Maximizing the roi from online marketing

Online is the New Primetime

Gian FulgoniChairman

Online is the New Primetime

Gian FulgoniChairman

Web Content 2008

June 18, 2008

MEASURING THE DIGITAL WORLD

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Why is Online the New Primetime?Why is Online the New Primetime?

■ It’s where the audience is.

■ There are powerful new tools for online media planning and analysis

■ We have proof of the power of online advertising:– Correct metrics

– Can measure latent impact

– Can show impact on offline (e.g. in-store) sales

– Can demonstrate long term branding benefit

■ Budgets rapidly shifting online as effectiveness and efficiency of online marketing is demonstrated, but Internet marketing still underutilized by many industries



Proprietary and Confidential Do not distribute without written permission from comScore

comScore Customer Knowledge Platform:A 360° View of 2 Million Global Internet Users

Passively Observed Behavior and Survey Measurement Designed to be representative of the online population Projectable to the total U.S. population Ernst & Young certified for information privacy & security

DEMOGRAPHICS• Self-reported and validated

• Appended Segments (e.g. Claritas, Acxiom)

• Individual & Household Level

WEB VISITING & VIEWING• All Web Site/Page Click Stream• Content Viewed• Search Engine Queries• Keyword Used

SURVEYS• E-mail or Contextual “Pops”

• Behavior-activated Surveys

• Observation of All Surveys Taken Across All Suppliers

ONLINE TRANSACTIONS• All Secure Session Activity

• Purchases and Subscriptions

• Price Paid, Shipping & Handling, Promotions

• Applications/Configurations

MARKETING STIMULI• Online Ads

• Referral Links

OFFLINE PURCHASING• Linked using Name and Address

• Client CRM Databases

• Retailer Loyalty Card Data

• IRI Scanner Panel Data


The Internet is a already a massive medium, but still growing rapidly in a variety of ways

The Internet is a already a massive medium, but still growing rapidly in a variety of ways

■ 191 million U.S. people age 2+ online in a month, spending an average of 30 hours online per person*

– But 77% of 841 million global Internet users now outside of U.S.

■ 99% of online population search in a month, conducting 80 searches per searcher**

■ 73% of online population stream a video, viewing an average of 83 videos per viewer per month***

– Up 50% vs YA

■ 67% of online population visit a social networking site, spending 4 hours per month per visitor*

■ Online consumer spending totaled $200B in 2007, up 20% vs. YA – Non-travel represents 8% of consumer spend (excl. food, gas, and autos)


User Generated Content Sites Growing RapidlyUser Generated Content Sites Growing Rapidly

5

People(000)

Monthly Unique Visitors (000)


The Internet is the 3rd most used medium and about to become 2nd only to TVThe Internet is the 3rd most used medium and about to become 2nd only to TV

Newspapers 8% Magazines

7%

Watching TV 37%

Video or DVDs 12%

Radio 19%

Internet* 17%

Source: Forrester Research, March 2007

* Excludes work usage.


Internet’s reach exceeds TV’s from 7 am to 8 pmInternet’s reach exceeds TV’s from 7 am to 8 pm

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Source: National People Meter, comScore Media Metrix 2007


Internet Ad Revenues Continue to SurgeInternet Ad Revenues Continue to Surge

Quarterly Internet Advertising Revenues($ Billions)

1998 1999 20072006200520042003200220012000

Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates.

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$21.1B in 2007, Up 26% Over 2006


Ad Dollars are Flowing OnlineAd Dollars are Flowing Online

Internet

Outdoor

Cable TV

Magazines

Direct Mail

Miscellaneous

Overall

Trade Journals

Yellow Pages

Broadcast TV

Radio

Newspapers

$21 Billion

$ 7

$26

$14

$61

$39

$295

$ 4

$14

$46

$19

$44

MediaAdvertising Dollars Spent in 2007* Percent Change from 2006

Source: Global Insights as published in BusinessWeek* Other sources may define categories differently, leading to different results

60% of all ad spending in traditional media goes to branding campaigns


Yet, online is only 7% of total ad spending!Yet, online is only 7% of total ad spending!

2007 Estimate($ in Millions)

Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

% Total

Direct Mail $ 60,988 21%

Broadcast TV $ 45,749 15%

Newspaper $ 42,939 14%

Internet $ 21,100 7%

Cable TV Networks $ 20,479 7%

Radio $ 18,592 6%

Yellow Pages $ 14,538 5%

Consumer Magazine $ 13,695 5%

All other $ 55,977 19%

Total $ 296,100 100%

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U.S. Online Advertising:One third branding; two thirds direct response

U.S. Online Advertising:One third branding; two thirds direct response

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Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates.

Total Online Advertising 2007: $21.2 Billion

•Search is the biggest piece of online advertising•Branding spending still under-developed

Display 24%

Search 41%

Classifieds 16%

Other 9% Rich 10%

Display Search Classifieds Other Rich / Video


The Web Already Delivers More Advertising Than TV!The Web Already Delivers More Advertising Than TV!

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2.2 x

Monthly GRP’s Monthly Impressions Per Person

Source: Display Impressions: comScore Ad Metrix, Jan -08, Television GRP’s: comScore Estimates

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The CPM’s are just much, much lower for Internet.The CPM’s are just much, much lower for Internet.


Frequent news about moves onlineFrequent news about moves online

■ “Online is getting to the point where it may be more important than the 30-second TV spot.” Joel Ewanick

VP Marketing Hyundai Motor America

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■ “The country’s third-largest advertiser (General Motors) is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next 3 years.” Advertising Age March 17, 2008

• Even ad-spending giant P&G is considering cutting its overall ad budget by as much as 10% this year and aggressively moving ad dollars to the Web. WSJ May 12, 2008


New Tools Put Online Media Planning and Analysis on a Par with other MediaNew Tools Put Online Media Planning and Analysis on a Par with other Media

■ Panel-based measures correct problems with site server data

■ Using the correct metrics allows improved media planning and analysis– Also, look beyond clicks

■ Intelligence is now available showing advertisers and publishers detailed data on all online ad campaigns

■ Detailed segmentation of users is helping build more powerful media plans

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The Cookie Deletion Problem: Overstated Reach and Understated FrequencyThe Cookie Deletion Problem: Overstated Reach and Understated Frequency

■ 30% of Internet users delete their cookies in a month

■ These deleters do so an average of 4 times a month– 5 different cookies for same site in a month on one computer

■ True for 1st party site cookies and 3rd party ad serving cookies

■ Cookie deletion creates large errors:– 2.5 times overstatement of unique visitors in server logs

– 2.5 times overstatement of reach and a similar understatement of frequency in ad server logs

■ Need to adjust basic site server statistics using panels

A comScore Study of Yahoo and DoubleClick Cookies


Analysis of Marriott Visitor Non-Buyers (VNBs)Analysis of Marriott Visitor Non-Buyers (VNBs) Dollar Share of Lost Sales Among VNBsDollar Share of Lost Sales Among VNBs

A: Lost Opportunity Analysis

8% Bought at Marriott

92% Became Visitor Non-

Buyers (VNBs)

87%That Visit Another Travel Site

88%Did Not Convert

12% Bought

Elsewhere

12.9 Million Unique Visitors

13% Had No Other Travel

Activity

25%

14%

10%10%

8%

7%

7%

19%

IC Hotels

Hilton

Other

Priceline

Hotels.com

Choice Hotels

Expedia Starwood

Looking Beyond your Site Server DataWhat’s the Size of my Lost Opportunity?

Looking Beyond your Site Server DataWhat’s the Size of my Lost Opportunity?

$462M Sales Opportunity Gap$462M Sales Opportunity Gap


Decline in Online Ad Click-Through RatesDecline in Online Ad Click-Through Rates

2.50%

1.12%

0.41%

0.20%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Rich Media Non-Rich Media

2002

2006

Sources: Doubleclick, eMarketer, Eyeblaster, ABI Research estimates


Clickers on Display AdsSource: comScore, Total US Online Population, July 2007

“Natural Born Clickers”comScore Study with Tacoda and Starcom

“Natural Born Clickers”comScore Study with Tacoda and Starcom

Clickers

Non-Clickers


Clickers Follow the 80/20 RuleClickers Follow the 80/20 Rule

Source: comScore, Total US Online Population, July 2007

Clickers are predominantly younger (25 - 44) with lower income (under $40K)


Those Who Viewed the Ad But Did Not Click Drove Majority of Site Engagement and SalesThose Who Viewed the Ad But Did Not Click Drove Majority of Site Engagement and Sales

% of Exposed People% of Exposed People

Include View-Through Effects When Measuring the Campaign – Clicks Are NOT Enough


Majority of Sales Impact of Display Ads Occurs OfflineMajority of Sales Impact of Display Ads Occurs Offline

Impact of Display Ads

Offline68%

Online32%

Offline Online


Clicks on Display Ads Are a Misleading Metric and They Don’t Reflect Brand-Building Effects

Clicks on Display Ads Are a Misleading Metric and They Don’t Reflect Brand-Building Effects

■ Only use for direct response ad campaigns (or search)

■ Clicks don’t measure all of a campaign’s sales impact, including the cumulative (latent) and offline impact of ads

■ Clicks don’t tell you anything about brand building effects

22


New competitive advertising intelligenceNew competitive advertising intelligence

■ comScore Ad Metrix– Number of ad view impressions…per advertiser…per site

– Precise reach and frequency, full demographics and behavioral stats

– Transcription of actual ads

– Post-buy analysis

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Auto Industry Ad LeadersAuto Industry Ad Leaders

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Advertiser

Total Display Ad

Views (000)Share of Voice*

Ad-Exposed Unique Visitors

(000) Reach Average

Frequency

General Motors 1,687,065 33.00% 102,574 56% 16.4

Toyota 1,356,782 26.00% 62,428 34% 21.7Ford Motor Company 1,075,831 21.00% 94,987 52% 11.3

Source: comScore Ad Metrix, Jan 08


Automakers using Portals and Auto Resource SitesAutomakers using Portals and Auto Resource Sites

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Source: comScore Ad Metrix, Jan 08

Total Display Ad

Views (000)

Ad Exposed Unique Visitors

(000) ReachAverage

Frequency

Yahoo! Sites 935,550 72,041 39% 13.0

Microsoft Sites 584,889 39,615 21% 14.8

Fox Interactive Media 550,288 41,660 23% 13.2

AOL LLC 316,772 33,808 18% 9.4

AutoTrader 113,764 3,698 2% 30.8

Edmunds.com 97,579 4,359 2% 22.4

KBB.com 83,529 4,669 3% 17.9

eBay 80,918 15,027 8% 5.4

Time Warner - Excl. AOL 53,674 8,855 5% 6.1

Google Sites 50,306 16,192 9% 3.1

Top Properties where Auto Manufacturer Display Ads Appear


Top Sites Deliver Far Less Than Their Nominal Reach and Need Ad Networks to Expand Effective Reach

Top Sites Deliver Far Less Than Their Nominal Reach and Need Ad Networks to Expand Effective Reach

Reach of U.S.Internet Audience

Source: comScore Custom Analysis, December 2007

Bottom 50% of Viewers for Each Site

3.1%3.8%

2.5% 2.1%

Yahoo Sites Google Sites MSN-Windows Live AOL

% of Total Page Views

% of Page Views Viewed by Bottom 50% of Site Users

Average PVs per Light User (bottom 50%)

10.3 14.7 7.4 7.3

At Least Half of Top Sites Audiences Are Hard to Reach by a Typical Campaign

AOL Media Network

AOL Media Network

74.4% 72.4%

58.7% 56.5%

MSN-Windows LiveGoogle SitesYahoo! Sites

AOL Media Network MSN-Windows LiveGoogle SitesYahoo! Sites


Why have so many advertisers been slow to adopt online?Why have so many advertisers been slow to adopt online?

■ Are the wrong metrics being used, i.e. clicks instead of ROI?

■ Is it lack of proof that online advertising works?

■ Is there a bias that online is only for direct response?

■ Do some advertisers not realize what paid search can do for them?

■ comScore’s clients have been busy proving the results– Search

– Display advertising

– Offline impact (in-store sales)

– Latent effects

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“The Role of Search in Consumer Buying”2006 comScore Study with Google“The Role of Search in Consumer Buying”2006 comScore Study with Google

Source: Google/comScore “The Role of Search in Consumer Buying” Press Release, March 21, 2006; based on holiday-related purchases completed online and offline across 11 product categories for 60 days post-search

Direct Online Effects 16%

Latent Offline Effects 63%

Latent Online Effects 21%

The Three Components of how Search Drives Buying

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THE SEARCH MARKETING OPPORTUNITYAll CPG Categories

THE SEARCH MARKETING OPPORTUNITYAll CPG Categories

Nearly half of Internet Users search on CPG related terms or visit CPG related sites.

USING SEARCH

Source: comScore Marketing Solutions; 3 Months Ending April 2007 – Total U.S.

Food

Baby

Personal Care

Household

93.7MM 43.8MM

26.0MM 15.7MM

35.9MM 9.8MM

7.3MM 1.7MM

% INTERNET REACH

UNIQUE VISITORS

UVs USINGSEARCH

“The Digital Shelf”:comScore Study with P&G, Yahoo and SEMPO

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SEARCHERSU.S.

POPULATION

Average Income $63k $45K

Average Age 41 46

Female 78% 50%

4 yr. College or Better Education 45% 22%

Demographic & Life Stage Questions: Base: Searcher (n = 2,011); Non – Searcher (n= 803) = Significant difference at 95% confidence

Demographic Profile

Searchers are more affluent, youngerand more likely to be female

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Searchers can be influenced to switch brands based on factors other than price

Thinking about your last purchase, did you switch brands?

Why did you switch?

Searchers Non-Searchers

QA14/11a: Did you switch to another brand? Base: Searchers (n = 1,893); Non-Searchers (n = 751)

QA15/12a: Why did you switch? Base: Searchers (n = 625); Non-Searchers (n = 208) = Significant difference at 90% confidence.

Price (Main Reason for

Switching)

• Searchers 27%• Non-Searchers

38%

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The Brand Lift of SearchThe Brand Lift of Search


Query: Unbranded (i.e., “fuel efficient car”)

Methodology: Testing the Brand’s Placement

1. Control (No branding – “Brand X” does not appear on the SERP)

2. Brand appears in Top Sponsored result only

3. Brand appears in Top Organic result only

4. Brand appears in both Top Sponsored and Top Organic results

5. Brand appears in Side Sponsored result only

Top Organic Only

3

Top Sponsored Only

2

Top Organic AND Top Sponsored

4

Side Sponsored

5

Top Sponsored

Control, brand not mentioned

1

Top Organic

Subjects entered an unbranded query and saw one of the following search engine results pages (SERP):

Source: Enquiro Search Solutions, Inc., July 2007.

Note: All subjects (N=2722) are 25+ and considering purchasing a new car within the next year (test brand: major import auto maker).

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Test Brand

Other

None

A 16% Point Increase in Brand Association When Brand Is in Top Sponsored and Top Organic Results

A 16% Point Increase in Brand Association When Brand Is in Top Sponsored and Top Organic Results

When you think of fuel-efficient cars, which come to mind?

42% point gap between test brand and another brand

16%

ControlSide

SponsoredTop Sponsored

ListingTop Sponsored& Top Organic

Top OrganicListing

0%

10%

20%

30%

40%

50%

60%

70%

Source: Enquiro Search Solutions, Inc., July 2007; Note: There is a significant (7% point) increase from Control to Side Sponsored, as well.

Query: Unbranded (i.e., “fuel efficient cars”)

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A 2.2x Lift in Aided Brand Recall When Brand Is in Top Sponsored and Top Organic ResultsA 2.2x Lift in Aided Brand Recall When Brand Is in Top Sponsored and Top Organic Results

Which of the following brands do you remember seeing in the search results page you just viewed?

Side Sponsored

TopSponsored

Top Sponsored & Top Organic

Top OrganicListing

2.2x

1.5x

x

Test Brand

Other0%

10%

20%

30%

40%

50%

60%

70%

Source: Enquiro Search Solutions, Inc., July 2007.

Query: Unbranded (i.e., “fuel efficient cars”)

Test Brand

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What about the impact of Internet ad campaigns on in-store sales?

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Close the Loop Studies (Done with Yahoo!)Close the Loop Studies (Done with Yahoo!)

■ Dozens of studies to assess the impact of paid search and banner ads on online and offline sales

■ Real world analysis: comScore panelists divided into two matched groups (exposed and non-exposed to advertising)

– Search only

– Display ads only

– Search and display ads together

– Neither

■ Passively measured behavior, no surveys involved

– Linked to in-store sale through CRM databases, retailer loyalty cards (e.g. Kroger),

IRI scanner panel

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Search + Display Ad Effectiveness Results:comScore Norms for Offline Sales LiftSearch + Display Ad Effectiveness Results:comScore Norms for Offline Sales Lift

Incremental Impact On Offline $’s

0%

10%

20%

30%

40%

50%

60%

Search &Display

Search Display

Control Test

Search ads generate a greater lift in offline sales, but have a far lower reach and cost substantially more than Display ads

Offline $$ Per (000) Exposed

11% 8% 80%% of All Exposed

Users


Some Summary Thoughts for the FutureSome Summary Thoughts for the Future

■ The move to online advertising is in full gear

■ It will spread rapidly as traditional advertisers understand its impact

■ Panel data needed for accurate consumer metrics

■ Reach and cumulative frequency are mandatory metrics if traditional branding ad dollars are to be moved online

■ Measure latency and offline impact of online campaigns to show true (higher) ROI

■ Search can be a branding tool

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Career

Maximizing the roi from online marketing