The document discusses the evolution of online advertising, highlighting its growing influence as a primary medium over traditional media like television. It emphasizes the necessity of accurate metrics to measure online ad effectiveness, including their impact on offline sales and brand recognition. Key trends include the increasing shift of advertising budgets to online platforms as companies recognize the benefits of digital marketing compared to traditional methods.

1. Online is the New Primetime Gian Fulgoni Chairman Web Content 2008 June 18, 2008 MEASURING THE DIGITAL WORLD

2. Why is Online the New Primetime? It’s where the audience is. There are powerful new tools for online media planning and analysis We have proof of the power of online advertising: Correct metrics Can measure latent impact Can show impact on offline (e.g. in-store) sales Can demonstrate long term branding benefit Budgets rapidly shifting online as effectiveness and efficiency of online marketing is demonstrated, but Internet marketing still underutilized by many industries

3. comScore Customer Knowledge Platform: A 360° View of 2 Million Global Internet Users Passively Observed Behavior and Survey Measurement Designed to be representative of the online population Projectable to the total U.S. population Ernst & Young certified for information privacy & security DEMOGRAPHICS Self-reported and validated Appended Segments (e.g. Claritas, Acxiom) Individual & Household Level WEB VISITING & VIEWING All Web Site/Page Click Stream Content Viewed Search Engine Queries Keyword Used SURVEYS E-mail or Contextual “Pops” Behavior-activated Surveys Observation of All Surveys Taken Across All Suppliers ONLINE TRANSACTIONS All Secure Session Activity Purchases and Subscriptions Price Paid, Shipping & Handling, Promotions • Applications/Configurations MARKETING STIMULI Online Ads Referral Links OFFLINE PURCHASING Linked using Name and Address Client CRM Databases Retailer Loyalty Card Data IRI Scanner Panel Data

4. The Internet is a already a massive medium, but still growing rapidly in a variety of ways 191 million U.S. people age 2+ online in a month, spending an average of 30 hours online per person* But 77% of 841 million global Internet users now outside of U.S. 99% of online population search in a month, conducting 80 searches per searcher** 73% of online population stream a video, viewing an average of 83 videos per viewer per month*** Up 50% vs YA 67% of online population visit a social networking site, spending 4 hours per month per visitor* Online consumer spending totaled $200B in 2007, up 20% vs. YA Non-travel represents 8% of consumer spend (excl. food, gas, and autos)

5. User Generated Content Sites Growing Rapidly People (000) Monthly Unique Visitors (000)

6. The Internet is the 3 rd most used medium and about to become 2 nd only to TV Source: Forrester Research, March 2007 * Excludes work usage.

7. Internet’s reach exceeds TV’s from 7 am to 8 pm Source: National People Meter, comScore Media Metrix 2007

8. Internet Ad Revenues Continue to Surge Quarterly Internet Advertising Revenues ($ Billions) 1998 1999 2007 2006 2005 2004 2003 2002 2001 2000 Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates. $21.1B in 2007, Up 26% Over 2006

9. Ad Dollars are Flowing Online Internet Outdoor Cable TV Magazines Direct Mail Miscellaneous Overall Trade Journals Yellow Pages Broadcast TV Radio Newspapers $21 Billion $ 7 $26 $14 $61 $39 $295 $ 4 $14 $46 $19 $44 Media Advertising Dollars Spent in 2007* Percent Change from 2006 Source: Global Insights as published in BusinessWeek * Other sources may define categories differently, leading to different results 60% of all ad spending in traditional media goes to branding campaigns

10. Yet, online is only 7% of total ad spending! 2007 Estimate ($ in Millions) Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers % Total Direct Mail $ 60,988 21% Broadcast TV $ 45,749 15% Newspaper $ 42,939 14% Internet $ 21,100 7% Cable TV Networks $ 20,479 7% Radio $ 18,592 6% Yellow Pages $ 14,538 5% Consumer Magazine $ 13,695 5% All other $ 55,977 19% Total $ 296,100 100%

11. U.S. Online Advertising: One third branding; two thirds direct response Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates. Total Online Advertising 2007: $21.2 Billion Search is the biggest piece of online advertising Branding spending still under-developed

12. The Web Already Delivers More Advertising Than TV! 2.2 x Source: Display Impressions: comScore Ad Metrix, Jan -08, Television GRP’s: comScore Estimates The CPM’s are just much, much lower for Internet. Monthly GRP’s Monthly Impressions Per Person

13. Frequent news about moves online “ Online is getting to the point where it may be more important than the 30-second TV spot.” Joel Ewanick VP Marketing Hyundai Motor America “ The country’s third-largest advertiser (General Motors) is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next 3 years.” Advertising Age March 17, 2008 Even ad-spending giant P&G is considering cutting its overall ad budget by as much as 10% this year and aggressively moving ad dollars to the Web. WSJ May 12, 2008

14. New Tools Put Online Media Planning and Analysis on a Par with other Media Panel-based measures correct problems with site server data Using the correct metrics allows improved media planning and analysis Also, look beyond clicks Intelligence is now available showing advertisers and publishers detailed data on all online ad campaigns Detailed segmentation of users is helping build more powerful media plans

15. The Cookie Deletion Problem: Overstated Reach and Understated Frequency 30% of Internet users delete their cookies in a month These deleters do so an average of 4 times a month 5 different cookies for same site in a month on one computer True for 1 st party site cookies and 3 rd party ad serving cookies Cookie deletion creates large errors: 2.5 times overstatement of unique visitors in server logs 2.5 times overstatement of reach and a similar understatement of frequency in ad server logs Need to adjust basic site server statistics using panels A comScore Study of Yahoo and DoubleClick Cookies

16. Looking Beyond your Site Server Data What’s the Size of my Lost Opportunity? A: Lost Opportunity Analysis 8% Bought at Marriott 92% Became Visitor Non-Buyers (VNBs) 87% That Visit Another Travel Site 88% Did Not Convert 12% Bought Elsewhere 12.9 Million Unique Visitors 13% Had No Other Travel Activity 25% 14% 10% 10% 8% 7% 7% 19% IC Hotels Hilton Other Priceline Hotels.com Choice Hotels Expedia Starwood $462M Sales Opportunity Gap Analysis of Marriott Visitor Non-Buyers (VNBs) Dollar Share of Lost Sales Among VNBs

17. Decline in Online Ad Click-Through Rates Sources: Doubleclick, eMarketer, Eyeblaster, ABI Research estimates

18. “ Natural Born Clickers” comScore Study with Tacoda and Starcom Clickers on Display Ads Source: comScore, Total US Online Population, July 2007 Clickers Non-Clickers

19. Clickers Follow the 80/20 Rule Source: comScore, Total US Online Population, July 2007 Clickers are predominantly younger (25 - 44) with lower income (under $40K)

20. Those Who Viewed the Ad But Did Not Click Drove Majority of Site Engagement and Sales % of Exposed People Include View-Through Effects When Measuring the Campaign – Clicks Are NOT Enough

21. Majority of Sales Impact of Display Ads Occurs Offline

22. Clicks on Display Ads Are a Misleading Metric and They Don’t Reflect Brand-Building Effects Only use for direct response ad campaigns (or search) Clicks don’t measure all of a campaign’s sales impact, including the cumulative (latent) and offline impact of ads Clicks don’t tell you anything about brand building effects

23. New competitive advertising intelligence comScore Ad Metrix Number of ad view impressions…per advertiser…per site Precise reach and frequency, full demographics and behavioral stats Transcription of actual ads Post-buy analysis

24. Auto Industry Ad Leaders Source: comScore Ad Metrix, Jan 08

25. Automakers using Portals and Auto Resource Sites Source: comScore Ad Metrix, Jan 08

26. Top Sites Deliver Far Less Than Their Nominal Reach and Need Ad Networks to Expand Effective Reach Reach of U.S. Internet Audience Source: comScore Custom Analysis, December 2007 Bottom 50% of Viewers for Each Site % of Total Page Views % of Page Views Viewed by Bottom 50% of Site Users Average PVs per Light User (bottom 50%) 10.3 14.7 7.4 7.3 At Least Half of Top Sites Audiences Are Hard to Reach by a Typical Campaign AOL Media Network AOL Media Network 74.4% 72.4% 58.7% 56.5% MSN-Windows Live Google Sites Yahoo! Sites AOL Media Network MSN-Windows Live Google Sites Yahoo! Sites

27. Why have so many advertisers been slow to adopt online? Are the wrong metrics being used, i.e. clicks instead of ROI? Is it lack of proof that online advertising works? Is there a bias that online is only for direct response? Do some advertisers not realize what paid search can do for them? comScore’s clients have been busy proving the results Search Display advertising Offline impact (in-store sales) Latent effects

28. “ The Role of Search in Consumer Buying” 2006 comScore Study with Google Source: Google/comScore “The Role of Search in Consumer Buying” Press Release, March 21, 2006; based on holiday-related purchases completed online and offline across 11 product categories for 60 days post-search Direct Online Effects 16% Latent Offline Effects 63% Latent Online Effects 21% The Three Components of how Search Drives Buying

29. THE SEARCH MARKETING OPPORTUNITY All CPG Categories Nearly half of Internet Users search on CPG related terms or visit CPG related sites. Source: comScore Marketing Solutions; 3 Months Ending April 2007 – Total U.S. % INTERNET REACH UNIQUE VISITORS UVs USING SEARCH “ The Digital Shelf”: comScore Study with P&G, Yahoo and SEMPO USING SEARCH Food Baby Personal Care Household 93.7MM 43.8MM 26.0MM 15.7MM 35.9MM 9.8MM 7.3MM 1.7MM

30. Demographic & Life Stage Questions: Base: Searcher (n = 2,011); Non – Searcher (n= 803) = Significant difference at 95% confidence Demographic Profile Searchers are more affluent, younger and more likely to be female SEARCHERS U.S. POPULATION Average Income $63k $45K Average Age 41 46 Female 78% 50% 4 yr. College or Better Education 45% 22%

31. Searchers can be influenced to switch brands based on factors other than price Thinking about your last purchase, did you switch brands? Why did you switch? QA14/11a: Did you switch to another brand? Base: Searchers (n = 1,893); Non-Searchers (n = 751) QA15/12a: Why did you switch? Base: Searchers (n = 625); Non-Searchers (n = 208) = Significant difference at 90% confidence. Price (Main Reason for Switching) Searchers 27% Non-Searchers 38% Searchers Non-Searchers

33. The Brand Lift of Search

34. Query: Unbranded (i.e., “fuel efficient car”) Methodology: Testing the Brand’s Placement Control (No branding – “Brand X” does not appear on the SERP) Brand appears in Top Sponsored result only Brand appears in Top Organic result only Brand appears in both Top Sponsored and Top Organic results Brand appears in Side Sponsored result only Top Sponsored Subjects entered an unbranded query and saw one of the following search engine results pages (SERP): Source: Enquiro Search Solutions, Inc., July 2007. Note: All subjects ( N =2722) are 25+ and considering purchasing a new car within the next year (test brand: major import auto maker). Top Organic Only 3 Top Sponsored Only 2 Top Organic AND Top Sponsored 4 Side Sponsored 5 Control, brand not mentioned 1 Top Organic

35. A 16% Point Increase in Brand Association When Brand Is in Top Sponsored and Top Organic Results Test Brand Other None When you think of fuel-efficient cars, which come to mind? 42% point gap between test brand and another brand 16% Control Side Sponsored Top Sponsored Listing Top Sponsored & Top Organic Top Organic Listing 0% 10% 20% 30% 40% 50% 60% 70% Source: Enquiro Search Solutions, Inc., July 2007; Note: There is a significant (7% point) increase from Control to Side Sponsored, as well. Query: Unbranded (i.e., “fuel efficient cars”)

36. A 2.2x Lift in Aided Brand Recall When Brand Is in Top Sponsored and Top Organic Results Which of the following brands do you remember seeing in the search results page you just viewed? Side Sponsored Top Sponsored Top Sponsored & Top Organic Top Organic Listing Test Brand Other 0% 10% 20% 30% 40% 50% 60% 70% Source: Enquiro Search Solutions, Inc., July 2007. Query: Unbranded (i.e., “fuel efficient cars”) Test Brand 2.2x 1.5x x

37. What about the impact of Internet ad campaigns on in-store sales?

38. Close the Loop Studies (Done with Yahoo!) Dozens of studies to assess the impact of paid search and banner ads on online and offline sales Real world analysis: comScore panelists divided into two matched groups (exposed and non-exposed to advertising) Search only Display ads only Search and display ads together Neither Passively measured behavior, no surveys involved Linked to in-store sale through CRM databases, retailer loyalty cards (e.g. Kroger), IRI scanner panel

39. Search + Display Ad Effectiveness Results: comScore Norms for Offline Sales Lift Incremental Impact On Offline $’s Search ads generate a greater lift in offline sales, but have a far lower reach and cost substantially more than Display ads Offline $$ Per (000) Exposed 11% 8% 80% % of All Exposed Users

40. Some Summary Thoughts for the Future The move to online advertising is in full gear It will spread rapidly as traditional advertisers understand its impact Panel data needed for accurate consumer metrics Reach and cumulative frequency are mandatory metrics if traditional branding ad dollars are to be moved online Measure latency and offline impact of online campaigns to show true (higher) ROI Search can be a branding tool