Emerging B2C Digital Marketing Trends with a Focus on Video by Richard V. Ducey, Ph.D.

1. Guiding Media. Inspiring Innovation. Leading Local. Emerging B2C Digital Marketing Trends With Focus on Digital Video on the Rise Among Marketers Rick Ducey Managing Director rducey@biakelsey.com January 28, 2016

2. 2© 2015 BIA/Kelsey. All Rights Reserved. | Objectives From this session you will learn: 1. How Small and Medium Businesses (SMBs) are using and evaluating the effectiveness of digital marketing channels, particularly social and video. 2. What marketers are spending and how they’re allocating their budgets between traditional and digital marketing. 3. And you will get insights and recommendations into how to best use digital social and video marketing as part of your overall marketing mix. BIA/Kelsey defines SMBs as firms with under 100 employees

3. 3© 2015 BIA/Kelsey. All Rights Reserved. | Talking Points What we’ll cover in this presentation  Social media highlights  Local advertising forecast  How SMBs are spending their advertising budgets  Assessing ROI on advertising  Digital video marketing trends and directions  Key takeaways

5. 5© 2015 BIA/Kelsey. All Rights Reserved. | Facebook is the killer app, when it comes to reach and use. But other social media channels have “super powers” depending on the demographic. Internet Users Men: 16% Women: 44%

7. 7© 2015 BIA/Kelsey. All Rights Reserved. | Social Media Services You May Have Never Used Are Huge Snapchat skews toward women, younger and $50K+ demographics. http://gizmodo.com/leaked-snapchat-code-hints-at-new-voice-and-video-chat- http://sproutsocial.com/insights/new-social-media- demographics/#snapchat1755009028?rev=1453756984798&utm_campaign=socialflow_gizmodo_twitter&utm_source=gizmodo_twitter&utm_medium=socialflow

8. 8© 2015 BIA/Kelsey. All Rights Reserved. |http://www.mediapost.com/publications/article/267445/instagram-ad-impressions-surge.html  According to Brand Networks, Instagram impressions delivered grew from 50M in April 2015 to 670M in Dec 2015.  Headed to 1B+ monthly impressions by end of 1Q2016.  To differentiate itself on an increasingly saturated platform, Instagram advertisers to embrace more premium ad formats -- and video especially -- this year.  During the fourth quarter alone, video ads as a percent of total ads served by Brand Networks jumped up from 9.54% in September to 22.52% in December.  “Video advertising on Instagram is rising to prominence incredibly quickly," according to Brand Network’s Jamie Tedford. Instagram is Headed to 1 Billion Monthly Impressions 13x Increase in Impressions April 2015 to December 2015, Video Ads Rising Quickly

10. 10© 2015 BIA/Kelsey. All Rights Reserved. | Social Increasingly is a Mobile Experience Large uptick in mobile engagement with social networks. https://www.comscore.com/Insights/Blog/Millennials-Boast-Huge-Social-Networking-Growth-and-Engagement-on-Smartphones

12. 12© 2015 BIA/Kelsey. All Rights Reserved. | Newspapers Print 9.8% Newspapers Online 2.6% Direct Mail 25.6% TV O-T-A 14.5% TV Online 0.7% Radio O-T-A 10.0% Radio Online* 0.8% Print Yellow Pages 1.7% Internet YP 1.6% OOH 5.6% Cable 5.1% Magazine 1.0% Magazine Online 0.3% Online / Interactive 11.3% Email 1.6% Mobile 7.7% 2016 U.S. Local Advertising Revenues — $146.6 Billion Local Ad Market Keeps Noticeable Shares for Traditional Media BIA/Kelsey sees traditional media keeping biggest share of ad. *Radio online revenues include online revenues from terrestrial and online streaming services.Source: BIA/Kelsey, October 2015

14. 14© 2015 BIA/Kelsey. All Rights Reserved. | $103.3 $104.0 $102.0 $102.9 $101.2 $102.8 $38.0 $42.6 $47.8 $53.5 $59.3 $66.0 $141.3 $146.6 $149.7 $156.4 $160.4 $168.9 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2015 2016 2017 2018 2019 2020 Traditional Online/Digital US$Billions Note: Numbers are rounded. 2015-2020 CAGRs: Total CAGR 3.6% Online/Digital CAGR 11.7% Traditional Media CAGR -0.1% US$Billions Note: Numbers are rounded. Steady Shift Toward Digital Ad Spending in Media Mix Digital rising to 40% of paid advertising by 2020. Source: BIA/Kelsey, October 2015

15. 15© 2015 BIA/Kelsey. All Rights Reserved. | *Other includes ad revenue from all other U.S. social networks (e.g., Pinterest, Tumblr and Foursquare). Facebook, 81.9% Twitter, 12.2% LinkedIn, 2.5% Other*, 3.4% 2020 Facebook, 79.7% Twitter, 12.8% LinkedIn, 3.9% Other*, 3.6% 2015 Social Media Advertising by Company: 2015 & 2020 It’s all about Facebook when it comes to paid social advertising, rising to 81.9% share. Source: BIA/Kelsey, October 2015

16. 16© 2015 BIA/Kelsey. All Rights Reserved. |Source: BIA/Kelsey, October 2015 $6.0 $8.6 $11.4 $14.4 $16.6 $18.4 $3.2 $3.7 $4.3 $4.9 $5.3 $5.7 $9.3 $12.3 $15.7 $19.3 $21.9 $24.1 $0 $5 $10 $15 $20 $25 $30 2015 2016 2017 2018 2019 2020 Mobile Desktop/Tablet Note: Numbers are rounded. U.S. Social Mobile vs. Desktop/Tablet Ad Spend Mobile portion of social ad spending will triple 2015-2020 US$Billions

17. 17© 2015 BIA/Kelsey. All Rights Reserved. |Source: BIA/Kelsey, Local Ad Forecast, October 2015 Local Television 67.6% Local Cable 22.9% Online Video 2.9%OOH - Video 4.6% Mobile Video 2.0% 2016 Local Video Ad Spending Pie TV and Cable Have Largest Slices but Mobile and Online Video Growing Quickly

18. 18© 2015 BIA/Kelsey. All Rights Reserved. |Source: BIA/Kelsey, Local Ad Forecast, October 2015 $20.2 $22.3 $21.8 $23.3 $23.1 $25.4 $6.8 $7.5 $7.3 $7.9 $7.6 $8.1 $0.7 $0.9 $1.2 $1.4 $1.6 $1.8 $1.4 $1.5 $1.6 $1.7 $1.7 $1.7 $0.4 $0.7 $0.9 $1.1 $1.4 $1.5 $29.6 $32.9 $32.8 $35.3 $35.3 $38.5 $0 $5 $10 $15 $20 $25 $30 $35 $40 2015 2016 2017 2018 2019 2020 Local Television Local Cable Online Video OOH - Video Mobile Video US$Billions Local Video Advertising Spending Online and Mobile Video Each Growing by $1.1B from 2015-2020

20. 20© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. Average Spending for SMBs (Amongthosewith $25K+Budget) $82,983 $87,923 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Wave 18 2014 Wave 19 2015 Q101 What was the approximate amount spent on advertising and promotion in the last 12 months? Sample Size = 229 Video Users

22. 22© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 10.4 10.9 12.9 0 2 4 6 8 10 12 14 Wave 17 (Q3/2013) Wave 18 (Q3/2014) Wave 19 (Q3/2015) Sample Size = 252 Media Used (Average Number) Q S11 Which of the following do you use to advertise or promote your business? “Plus Spenders” Use 13 Media Business trying new channels Noe: “Plus Spenders” refer to SMBs in BIA/Kelsey’s Local Commerce Monitor that spend at least $25K in annual advertising.

23. 23© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 76.6% 72.7% 65.6% 58.7% 51.0% 40.9% 40.8% 40.2% 40.0% 34.1% 32.3% 31.1% 30.6% 30.3% 29.2% 27.9% 26.5% 26.2%25.6%25.3% 23.9% 23.5% 22.6% 21.3% 21.3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Q S11 Which of the following do you use to advertise or promote your business? Sample Size = 243 Media Used forAdvertising or Promotion Among SMB Video Users*: Website Video, YouTube and Other Online Video Are Top 3 Video Users *About 25% of All SMBs Use Some Type of Video.

24. 24© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 9.2% 10.1% 14.5% 15.6% 15.1% 21.8% 13.2% 3.3% 10.2% 12.4% 14.2% 22.3% 17.8% 18.5% 2.5% 6.3% 6.1% 10.1% 19.5% 20.9% 34.4% 0% 10% 20% 30% 40% 50% 60% 70% Competitors Spending Amount Spent Previous, Adjusting Up or Down Advertising Discounts and Bargains Business Conditions Our Expected Revenues Money Left After Other Expenses Are Paid Exposure and Customer Engagement Benchmarks Third Second First Q104A What are the 3 biggest factors in determining spend? Sample Size = 243 Factors Determining Ad Spend Over Half of SMBs Cite Customer Exposure and Engagement Benchmarks as Drivers Video Users 52.9%

25. 25© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 53.3% 3.7% 37.6% 5.3% 0% 10% 20% 30% 40% 50% 60% Increase Decrease Maintain Not sure Q104 In the next 12 months do you intend to? Sample Size = 243 Video Users Spending Intentions For Next 12 Months Over Half of SMB Video Advertisers Will be Increasing Their 2016 Ad Budgets

27. 27© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 7.7% 13.1% 14.7% 22.2% 29.9% 38.2% 41.8% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% None Analysis Program None, But Likely Compare Performance Data Vendor Data Own Data Google Adwords/Google Analytics Q108 What type of analysis do you do to determine cost effectiveness of your marketing? Sample Size = 243 Video Users Analysis of Cost Effectiveness ofAdvertising Google Analytics, Own Data and Vendor Data Used Most

28. 28© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. ROIAssessment ofAd Media – Over 30 Channels Measured! 6.1% 0.0% 7.5% 6.1% 10.4% 1.4% 3.5% 5.3% 16.4% 5.2% 7.8% 6.4% 9.9% 5.4% 15.6% 1.0% 1.7% 11.0% 4.7% 7.8% 4.8% 14.1% 9.9% 8.3% 7.7% 7.7% 5.9% 7.5% 6.8% 10.5% 15.2% 4.0% 9.4% 7.4% 5.9% 9.2% 15.2% 5.5% 12.4% 3.4% 4.3% 10.3% 9.8% 13.2% 11.4% 27.6% 8.2% 2.3% 15.1% 6.4% 13.1% 20.5% 12.3% 9.8% 15.3% 10.6% 26.1% 22.6% 20.6% 22.1% 19.8% 20.2% 21.0% 21.7% 21.3% 19.6% 33.3% 13.9% 24.6% 27.8% 17.4% 6.2% 25.9% 21.8% 21.5% 17.6% 22.9% 24.2% 29.3% 15.7% 24.8% 19.0% 18.2% 12.3% 23.6% 20.7% 16.0% 22.6% 20.1% 19.9% 35.6% 15.6% 26.5% 20.0% 15.9% 13.3% 34.8% 25.5% 19.0% 29.4% 42.2% 35.0% 29.8% 28.4% 34.1% 16.2% 28.7% 27.8% 32.9% 20.4% 31.5% 24.3% 29.2% 21.9% 19.3% 26.8% 16.7% 26.2% 21.8% 22.3% 21.1% 18.9% 25.7% 17.1% 22.9% 13.2% 15.7% 18.7% 19.6% 13.9% 31.8% 18.7% 16.6% 10.4% 22.9% 11.0% 17.9% 11.8% 18.5% 20.4% 12.7% 22.3% 12.6% 15.6% 14.8% 15.8% 17.8% 10.7% 18.7% 12.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Not Sure Poor Equal to Spend Fair 2-4x Spend Good 5-9x Spend Excellent 10-19x Spend Extraordinary Over 20x Spend Q107 How would you rate the ROI on media you use? Sample Size = Variable Video Users

29. 29© 2015 BIA/Kelsey. All Rights Reserved. | 1.7% 20.4% 22.9% 14.5%10.3% 7.4% 13.4% 15.0% 33.3% 18.3% 20.3% 24.8% 15.6% 22.4% 18.2% 22.7% 16.7% 13.0% 11.7% 12.2% 22.3% 18.6% 13.5% 10.8% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% Video Display Other Online Video YouTube Website Video Not Sure Poor Equal to Spend Fair 2-4x Spend Good 5-9x Spend Excellent 10-19x Spend Extraordinary Over 20x Spend ROI Assessment for Digital Video Advertising Video Display gets highest ROI ratings by SMB video users, 22.3% say 20x or better.

30. 30© 2015 BIA/Kelsey. All Rights Reserved. | What’s Your ROI on Website Video? Almost half of SMBs see at least 5x ROI on website video spending Source: BIA/Kelsey, Local Commerce Monitor Surveys, Waves 16-19. Good 5-9x Spend Excellent 10-19x Spend Extraordinary Over 20x Spend Top 3 Total 2012 33.9% 14.9% 7.7% 56.5% 2013 23.3% 19.2% 10.2% 52.7% 2014 14.9% 12.7% 16.4% 44.0% 2015 22.7% 12.2% 10.8% 45.7%

32. 32© 2015 BIA/Kelsey. All Rights Reserved. | Three Basic Approaches to Video Production BIA/Kelsey Recommends Long Term View of Video in Our Free Report Source: BIA/Kelsey, “Video: The Conversion Media,” September 2015 1. Regular gritty self-produced video that, while it is a bit rough, delivers a genuine sense of participation in the recorded event 2. Professionally produced video, whether created by a dedicated in-house person or outsourced to a production company 3. Tentative steps into video with a few test programs delivered to gauge interest among viewers Download free at: http://www.biakelsey.com/Research-and-Analysis/Reports/Sponsored-Research/Video-The-Conversion-Media.asp

33. 33© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 45.6% 24.4% 15.4% 6.7% 5.9% 1.6% 0.3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Made Ourselves Producer Custom Video Didn’t have a video made Producer Stock Video Producer Slide Show Other Don’t remember Q315 If you had a video made in the last 12 months what method did you use? Sample Size = 243 Video Production Methods Almost Half of SMBs Make Their Own Videos Video Users

35. 35© 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey Local Commerce Monitor™ (LCM) Wave 19, Q3/2015 (and prior waves, if relevant). Methodology: Online panels. 29.9% 26.9% 16.6% 14.2% 10.2% 5.4% 7.1% 5.5% 6.6% 21.7% 19.7% 17.9% 17.8% 13.1% 13.3% 9.2% 9.5% 5.3% 17.3% 21.1% 21.9% 24.3% 25.3% 24.5% 20.9% 21.2% 20.1% 16.6% 17.5% 24.5% 26.3% 28.2% 31.8% 29.1% 33.4% 30.2% 14.6% 14.7% 19.1% 17.4% 23.2% 25.0% 33.7% 30.4% 37.7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Broadcast Advertising Discount or Loyalty Program Mobile Advertising Print Advertising Analytics/Performance Assessment Video Social Media Advertising Email Marketing SEM/SEO Not at all a priority Low priority Moderate priority Very high priority Extremely high priority Q608 What is your future marketing priorities for the following options? Sample Size = 243 Future Marketing Priorities of SMBs 56.8% SMBs Say Video is a “Very” or “Extremely” High Priority Video Users 56.8%

36. 36© 2015 BIA/Kelsey. All Rights Reserved. | http://www.videoedge.net/news/expertise/youtubes-robert-kyncl-says-digital-video-will-become-largest-way-people-spend-their-free-time-2020/361944?utm_source=twitterfeed&utm_medium=twitter  “Digital video is exploding.”  “Already the youngest millennials are watching more digital video than TV.”  “In fact, it has now overtaken social media as their top online activity.” YouTube’s Robert Kyncl 2016 CES Keynote Video already bigger than social media among millennials

38. 38© 2015 BIA/Kelsey. All Rights Reserved. | Ooyala, Global Video Index, Q3 2015  Digital video must work on the phone for greatest impact.  Bigger screens, data plans, changing consumer expectations all point to further growth in mobile video use. Mobile Video on the Rise – Quadrupled Share Since 2013 Website video is important but more viewing on phones these days

39. 39© 2015 BIA/Kelsey. All Rights Reserved. |Source: www.multifamilyexecutive.com/property-management/marketing/more-consumers-using-mobile-to-apartment-hunt_o Mobile Video Works for Multifamily 40% of consumers consider mobile video an evaluating tool

40. 40© 2015 BIA/Kelsey. All Rights Reserved. |http://apartmentinternetmarketing.com/2015/11/forget-reality-multifamily-marketing-is-poised-for-a-virtual-change/ Virtual Reality, Augmented Reality and 360° Video

42. 42© 2015 BIA/Kelsey. All Rights Reserved. | Key Take Aways Multifamily Marketers Can Ride the Wave of Video, Social, Mobile 1. SMBs are using and evaluating the effectiveness of digital marketing channels, particularly social, mobile and video. • Using more different media channels, up to 12.9 on average for larger spending SMBs • More use of social and. mobile • Website video currently gets highest ROI for video advertising 2. Marketers are spending and how they’re allocating their budgets between traditional and digital marketing. • Shifting spend to digital, 40% or so on average • Weighting Mobile, Social, Video 3. Insights and recommendations into how to best use digital social and video marketing as part of your overall marketing mix. • Match marketing channel, creative to consumer purchase journey stage and audience targeting. • Programmatic exchanges provide self-serve options and more targeting • Develop goals, metrics, assess ROI and optimize campaigns – easier to do in digital media • Plan and measure cross-platform campaigns

43. Questions & Comments: Guiding Media. Inspiring Innovation. Leading Local. Rick Ducey Managing Director rducey@biakelsey.com

Emerging B2C Digital Marketing Trends with a Focus on Video by Richard V. Ducey, Ph.D.

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