WOMBAT 3 - How to Integrate Word of Mouth into Your Advertising Plans

There’s a Lot of WOM Today 3.5 billion word of mouth conversations each day in America Source: Keller Fay Group’s TalkTrack™ Slide 2

An Erosion of Trust “I can trust well-known long established companies to make safe durable products without the government setting industry standards” 1999 2006 71% 63% Source: Yankelovich Monitor, 2005-06 Slide 3

Word of Mouth Is Gaining over Advertising (Effectiveness Through Time) Index to All Communications Contacts 150 WOM 140 130 120 TV Advertising 110 100 2002 2003 2004 2005 2006 Source: SMG/100+ MCA Studies Slide 4

Word of Mouth Rising The same trends decreasing the influence of traditional marketing are increasing the power and salience of Word of Mouth Tra dit of i on rd Ma al Wo th rke tin u Mo g Power Declining trust / Increased clutter, emerging technology, fragmentation. Slide 5

Conversation is Re-Taking the Throne in the Social Order Social Marketplace 2000 Mass Marketing 1950 Age Social Marketplace YR1 Slide 6 Human History

Global Brands Are Now Built on Word of Mouth Slide 7

But WOM and Advertising Are Not in Opposition Slide 8

Advertising is a Key Driver of WOM (% of Conversational Brand Mentions Referring to Marcoms) Keller Fay’s TalkTrack™ No Media/Marketing Advertising Referenced 17% 50% Editorial/Programs 11% Websites (Company/Other) Other* 4% Promotion 1% 6% Point of Sale Direct mail/emailing 6% 3% Slide 9

Authentic Customer-Based WOM is Most Effective People on the “receiving side” of WOM are more impressed by advice given by a true customer of the brand (9 or 10 rating on a 0-10 scale) 56% 53% 52% 43% 39% 35% 34% 33% 27% 27% Credibility/Believability Likely to Pass Along to Likely to Seek Out Likely to Purchase Recommendation to of What Was Heard Others Information "Buy it or Try it" Customer Non Customer Base: Brand mentions where someone else provided advice (Customers, n=16,605; Non Customers, n=3,747) *Figures represent percentage scoring a 9/10 on a 0 to 10 scale. Slide 10

But Customers Are More Apt to Recommend When Exposed to Marketing Communications Advertising gives customers the motivation and language for making recommendations 47% Among Those With Customer Experience 40% 32% 28% 21% 19% 7% 6% Buy it or try it Consider it Avoid it No Specific Recommendation Made Marketing/Advertising Cited No Marketing/Advertising Cited Base: Brand mentions where someone else provided advice among those with customer experience (Mktg/Ad Referenced, n=7,195; No Mktg/Ad, n=9,410) Slide 11

MediaVest’s Approach to Word of Mouth • Challenge the Mass Marketing Age message dispersion model • Provide clients with effective ‘go to’ marketing strategies • Partner with others who are leading the industry Slide 12

A Game Changing Model Based on New Realities Slide 13

Leveraging trust and credible word of mouth Slide 14

Three Rules Identify & Engage Influencers Inspire & Reward Advocacy Net Positive Conversations Measure & Learn Slide 15

Measuring and Mastering Your Word of Mouth • The new charge for communications companies like Starcom MediaVest: Promote the spread of brand advocacy WOM is now the metric by which communications success is measured • WOM is measurable: Need to measure both offline (90% of WOM) plus online Need total population sample Audience/receiver perspective, as well as “speakers” Linkages to inputs and outputs • Measure and motivate WOM to grow your brand! Slide 16

2007 Super Bowl Advertisers Many advertisers claim that “word of mouth” justifies outrageous costs for advertising during the Super Bowl. So how did the 2007 Super Bowl Advertisers do in generating WOM? © 2007 Keller Fay Group & MediaVest

MediaVest Super Bowl Study • MediaVest sponsored a special pre/post Super Bowl study through Keller Fay Group Goal was to test the proposition that Super Bowl advertising has high WOM value • Methodology Rely on full month of TalkTrack™ data prior to Super Bowl Broadcast - 3,513 interviews in January 2007 - 55,850 conversational brand mentions Tripled usual sample for week following Super Bowl - 2,175 interviews versus usual sample of 700 - 22,741 conversational brand mentions - Provided reliable sample size for pre/post analysis Slide 18

Keller Fay’s TalkTrack™ • Launched in April 2006 • Diary-assisted reporting of conversations over 24 hours Respondents recruited to take notes on conversations in 16 “marketing relevant” categories over next 24 hours Re-contacted a day later to answer standardized questions about brands/companies talked about during past 24 hours Brand/company names collected on open ended basis • Continuous online survey with nationally representative sample of consumers, ages 13 to 69 Sample drawn from several of largest online consumer panels Demographically balanced to US Census • Sample sizes 700 respondents per week; 3,000 per month Yielding 8,000 conversational brand mentions week; 36,000 per month Slide 19

WOM Dynamics Collected • Brand Level Polarity: Positive, negative, mixed neutral opinions Recommending: Buy, consider, avoid Content: What was said Credibility & Intended actions Influences: Customer Experience, Media/marketing Sender vs. Receivers • Conversation Level Mode: face to face, phone, online Venue: home, work, school, in-store, in-transit, etc. Participants: Who & how many Slide 20

Post-Game Analysis: Super Bowl Advertisers* Gain in WOM • Among all Americans 13 to 69, the Super Bowl advertisers earned 5.4% of all consumer word of mouth the month prior to the event, and 6.2% of all WOM the week afterwards, an increase of 15%. • This increase translates into a projected increase of 22 million daily brand mentions for Super Bowl advertisers the week following the game. Projected Increase in Super Bowl Advertiser WOM Percentage Increase in Super Bowl Advertiser WOM (Projections in Millions of Daily Brand Mentions) +15% +22 Million 170.4 6.2% 148.4 5.4% Total public Total public Pre Super Bowl Post Super Bowl Pre Super Bowl Post Super Bowl *Throughout this report, Super Bowl advertisers are those listed as major advertisers by USA Today or Advertising Age, with the exception of movies, CBS promos, non-profits, and a few low word of mouth brands that constituted just 9 mentions among 22,741 in the post wave study. Base for Chart: All conversational brand mentions: Pre-wave = 55,850; Post-wave = 22,741. Source: TalkTrack™, January 1, to February 11, 2007 NOTE: Projections are based on the average brand mentions, per person. The total population figure was based on census data. Slide 21

Post-Game Analysis by Gender: Super Bowl Advertisers Gain in WOM • The increase was primarily among men, who were often the principal target of advertisers. Their WOM about Super Bowl advertisers increased by 23%, from 6.0% of all WOM to 7.4%. 8% 7.4% +23% 7% +8% 6.0% 6% 5.4% 5.0% 5% 4% 3% 2% 1% 0% Men Women Pre Super Bow l Post Super Bow l Base for Chart: All conversational brand mentions: Pre-wave = 55,850; Post-wave = 22,741. Source: TalkTrack™, January 1, to February 11, 2007 Slide 22

Post-Game Analysis for Males: Advertisers Gain WOM Among Young Males • Super Bowl advertisers got a double digit lift among males of all ages, but the biggest increases were for men 21 to 34 (+28%) and 35 to 49 (+29%). 9% 8.2% 8% +17% 7.6% +28% 7.2% +29% +10% 7% 6.6% 6.5% 6.4% 6.0% 6% 5.6% 5% 4% 3% 2% 1% 0% Age 13 to 20 Age 21-34 Age 35-49 Age 50-69 Pre Super Bow l Post Super Bow l Base for Chart: All conversational brand mentions: Pre-wave = 55,850; Post-wave = 22,741. Source: TalkTrack™, January 1, to February 11, 2007 Slide 23

Slight Positive Change in “Polarity” of WOM about Super Bowl Advertisers • Word of mouth about Super Bowl advertisers was much more positive (61%) than negative (10%) before the game, and this ratio improved slightly after the game (63% to 8%). • A modest increase in positive WOM about Super Bowl advertisers among all males was evident following the game. Negative Mixed Positive -17% 61% Total public: Pre Game -10% Total public: Post Game -8% -18% 63% -11% -17% 62% Males: Pre Game Males: Post Game -9% -18% 66% -9% -17% 59% Females: Pre Game Females: Post Game -7% -17% 61% Base for Chart: Brand Conversations (Total: Pre-wave, n=1,387; Post-wave, n=761; Men: Pre-wave, n=715; Post-wave, n=370; Women: Pre-wave, n=672; Post-wave, n=391) Source: TalkTrack™, January 1, to February 11, 2007 Slide 24

Super Bowl Advertisers’ WOM Linked to Television Ads • People talking about the Super Bowl Advertisers’ brands were 55% more likely after the game to refer to the advertisers’ TV commercials than before the game. • Although many advertisers included an Internet component to their Super Bowl strategy, there was no increase in Internet references in WOM about these brands. 25.0% 20.0% 15.0% +55% 15.0% 9.7% 10.0% -9% 6.9% 6.3% 5.0% 0.0% TV Ads Internet Ads, Web sites, Blogs, etc. Pre Game Post Game Base for Chart: All conversational brand mentions, Total: Pre-wave, n=1,387; Post-wave, n=761 Source: TalkTrack™, January 1, to February 11, 2007 Slide 25

Advertisers’ WOM Very Likely to Lead to Purchase and WOM Pass Along After Game • As WOM grows for Super Bowl Advertisers after the game, the chance of conversations leading to purchase or pass along held steady. Pre Game Post Game Figures Represent Those Scoring “9” or “10” on a 0-10 scale 48.8% 48.1% 46.1% 46.0% Likely to Pass Along to Others Likely to Purchase Base for Chart: Brand Conversations (Total: Pre-wave, n=1,387; Post-wave, n=761) Source: TalkTrack™, January 1, to February 11, 2007 Slide 26

But, Super Bowl “Lift” Somewhat Short Lived • On the Monday following the game, WOM increased by almost 2 percentage points, or more than one-third. Super Bowl talk declined in the following days, but remained strong without major slippage until exactly one week after the game when talk fell to the pre-game WOM level. 8% 7.3% 7% 6.5% 6.5% 6.1% 6% 6.0% 5.5% 5.2% 5% Pre-Super Bowl WOM Level 4% 3% 2% 1% 0% Monday Tuesday Wednesday Thursday Friday Saturday Sunday Pre Game Post Game Base for Chart: All conversational brand mentions: Pre-wave = 55,850; Post-wave = 22,741. Source: TalkTrack™, January 1, to February 11, 2007 Slide 27

The Super Bowl’s Biggest WOM Brands Projected Super Bowl Advertiser WOM • Coca-Cola, Bud Light, Taco Bell and Honda enjoyed the highest projected increase of post Super Bowl word of mouth. Brands are Ranked by Pre Super Bowl Advertiser WOM +9.0M (Projections in Millions of Daily Brand Mentions) 42.0 33.0 Pre Super Bow l Post Super Bow l +2.2M 11.8 +1.7M +1.4M +2.4M 9.6 8.2 +2.5M 8.0 7.4 6.3 6.0 5.8 +1.8M 5.2 2.7 1.9 0.1 Coca-Cola Honda NFL Budw eiser Taco Bell Bud Light Snickers NOTE: Projections are based on the average brand mentions, per person. The total population figure was based on census data. Source: TalkTrack™, January 1, to February 11, 2007 Slide 29

Lessons for WOM Advertising • WOM and advertising can work together Advertising is cited frequently in WOM conversations Advertising also can play an indirect or subconscious role in our daily conversations • Advertising works best for WOM when… Aimed at influencers Uses consumer-speak, not marketing-speak Uses portable “talk-bytes” • Impact May be more likely to last when…. Message supports brand’s basic value proposition • Advertisers Should Re-think advertising objectives Aim for current customers Give them the language and motivation to recommend Slide 30

WOMBAT 3 - How to Integrate Word of Mouth into Your Advertising Plans

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