The Impact of Loyalty Initiatives on Subscriber Retention

The Palms, Las Vegas

March 5, 2007

2007 MAAX™ USERS GROUP

Overview

Loyalty Programs today

The Globe and Mail • – Newspaper Overview

The Recognition Program • – Overview and Update

Preliminary Results

Open Discussion about Effectiveness

Loyalty Programs Today

There are hundreds of them.

They all want to be top of mind and have the most valuable card in your wallet.

Generally consumers are required to spend, collect and redeem.

It’s difficult, and can be expensive to win consumer awareness, commitment and participation as their first choice for loyalty.

Consumer Expectations:

A program that’s easy to understand and use.

Significant value in exchange for their time and/or money.

Compelling and interesting rewards and offers.

Regular, permission based worthwhile communication pushed to them.

Strict compliance to privacy and ethical practices.

Existing Newspaper Programs:

Many existing programs may well be serving some of the needs of the newspaper.

However the following points should be reviewed: • Does the program have measurable objectives? • Is there a person or department directly responsible? • Are there any revenue generating components? • Are departments other than circulation involved? • Is there regular consumer research conducted on the

program?

Many current programs seem somewhat “one dimensional” and could be enhanced to improve retention, revenues and consumer satisfaction.

Links Loyalty Programs

Links has the capability to create a variety of state of the art Loyalty Programs in whole or in part for any market.

Links Loyalty programs can fully integrate with MAAX® as well as other CRM applications.

The programs are implemented and operated as turn-key applications in conjunction with the newspaper marketing and sales departments.

The programs operate through multi-level offers driven through external and internal sources.

The Globe and Mail

Case Study:

The Globe and Mail:

Subscriber Recognition Program

Newspaper Profile:

Canada’s National Newspaper – founded 1844

Over 1,000,000 Readers each day

*Circulation • Monday to Friday: 335,013

• Saturday: 419,343

Over 80% EZ Pay Subscribers

Highest general discount is 12 Months for 10 (17%)

*Source: ABC Fas-Fax for 6 months ending Sept.30, 2005

Pai

d a

t 50%

or

more

Cir

cula

tion i

n (

000’s

)

Total Weekday Circulation Paid at 50% or More

Source: ABC Publishers’ statements weekday Circulation

Globe Mon.- Fri.

276,922

259,737260,816

250,215

262,256268,133

257,018

238,986

230,281229,653

260,650

-

50,000

100,000

150,000

200,000

250,000

300,000

Sept.'00 Mar.'01 Sept.'01 Mar.'02 Sept.'02 Mar.'03 Sept.03 Mar.'04 Sept.04 Mar.'05 Sept.'05

Globe Mon.- Fri.

*Source: ABC Fas-Fax for 6 months ending Sept.30, 2005

159

152

158 157

164

100

110

120

130

140

150

160

170

Mar.'01 Mar.'02 Mar.'03 Mar'04 Mar.'05

Globe Wkdy HD Paid>50%

Hom

e D

eliv

ery C

irc.

Pai

d a

t 50%

or

more

Cir

cula

tion i

n (

000’s

)

Source: ABC Publishers’ statements weekday Circulation

Total Weekday Circulation

Home Delivery Paid at 50% or More

*Source: ABC Fas-Fax for 6 months ending Sept.30, 2005

Globe Sat.

370,099

349,481349,901

341,206

347,882350,669

355,020

348,090

331,161

312,594 311,954

280,000

290,000

300,000

310,000

320,000

330,000

340,000

350,000

360,000

370,000

380,000

Sept.'00 Mar.'01 Sept.'01 Mar.'02 Sept.'02 Mar.'03 Sept.03 Mar.'04 Sept.04 Mar.'05 Sept.'05

Globe Sat.

Total Saturday Circulation Paid at 50% or More

Pai

d a

t 50%

or

more

Cir

cula

tion i

n (

000’s

)

*Source: ABC Fas-Fax for 6 months ending Sept.30, 2005

Total Saturday Circulation

Home Delivery Paid at 50% or More

194

188186

181182

100

110

120

130

140

150

160

170

180

190

200

Mar.'01 Mar.'02 Mar.'03 Mar'04 Mar.'05

Globe Sat. HD Paid>50%

Hom

e D

eliv

ery C

irc.

Pai

d a

t 50%

or

more

Cir

cula

tion i

n (

000’s

)

*Source: ABC Fas-Fax for 6 months ending Sept.30, 2005

4,307

1%

39,254

12%14,530

4%

276,922

83%

Paid >50% Paid <50% Bulk Non-Paid

Total Globe Wkdy. 335,013

88%

370,099

1% - 3,7361%

3,474 10%

42,034

Paid >50% Paid <50% Bulk Non-Paid

Total Globe Sat. 419,343

Circulation Composition

Why Is Circulation Up?

An Award Winning, High Quality Paper

Regular Product Enhancements

Improved Customer Service

Senior Management will Take Strategic Risks

Brand Integrity Is Always Maintained

Constantly Improving Acquisition Methods

The Globe Recognition Program

Globe Recognition

Why the program was developed

How the program works

The Consumer Audience

Recognition Program Benefits

Advertising Partner Benefits

Overview

Why Was The Program Developed?

To recognize and reward the most loyal and valuable subscribers

To improve the retention of the best customers

To encourage long-term, full week subscriptions

It allows a select group of advertising clients to extend their marketing messaging in the form of unique, high valued direct marketing offers to the cream of the subscriber base.

Launch Events • Downtown Toronto was targeted with two weeks of

promotional activity.

• Media included: Radio

Out of home

In-paper

Magazines

Commuter Trains

• Registering the card made subscribers eligible for several prizes including:

2004 Volkswagen Passat

$5,000 in Taylor Made Golf Equipment

Vacation Packages

How Does the Program Work?

The program is not circulation centric. It is at least equally driven by advertising and marketing.

The program rewards the most loyal and valuable subscribers by offering them exclusive offers to retail locations and special opportunities to access events.

Unique, exclusive offers in a number of key categories are maintained in a secure Globe Recognition web site.

Subscribers register for the program and access the offers by logging in with their user name and password.

How Does the Program Work?

The program is managed by Links.

No points are collected or redeemed.

Email alerts provide timely information about the offers to the audience.

An extensive network of suppliers, retailers and advertising clients provide fuel for the offers presented.

All offer content and the channels used (generally online, email and direct mail) are approved by The Globe and Mail.

The Audience

A large percentage of the eligible subscriber base has registered for the program (over 25%).

They are a significantly more affluent than the readership base (which is already a very desirable audience).

Similarly they are also very well educated.

Their response to the program in registration and to the offers has been very positive.

Merchants are pleased with the quality of consumer with respect to store traffic and activity response.

Households with Income over $150,000

Income Profile

100

211

489526

0

100

200

300

400

500

600

Ontario Globe Readers

Globe Subscribers Recognition Cardholders

Index

Source: Globe Circulation; NADBank, Statistics Canada

Education Profile Households with University Education

100

163179

186

0

100

200

Ontario Globe Readers

Globe Subscribers Recognition Cardholders

Index

Source: Globe Circulation; NADBank, Statistics Canada

Advertising Partner Benefits

Direct access to a key demographic component of the subscriber base.

A significant value added opportunity that is generally exclusive to advertising clientele.

Integrated messaging capabilities.

Increased store traffic.

Measurable results.

The Offers

Offers must be high value, unique and exclusive.

All offers are communicated through The Globe and Mail and branded as such.

No lists are rented and no subscriber data is shared.

Rather than simple discounts, we prefer to develop unique experiences and opportunities that are simply normally unavailable to the general public. Bundling multiple merchant offerings is a viable option.

The best offers serve advertiser objectives as well as those of the Recognition Card Program.

Recognition Home Page

Exclusive Offers

Sample Recognition Events

Globe Recognition

Advertiser Offer Examples:

Neil Young Film

“Heart of Gold”

• Over 600 Entries received in

one hour.

• Client was very pleased with

the audience delivered.

• Subscribers received great

value and they were very

appreciative.

Advertiser Offer Examples:

Tim Robbins Film

“Catch a Fire”

• Event sold out in two hours.

• The client (Alliance Atlantis)

wants to repeat the event.

• Paramount has been

approached and will also be

running similar events.

McCartney Concert

• Event sold out in 20 minutes

(400 tickets)

• These events provide access to

tickets 3 to 5 days before the

rest of Canada for our

members.

• Over 30 concert events have

been offered since the

programs inception.

Mercedes – Tag Heuer Event

• Subscribers enjoyed 60 to 70

percent discounts on Tag

watches while viewing

Mercedes vehicles including

the SLR McLaren.

• Tag sold over $120,000 of

product.

• Mercedes insisted on repeating

the event one month later.

Sample Offer

Concert Offers

Art Experience Offers

Recent Golf Offers

Dining Offers

Performance Metrics

Subscriber Retention

A control group of non-registrant subscribers with identical attributes were isolated in November 2004, 2005, and 2006.

These subscribers were full week, fully paid and had been subscribing for a minimum of six months.

An identical group of Recognition Members were also identified and flagged.

Retention analysis has regularly been completed using MAAX and R-Logic.

Performance Metrics

Advertising

Specific advertising clients were identified for participation in the program to leverage their spend.

Non-advertising clients have also been identified as prospective merchants in the program.

Financial spending activity has been tracked year over year for these businesses.

Preliminary Results

The number of registered card users has significantly surpassed the original expectations.

Merchants, advertising clients and partners have successfully driven consumer traffic and sold products and services with exclusive offers.

Over 200 offers have populated the web site and over 160 email campaigns have been executed promoting events

Retention of the core target group has improved significantly saving hundreds of thousands of dollars in acquisition costs.

Specific Metrics have shown excellent results.

Recognition Membership Growth

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jul -05 Aug-

05

Sep-

05

Oct-05 Nov-

05

Dec-

05

Jan-06 Feb-

06

Mar-

06

Apr-06 May-

06

Jun-06 Jul -06

Results

Over the 27 months since the program was implemented, there has been a significant improvement in retention among Recognition Members versus non-members who are identical in demographic profile.

Advertisers have committed hundreds of thousands of dollars in incremental revenue as a result of the program.