Consumers Know Best Research Presentation

The Changing Media LandscapeThe changing role of older media and the emergence of newerones extend the marketer’s role well beyond the allocation ofbudgets and channels.Marketers today require a deep understanding of howconsumers engage with different types of media at each stageof the journey toward a purchase decision. What’s more, thesedifferent kinds of media are related and interact with oneanother, so marketing plans and capabilities must adapt andevolve. David Edelman and Brian Salsberg, McKinsey Quarterly, 2010As the media landscape has become more complex, so, in turn, has effective brandstrategy. And the cost of getting it wrong is higher too – consumer feedback now hasmore reach and greater weight than ever. Yahoo! undertook this research to understandwhat consumers do on the path to purchase, and what this means for brands. 2

The Research Qualitative  Week-long qualitative online discussion board about attitudes and behaviours around brands, purchasing, and social tools.  In-depth ethnographic interviews with select participants.  November 2010 Quantitative  Quantitative survey of online Canadians to delve into the key themes arising from the qualitative sessions, and understand key audience segments.  Demographically nationally representative sample of 2000 respondents.  January-February 2011 NB: Blind study (participants not aware of Yahoo!’s involvement) 3

Savvy Shoppers Are in the Know Like never before, consumers connect with multiple trusted sources in search of product and pricing information, and guidance and reassurance from friends and experts. 4

Consumers Do Their Homework of consumers have looked for more 68% information about a brand or product after seeing an ad conduct research before buying something 58% say it’s stressful trying to 40% find the right product or brand These figures are for purchases across all categories: CPG to finance, technology to travel, and autos to retail. In more involved purchases, we might expect the proportion conducting research to be even higher. 5

They Seek Knowledge and Assurance Manufacturer infoPRODUCT What does the item 42% about the productINFORMATION 60% DO or comprise? 41% What the product looks like Comparisons withEXPERT How does it compare 50%VIEWS 65% to the alternatives? 46% alternatives Expert reviews Problems usersCONSUMER 61%EXPERIENCES 79% Is it right for ME? 58% have had Reviews from usersBUYING Where can I buy it 72% Price comparisonsINFORMATION 80% most cheaply? 55% Where to buy The information that consumers seek on the path to purchase breaks down into four broad themes. 6

Internet, Friends and Retail Stores AreKey Information Sources 84% Internet 54% Talking to friends, family 73% via any means 19% 67% Going to a store 12% Magazines, newspapers 44% or books 4% 8% Some other source 3% Use for information Turn to first for information 7

Paid, Owned and Earned MediaAre Distinct and Complementary Paid, owned and earned media are distinct and complementary in consumers’ eyes. Each channel fulfills different information needs, and all are imperative along the consumer’s path to purchase.Proprietary and Confidential. ©2011 All Rights Reserved. 8

Paid, Owned and Earned Defined PAID OWNED EARNEDAdvertising Brand Website Talking to FriendsBroadcast Brand Social Outreach Consumer ReviewsPrintOnline Display Formats Facebook Page Online ConsumerSearch Marketing Twitter Feed Discussions & Forums Official BlogPromotions Expert Views & Reviews Editorial CoveragePaid media is straightforward, but it’s worth noting that consumers see brands’ socialoutreach as owned, not earned, space. Earned media is also well-understood as being‘everything else’, encompassing consumer and expert sources. 9

Steps on the Path to Purchase DISCOVERY FIRST AWARENESS CONFIDENCE PRODUCT IS RIGHT FOR ME Consumer NeedsRECOMMENDATIONS Product Information Expert Views MORE INFORMATION ABOUT THE BRAND/ PRODUCT Consumer Experiences Buying Information INFORMATION TRUSTWORTHY RECOMMENDATIONS COMPARE PRODUCTS There are many different interpretations of the path to purchase, but respondents identified five steps that they go through before making a purchase decision. 10

Advertising Is the Primary Channel forProduct Discovery FIRST AWARENESS PAID DISCOVERY Advertising 43% Store Promotion 36% Mention on TV 38% CONFIDENCE Mention in Print 35% PRODUCT IS RIGHT FOR ME MORE INFORMATION Consumer Needs ABOUT THE BRAND/ PRODUCT Advertising 38%RECOMMENDATIONS Product Information Expert Views Sales Assistant 41% Consumer Experiences Brand Website 45% Buying Information Subject-specific forums 37% INFORMATION TRUSTWORTHY RECOMMENDATIONS COMPARE PRODUCTS Early on, it’s about discovery, and the research shows that consumers still see advertising as their main source for this. They expect it, they’re attuned to it, and they like being shown the product in the best possible light – as only advertising can. 11

A Brand’s Website Is the #1 Source forMore Information FIRST AWARENESS OWNED DISCOVERY Advertising 43% Mention on TV 38% Store Promotion 36% CONFIDENCE Mention in Print 35% PRODUCT IS RIGHT FOR ME MORE INFORMATION Consumer Needs ABOUT THE BRAND/ PRODUCT Brand Website 45%RECOMMENDATIONS Product Information Expert Views Sales Assistant 41% Consumer Experiences Advertising 38% Buying Information Subject-specific forums 37% INFORMATION TRUSTWORTHY RECOMMENDATIONS COMPARE PRODUCTS Owned media are also key – the brand’s official website is the number one destination for consumers seeking more information about a product or brand they’ve seen advertised. While a brand’s social outreach is also owned media, consumers didn’t identify it as important in the path to purchase. 12

Expert Sources Provide IndependentGuidance at All Stages FIRST AWARENESS EARNED DISCOVERY Mention on TV 38% Mention in Print 35% CONFIDENCE Advertising 43% PRODUCT IS RIGHT FOR ME Store Promotion 36% Expert Reviews 24% Sales Assistant 18% MORE INFORMATION Talking to friends 29% Consumer Needs ABOUT THE BRAND/ PRODUCT Consumer reviews 21% Sales Assistant 41% Product InformationRECOMMENDATIONS Expert Views Brand Website 45% Advertising 38% Consumer Experiences Buying Information Subject-specific forums 37% TRUSTWORTHY RECOMMENDATIONS INFORMATION Expert Reviews 32% Sales Assistant 21% COMPARE PRODUCTS Talking to friends 42% Expert Reviews 39% Price comparison sites 45% Consumer reviews 31% Sales Assistant 33% Consumer reviews 41% Editorial sources are important in product discovery; for example, Oprah talking about a new product, or a travel website recommending a particular resort. Later, experts provide the impartial knowledge and guidance that’s crucial for comparing alternatives and building confidence in a particular purchase choice. 13

Consumer Reviews and Talking toFriends Instil Trust and Confidence FIRST AWARENESS EARNED DISCOVERY Advertising 43% Mention on TV 38% CONFIDENCE Store Promotion 36% PRODUCT IS RIGHT FOR ME Mention in Print 35% Talking to friends 29% Consumer reviews 21% Expert Reviews 24% MORE INFORMATION Sales Assistant 18% Consumer Needs ABOUT THE BRAND/ PRODUCT Sales Assistant 41% Product InformationRECOMMENDATIONS Expert Views Brand Website 45% Advertising 38% Consumer Experiences Buying Information Subject-specific forums 37% TRUSTWORTHY RECOMMENDATIONS INFORMATION Talking to friends 42% Consumer reviews 31% COMPARE PRODUCTS Expert Reviews 32% Consumer reviews 41% Expert Reviews 39% Sales Assistant 21% Price comparison sites 45% Sales Assistant 33% Consumer-to-consumer sources are also vital in building confidence. Consumers see talking to friends and aggregated reviews online as complementary, providing personal feedback and a breadth of experience from ‘people like me’. 14

Connecting the Journey: Paid, Ownedand Earned FIRST AWARENESS PAID OWNED EARNED DISCOVERY Advertising 43% Mention on TV 38% CONFIDENCE Store Promotion 36% PRODUCT IS RIGHT FOR ME Mention in Print 35% Talking to friends 29% Expert Reviews 24% MORE INFORMATION Consumer reviews 21% Consumer Needs ABOUT THE BRAND/ PRODUCT Sales Assistant 18% Brand Website 45% Product InformationRECOMMENDATIONS Expert Views Sales Assistant 41% Advertising 38% Consumer Experiences Buying Information Subject-specific forums 37% TRUSTWORTHY RECOMMENDATIONS INFORMATION Talking to friends 42% Expert Reviews 32% COMPARE PRODUCTS Consumer reviews 31% Price comparison sites 45% Expert Reviews 39% Sales Assistant 21% Consumer reviews 41% Sales Assistant 33% Bringing the paid, owned and earned sources together, we can see why all are important in a comprehensive brand strategy: consumers use them at different times and for different reasons on the path to purchase. 15

Understanding the Differences WithinPaid, Owned and Earned Media There are important nuances within paid, owned and earned media – and smart brands harness these distinctions to know where, and where not, to engage with consumers. 16

A Brand’s Website Is More InformativeThan Its Social Media Profile OWNED “I went to the Facebook page of one of my favourite brands. While it may have been interesting to see some vintage product photos or see ads about upcoming products...it would definitely not be part of my purchase path. I actually prefer their corporate website, which is nicely laid out, and easier to access and navigate.” 40% 26% Brand Website INFORMATIVE Brand’s social profile or BlogA brand’s official website plays an important role for consumers that is not replicated byits blog, Twitter feed or social networking profile. 42% trust a brand’s website more thanits Facebook page, and a brand’s website is regarded as the most informative mediachannel. 17

Expert Sources Are Irreplaceable forCredibility and Confidence EARNED “Im more inclined to see reviews completed by established publications or specialists as being "reliable" than the opinion of someone who rates a product online, simply because they [consumers] have the ability to freely express their opinion without any real expertise or knowledge.” Expert reviews are the #1 source for being well-informed…and the second most trustworthy source, after talking to friendsExpert sources are unlike any other for consumers, due to being independent but well-informed. They include store assistants, expert reviews and articles and editorialmentions on TV, in print or on respected websites. 18

Not All Consumer Sources Are CreatedEqual EARNED PROVIDES TRUSTWORTHY RECOMMENDATIONS 42% Conversations with friends about a brand 31% Consumer reviews 18% Subject-specific forums 15% Reading discussions on social networking sitesFriends’ opinions and consumer reviews are also used extensively on the path topurchase, discussions on forums and social networks less so. To some extent this is dueto consumers’ perceptions of convenience and the relevance of the information available. 19

Advertising Is Most Engaging inPremium and Respected Environments PAID “If its a trusted site, the advertising becomes more effective because I will be more inclined to pay attention to the ad and to invest the time into finding out more.” InformativeAds on Yahoo!, MSN Well-informed ...than ads on socialor Globeandmail.com networking sitesare regarded as more Trustworthy HelpfulAs with expert reviews, advertising’s value stems in part from the authority andappropriateness of the channel on which it appears. Respondents consistently stated thatthey feel ads on premium content sites are more relevant than those on social sites. 20

The Implications for Brands: Integrated Planning PAID OWNED EARNED• Engaging and • Feature an official brand • Proactively seek a informative ad campaign site that delivers on presence in expert consumers’ information reviews and articles• Consistent messages needs across respected online • Encourage loyal and offline channels • Establish a brand customers to share their presence on social experiences• Directing consumers to platforms for customers the brand Website who want to interact and • Be an active listener and engage with the brand or respond if and when each other appropriateTo remain relevant all along the path to purchase, brands’ strategies must encompassALL of these channels. Particularly in earned media, where brand involvement is difficult,understanding consumers’ behaviours and needs is key. 21

Consumers Know Best Consumers are more discerning than ever before in how they use multiple sources of information on the path to purchase, and brands must understand what they want, and where they want it, in order to stay relevant and engaging along this path. For more information about the research and its implications for brands, or to find out how Yahoo! can help, please contact your Yahoo! rep or call 1-888-924-6620.Proprietary and Confidential. ©2011 All Rights Reserved. 22

Consumers Know Best Research Presentation

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