & Light TV Viewers Cost : $300K per Week, Total: $3.9M

Running Time : 13 weeks TV: $15 CPM; Internet: $8 CPM Source: SRI, Fall 2001 – Media Mentor

Here’s Something to Think About…

Workplace Daytime: The New Prime Time

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 12 :0 0 A M 1:0 0 A M 2:0 0 A M 3:0 0 A M 4:0 0 A M 5:0 0 A M 6:0 0 A M 7:0 0 A M 8:0 0 A M 9:0 0 A M 10 :0 0 A M 11 :0 0 A M 12 :0 0 PM 1:0 0 PM 2:0 0 PM 3:0 0 PM 4:0 0 PM 5:0 0 PM 6:0 0 PM 7:0 0 PM 8:0 0 PM 9:0 0 PM 10 :0 0 PM 11 :0 0 PM At Home At Work Source: Nielsen Netratings, IMS Services, February 2002

The Office Daypart: A Significant Opportunity

TIME MODE FAVORED MEDIA

11 6 am 7 8 9 10 12 pm 1 2 3 4 5 6 7 8 9 10

At Home AM Commute Workplace PM Commute At Home

Newspaper, TV, Radio Radio, Outdoor Online Radio, Outdoor TV, Magazines Online

Not So Secret Secrets:

1. The Internet Opportunity (Still) Remains Huge 2. Consumer Media Habits Are Changing. (Duh!) 3. Broadband is Here… Now… Today

Setting “High”Speed Expectations

Broadband’s Boom Began In 2001 50 Cable 40

Broadband households

(millions) 30 20 Cable DSL Fixed wireless Satellite Fiber

Total

(millions) 10 0

2000

3.74

1.25

0.02

0.00

0.00

5.00

2001

7.76

2.96

0.25

0.00

0.00

10.97

2002

11.42

6.61

0.66

0.19

0.01

18.89

2003

15.81

10.07

1.25

0.55

0.06

27.73

(numbers may not total due to rounding)

2004

19.43

14.06

2.22

1.11

0.19

37.01

Source: Forrester Research, November 2001

DSL

2005

22.42

17.75

4.20

1.87

0.47

46.72

Fixed wireless Satellite Fiber

25 20 15 The March To Broadband Total U.S. Broadband Users (in millions) Active Reach (%) 25% 20% 15% 10 10% 5 0

Jan-00 Mar-00 May-00 Jul-00 -

Over 20% of Active Users now on Broadband 5%

-

1 in 10 Households using Broadband

Sep-00 Nov-00 -

Half (!) of ALL time online is via Broadband

Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02

0% Source: Nielsen//NetRatings, May 2002, (@Home)

Broadband Cumulative Hours Outgrown Total Narrowband Hours Cumulative Hours Online US Home and Work users

1,200.

1,000.

800.

600.

400.

200.

0.

Broadband Narrowband Month Source: Nielsen Netratings, Historical Data Points

Broadband Users Do More of Everything Online

Send/receive email Use search engines Randomly surf Research products Research vacations Company/brand sites Download software Use free email Send SMS Make purchases Use reference sites Other View stock prices Visit TV network sites Download MP3 Read newspapers Read magazines Visit weather sites Request tech support Use online chat 0 15% 30%

Source: Forrester Research, November 2001

45% 60% Online user Broadband user 75% 90% Online user 84% 68% 48% 45% 39% 31% 27% 26% 23% 23% 22% 22% 19% 19% 19% 17% 17% 17% 17% 16% Broadband user 94% 84% 69% 65% 52% 42% 58% 50% 42% 35% 30% 31% 25% 35% 51% 33% 35% 27% 39% 33%

Broadband Creates Stickiness, Loyalty and Media Consumption Growth Speed Unique Audience Pages Per Person Time Per Person (HR) Visits per person

Modem 14.4K 4,442,061 361 7:28:18 13.48

Modem 28.8/33.6K Modem 56K ISDN LAN 11,795,676 60,751,120 200,033 504,096 462 636 1,856 1,875 Cable Modem DSL 12,174,880 4,879,456 1,440 1,532 Unspecified High Speed 8,922,652 1,177 8:33:05 10:36:32 23:45:28 21:35:43 18:08:02 19:41:11 15:43:35 15.97

19.46

44.24

38.4

34.48

35.23

29.34

Source: Nielsen//NetRatings, July 2002, US Home users

Not So Secret Secrets:

1. The Internet Opportunity (Still) Remains Huge 2. Consumer Media Habits Are Changing. (Duh!) 3. Broadband is Here… Now… Today 4. The Internet is The Ultimate Marketing Machine

Only The Internet Combines Direct Marketing Targeting With Mass Media Reach Direct Marketing Advertising Promotions Commerce Data, Research and Consumer Insights

The Power Of The Internet: Need Based Solutions

Integrated with offline marketing, the Internet can uniquely fulfill the six most common, yet essential, marketing needs .

What Are Your Needs?

Awareness?

New product introduction?

Event marketing?

Re-positioning?

Co-branding / partner association?

Brand preference?

What Are Your Needs?

Coupons?

Sweepstakes?

E-mail collection?

Off-line?

What Are Your Needs?

Buyer?

Trial taker?

Visitors?

Registrants?

Qualified leads?

Conversions

What Are Your Needs?

Increase spend?

Referral?

Reduce churn?

Win back?

Crisis management?

High frequency personalization?

What Are Your Needs?

Analyze & optimize media plans CRM infrastructure / applications Online fulfillment, replacement, and cost reduction Shorten “to market” cycle Creative and offer pre-testing

What Are Your Needs?

- Customer profiling & insights - Find best prospects - Multiple media comparison - I.D./ maximize event triggers - Predict events

Some Mini Cases

Ford Explorer Intro Biggest Sale in Internet History Pepsistuff.com

Branding: Ford Explorer

Customer Identification:

Potential SUV purchasers, generally families with children

Business Drivers:

“ Explosive” 24 hour front page event to reach maximum number of prospects, plus offline TV and outdoor billboards

Measurement and Assessment

Track activity on Ford Explorer site, identify potential prospects, measure brand awareness

Results: Ford Explorer

-- 300K leads to Ford after 24 hour event -- Exceptionally strong PR in consumer and print vehicles -- Extraordinary response from dealer network

Sales Promotion: The Biggest Sale In Internet History

Customer Identification

: -- Users and potential users of Yahoo! who have either shopped online or are on the fence -- Yahoo! Shopping partners

Business Drivers:

Heavy online and offline promotion to drive sales during slow retail period

Measurement & Assessment:

Merchant participation and sales results

What it Looked Like Online

Logos free, based on editorial and brand. Retail, travel, and auction partners participated Paid Premium placements All Yahoo! Stores list their offers.

Offline Marketing & PR

• •

Radio in 10 Markets

• High online buyer penetration • Heavy-up in AM/PM drive •

Print - 4 color, full page ad

- USA Today & SF Chronicle •

Buzz

- telephone poles in key cities

PR

- 66 placements (broadcast & print) - More than 88mm impressions

Results:

• •

Over 1,000 partners 70% average lift in sales.

o

Some lifts as high as 1500%, with daily sales at holiday season levels.

Optimization: Pepsistuff

Customer Identification: Younger (13 –34) soda drinkers Business Drivers: Totally integrated online and offline loyalty program using multiple ad units on Yahoo!, chat, auctions, e-mail, TV, in store and radio Measurement and Assessment: Store sales volume vs. prior year, Brand strength, registrations, ROI vs. offline, PR,

Banner Advertising on Yahoo!

POS Materials

Pepsistuff.com Results

-- 5% increase in sales vs. year ago -- 3.5 million registrations -- 60% of registrants gave permission for future e mail correspondence -- 80% more cost effective than offline promotion - Significant increase in Pepsi monitored “Brand strength” survey -- New Pepsistuff.com coming

Not So Secret Secrets:

1. The Internet Opportunity (Still) Remains Huge 2. Consumer Media Habits Are Changing. (Duh!) 3. Broadband is Here… Now… Today 4. The Ultimate Marketing Machine 5. Great (Creative) Ideas Win

But…Be Careful What You Ask For… You Might Get It.

Fake Windows, Deceptive

But…Be Careful What You Ask For… You Might Get It.

Irritating, Too Much Blinking

OK… So What’s The Takeaway?

Like offline, smart marketers will win

• Seize the opportunity as the Internet gets bigger and better • Media plans can be more effective and efficient by integrating the Internet with offline • The Internet is unsurpassed at identifying and solving customers needs • Push the envelope creatively. It works