Digital Marketing Now: 7 Strategies for Surviving the Downturn

eMarketer Presents Digital Marketing Now: Seven Strategies for Surviving the Downturn David Iankelevich Vice President, Sales January 15, 2009

Today’s Agenda • Who is eMarketer • Economic impact on media spending • Internet spending • Seven strategies

eMarketer Sees and Analyzes Information from Multiple Sources

Media Spending Growth in the US Date 2008 2009 Barclays Capital Dec. Dec 2008 -5 0% 5.0% -10 0% 10.0% GroupM Dec. 2008 0.3% -3.2% BMO Capital p Oct. 2008 -1.1% -1.9% Citi Investment Nov. 2008 -1.8% -3.6% eMarketer Nov. 2008 -1.0% -3.7% Collins Stewart Nov. 2008 0.5% -2.0% UBS Oct. 2008 2.5% -6.0% Morgan Stanley Oct. 2008 -2.1% -5.0% Myers Publishing Oct. 2008 -1.3% -4.0% Wachovia Oct. 2008 -0.8% -0.8% ZenithOptimedia Dec. 2008 -3.8% -6.2%

What are marketers seeing for their traditional media budgets? g 85% 59% 48% will cut —MarketingSherpa, Oct.t2008 —MarketingProfs, O t 2008 M —Epsilon, Sept.Sept. M kEtiti Sh S f t S k il P 2008 (n = 175 CMOslargesenior marketers) (n = 400600 marketers) (n = and companies)

US online ad spending growth for 2008 16.9% Barclays (Oct '08) 16.0% Collins Stewart (Nov '08) 16.0% GroupM (Dec '08) 13.8% Myers (Oct '08) 13.0% BMO Capital (Oct '08) p ( ) 12.0% MAGNA (Oct '08) 11.6% ThinkPanmure (Oct '08) 11.5% 11 5% Morgan Stanley (Oct '08) 11.4% Citi (Nov '08) 11.3% eMarketer (Nov '08) 10.4% Borrell Assoc. (Nov '08) Source: eMarketer, Dec, 2008

US online ad spending growth for 2009 14.8% Jupiter (Dec '08) ??? 14.1% Barclays (Oct '08) 13.5% 13 5% Myers (Oct '08) M (O t 13.5% MAGNA (Oct '08) 13.0% BMO (Oct '08) 10.0% 10 0% Collins Stewart (Nov '08) 08) 10.0% Wachovia (Oct '08) 9.7% Morgan Stanley (Oct '08) 8.9% 8 9% eMarketer (Nov '08) 08) 7.2% Borrell (Nov '08) 5.8% Citi (Nov '08) 5.0% ??? GroupM (Dec '08) p( ) 3.0% ThinkPanmure (Oct '08) Source: eMarketer, Dec, 2008

US online ad spending growth for 2009 13.5% Myers (Oct '08) 13.5% 13 5% MAGNA (Oct '08) 13.0% BMO (Oct '08) 10.0% 10 0% Collins St C lli Stewart (Nov '08) t (N 10.0% Wachovia (Oct '08) 9.7% 9 7% Morgan Stanley (Oct '08) 8.9% eMarketer (Nov '08) 7.2% Borrell (Nov '08) Source: eMarketer, Dec, 2008

% of marketers planning to increase their online ad budget – marketing execs 55% of global despite the recession g p plan to cut spending on traditional Forrester (Spring '08) N = 333 26% media in order to fund increased Advertiser Perceptions (May '08) N efforts online = 1,811 72% 31% N = 400 MarketingSherpa (Sep '08) 63% Epsilon* (Sept '08) N = 175 62% MarketingProfs (Oct '08) 08) N = 600 *63% of (175) CMOs said they had increased their online budgets in the past year

Seven Strategies for Surviving the Downturn 1. Get with the Accountability program 2. Keep d i search 2K doing h 3. Don’t ignore the power of branding online 4. Stay close to the customer “This is the age of accountability 5. Engender Trust for the marketing profession profession. 6. Engage with online video --Robert Liodice, Association of National Advertisers, , , 7. Test, test 7 Test test, test CEO

Need to break down the data silos • Search – Display ads • O li – Offli media Online Offline di • Online – Offline channels “When the going gets tough, information gives comfort you are on the right track” track - - David Lowden, chief executive, Taylor Nelson Sofres,

Seven Strategies for Surviving the Downturn 1. Get with the Accountability program 2. Keep d i S 2K doing Search h 3. Don’t ignore the power of Branding online 4. Stay close to the Customer 5. Engender Trust 6. Engage with online Video 7. Test, Test 7 Test Test, Test

Seven Strategies for Surviving the Downturn 1. Get with the Accountability program 2. Keep d i S 2K doing Search h “As the ad the power of Branding online a 3. Don’t ignore industry braces for deep close to the Customer d Stayrecession, someone needs i d 4. to Engender Trust search advertising 5. notify the y g business.” online Video 6. Engage with 7. Test, Test 7 Test Test, Test --Mike Shields, MediaWeek, 10/15/08

Seven Strategies for Surviving the Downturn 1. Get with the Accountability program 2. Keep d i S 2K doing Search h “As the ad the power of Branding online a 3. Don’t ignore industry braces for “You can track every cent and y deep close to the Customer d Stayrecession, someone needs i d every click. Search is comfort 4. to Engender Trust search advertising 5. notify the y g food for marketers ” marketers. business.” online Video 6. Engage with --Even Andrews, Forrester Research , 7. Test, Test 7 Test Test, Test --Mike Shields, MediaWeek, 10/15/08

Search Ad Spending Growth for 2009 24.0% Magna 23.0% 23 0% Oppenheimer & Co. Inc. Co Inc 21.0% BMO Capital Markets 17.3% JP Morgan 14.9% eMarketer 14.0% Citi Investment Research 13.7% Borrell 13.0% Collins Stewart 13.0% ThisPanmure

Search is ROI on steroids:

Search is ROI on steroids: Search engine optimization (SEO) was rated as the best-performing online best performing advertising tactic by 57% of online marketers, marketers per MarketingSherpa (2007)

#3. Anti-Search: Don’t Ignore the Power of Branding Online Customer Awareness/Branding Relationship Management Attitudes, Interest CONSUMER Post-sales support Pre-purchase Information Fulfillment Gat e g Gathering Sale/Purchase

#3. Anti-Search: Don’t Ignore the Power of Branding Online Customer Awareness/Branding Relationship Management Attitudes, Interest Marketing opportunity CONSUMER Post-sales here to influence online ee o ue ce o e support Pre-purchase shoppers – whether or Information not Fulfillment they choose to use a y Gat e g Gathering search engine Sale/Purchase

$25 B Online % Lift In Conversion Rate2008 Display Ad Market in When Awareness Ads Are Combined With Search: Interest Search = 45% of Desire dollars Consumers exposed to both search Source: Atlas Digital Marketing Insight, 2008 and display ads were 56% more Action likely to purchase an Alltel phone, vs. those who j t clicked on a search ad th h just li k d hd Source: eMarketer, Nov, 2008

Stay close to the Customer “Many businesses will “M bi ill turn to the Web to stay in touch with consumers t h ith during a difficult financial climate. Thi i going t li t This is i to be a lifeline.” --Adam Sarner, analyst, Gartner

Teens on social networks in 2008 (eMarketer) 77% 81% Teens on social networks in 2009 (eMarketer) T il t ki 60% Affluent (L (Luxury I tit t M h 2008) Institute, March,

Look, Listen, , , Lounge & Learn A. A Learn how consumers talk about your product or service category • Notice what words and language they use gg y B. Learn about real or perceived problems with your product or customer service dt t i • e.g., Dell’s lesson learned C. Unleash the wisdom of the customer!

Look, Listen, Lounge & Learn A Learn how consumers service wiki] “[With our customer talk about your [With end A. product or service category users create the value themselves • Notice what words and language they use gg y and seek th value of other end users d k the l f th d like themselves.” B. Learn about real or perceived problems with your product or customer service dt t i --Brad Smith, CEO, Intuit • e.g., Dell’s lesson learned C. Unleash the wisdom of the customer!

Look, Listen, Lounge & Learn A Learn how consumers service wiki] end “[With our customer talk about your [With of TurboTax users’ questions A. “40% or service category product users create they otherthemselves value customers, are Notice what words and language they use • answered by gg y and seek higher lrate f other end users d at a th value of th k the d and of accuracy.” like themselves.” B. Learn about real or perceived problems with your product or customer service dt t i --Brad Smith, CEO, Intuit --Brad Smith, CEO, Intuit • e.g., Dell’s lesson learned C. Unleash the wisdom of the customer!

Runners send videos images and videos, songs to their friends, engage in virtual contests and arranged irt al for real meetups 40% of visitors become converts to Nike’s shoes. t t Nik ’ h

How do you create trust for your brand? • Make your product and customer service as g good as they can be y • Emphasize listening over loud-speaking • Adapt your digital marketing messages to be more real – more conversational, less conversational “marketing-speak” • Allow for customer ratings and reviews

• Read Reviews

• Top products converted at a 49% higher clip • Average order size increased 40% • Read Reviews

154 million Americans = 80% of Internet users 167.5 million = 87% of Internet users

Versus watching TV, online video viewers are 25% more engaged i TV content and d in d 47% more engaged in the ads ads. --Simmons 2008 Simmons,

US online video ad spending, in millions $4,600.0 US online video ad spending, in millions $3,000.0 +44.9% Growth $1,850 $1,250 2.5% $850 $587 $324 2007 2008 2009 2010 2011 2012 2013 Source: eMarketer, November, 2008

US online video ad spending, in millions Gilbane Group: 50% of U.S. firms say they’re using online video, and 46%$4,600.0 US online video ad spending, ratemillions effective” (June ‘08) in it “very y ( ) $3,000.0 +44.9% Broadband video ads allow for Growth $1,850 greater measurability, $1,250 2.5% $850 target-ability and t t bilit d $587 $324 share ability! share-ability! 2007 2008 2009 2010 2011 2012 2013 Source: eMarketer, November, 2008

Are marketers #7. Test, Test, #7 Test Test Test!!! missing the bus? 59% claimed the biggest obstacle to Only 24% of U.S. marketers using consider their firms to be id th i fi tb digital “digitally savvy”. media was “lack of lkf Among B2B marketers, “Iterate. (blogs, experience” “A lot 31% have begun to online video A y of % stuffg(blogs only this video, Don’t pontificate.” etc) you just tactics liketry!” use Web 2.0 have to blogs,Michaelnetworks and Director g--MichaelRishad Tobaccowala , social Metz Senior Director, Metz, --Rishad podcasts toMarketing and Strategy Cisco engage buyers Source: Booz Allen Hamilton and Web Chief Innovation Officer, Publicis Group ANA, 2007; survey among 184 ANA- member marketers

Are marketers #7. Test, Test, #7 Test Test Test!!! missing the bus? 59% claimed the biggest obstacle to Only 24% of U.S. marketers using consider their firms to be id th i fi tb digital “digitally savvy”. media was “lack of lkf Among B2B marketers, “Iterate.begun to experience” only 31% have g y% Don’t pontificate.” use Web 2.0 tactics like blogs, social networks and g, --Rishad Tobaccowala Rishad podcasts to Chief Innovation Officer, Publicis Group engage buyers Source: Booz Allen Hamilton and ANA, 2007; survey among 184 ANA- member marketers

Are marketers #7. Test, Test, #7 Test Test Test!!! missing the bus? 59% claimed the biggest obstacle to Only 24% of U.S. marketers using consider their firms to be id th i fi tb digital “digitally savvy”. media was “Trying “lack of lkf “Iterate.begun to first video is (blogs online video, the step Among B2B marketers, experience” “A lot 31% have g(blogs, A y of % stuff only this etc)towards failure.” Don’t pontificate.” use Webjust tactics liketry!” you 2.0 have to blogs,Michaelnetworks and Director g--MichaelRishad Tobaccowala , social Metz Senior Director, Metz, --Rishad podcasts toMarketing and Strategy Cisco engage buyers Source: Booz Allen Hamilton and Web Chief Innovation Officer, Publicis Group ANA, 2007; survey among 184 ANA- member marketers

For more information about eMarketer or for f a copy of these slides, please contact: f th lid l tt David lankelevich Vice President Diankelevich@emarketer.com

Digital Marketing Now: 7 Strategies for Surviving the Downturn

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