State of the Global Internet with Lessons Learned from Measurement of Online Advertising

State of the Global Internet With Lessons Learned from Measurement of Online Advertising

Gian Fulgoni Executive Chairman and Co-Founder, comScore Inc Discussion Topics

. A Brief Introduction to comScore . Key Trends in Global Internet Behavior . Lessons Learned About Online Advertising: – The Click – The Cookie – Ad Visibility – Facebook

NASDAQ SCOR Clients 1,900+ worldwide Employees 1,000+ Headquarters Reston, VA 170+ countries under measurement; Global Coverage 43 markets reported Local Presence 32+ locations in 23 countries

2 Million Person Panel PERSON-Centric Panel with 360°View of Person Behavior SITE-Census Measurement

Web Visiting & Search Online Behavior Online & Offline Advertising Buying Exposure PANEL CENSUS

Advertising Transactions Effectiveness

Media & Video Demographics, Consumption PANEL Lifestyles & Attitudes Unified Digital Measurement™ (UDM) Mobile Internet Usage & Behavior Patent-Pending Methodology 1 Million Domains Participating Adopted by 80% of Top 100 Global Media Properties

And, a behavioral© comScore, Inc. Proprietary. cross -platform4 measurement capability V0411 The U.S. Is No Longer the Center of the Online Universe

U.S. Internet Population vs. Rest of the World Distribution of Worldwide Internet Audience

Middle East - Rest of the Africa, World 34% Latin America, 8.8% 9.0% Asia 87% North Pacific, America, 41.3% U.S. 14.6% 66% Asia Pacific

Europe, 13% 26.4%

1996 2011

. In 1996, 2/3 of world’s Internet population was in the US, yet today Asia Pacific is the largest region with over 40% of online population. . Many emerging regions likely to bypass old modes, skipping dial-up to go straight to broadband, making multimedia, video, and collaborative content immediately accessible. . Early adoption of mobile web in addition to PC web will likely be popular in many of these high- growth areas.

. Growth expected to continue as home Worldwide Online Population broadband penetration increases in Asia (Millions) and Latin America +9% . Growth in developing regions likely to 1,444 also continue as people move from 1,323 shared-access to home & work use . Growth slow in North America 2010 Dec 2011 Dec . European growth mostly driven by Russia

+11% Dec-11 Dec-10 595 534 +6% +3% 381 361 +15% +14% 210 203 129 112 126 111

Asia Pac Europe North America Latin America Middle east Africa

© comScore, Inc. Proprietary. 6 Internet Audience 15+ accessing Internet from Home or Work Source: comScore Media Metrix, Dec 2010 and Dec 2011 Shared-Access Environments Make up Significant Portion of Total Population in Some Regions

. Shared-access population in India is almost as large as the Internet population accessing from work and home 331 Unique Visitors (MM)

15+ H/W Other

105

47 43 52 32 25 29 11 12

China India Brazil Mexico Indonesia

. Significant growth in BRIC countries in the past year, particularly in China, where 13% growth represents 40 million new web users from work & home . Growth similarly high in many Latin American and Asian markets

Online Population Sizes (MM) BRIC +13% Dec-10 Dec-11 331 291

+12% +15% +15%

42 47 45 52 46 53

China India Brazil Russia

. Internet audience in India skews dramatically younger: 75% of web audience is under 35, compared to 52% of the world and 55% of the region

Composition of Internet Audience 15+

Worldwide 26 26 22 14 12

Asia Pacific 28 27 23 12 9 75%

India 33 41 17 6 3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 15-24 25-34 35-44 45-54 54+

. Web users in China and India are lighter users than Russians and Brazilians . Expect usage rates to increase as home/work Internet penetration increases and broadband becomes more readily available

Total Hours Online per Visitor WW AVG: 24.4 Russia 25.1

Brazil 26.7

Indonesia 16.4

Mexico 21.1

China 14.1

India 13.0

© comScore, Inc. Proprietary. 10 Internet Audience 15+ accessing Internet from Home or Work Source: comScore Media Metrix, Dec 2011 Young People Drive Internet Consumption in India Today, Suggesting Future Overall Usage Will Rise Dramatically

. 25-34 year olds are India’s heaviest Internet users

Time Online by Age Total time in Billion Minutes 16 14.9 14 12.4 12

10 8 6.1 6 4 2 2 0.87 0 15-24 25-34 35-44 45-54 55+

Millions of Monthly Users In Oct 2011 Around the world, Social Networking 1,179.4 now reaches

billion 916.8 1.2 users

444.9 82% of the world’s online population

Total Unique Visitors (MM) Visitors Unique Total Email Instant Social 95% Messengers Networking Reach among

Source: comScoreIndia Media online Metrix, October users 2011 © comScore, Inc. Proprietary. 12 The Rise of the Global Social Networking Audience

Worldwide Total Unique Visitors (MM) 1,600

1,400 +88% Total Internet 1,200

1,000 +174% Social 800 Networking

600

400

200

0 2007 2008 2009 2010 2011

Source: comScore Media Metrix, March 2007 - October 2011 © comScore, Inc. Proprietary. 13 Nearly 1 in 5 minutes online is spent on social networks today. 2008 2009 2010 2011

35 Social Networking

30 Search/Navigation

Retail 25 Communications (Email/IM)

Other Content

Time Spent on Key Categories Online Worldwide Hours per Month (Billions)

Source: comScore Media Metrix, March 2007 - October 2011 © comScore, Inc. Proprietary. 14 3 Facebook’s worldwide site rank Facebook’s global 55% penetration 2 Facebook’s India site rank

Source: comScore Media Metrix, October 2011 © comScore, Inc. Proprietary. 15 in 4 minutes on social networking 3 sites are spent on Facebook in 7 minutes spent online 1are spent on Facebook

Source: comScore Media Metrix, October 2011 © comScore, Inc. Proprietary. 16 Since 2010, Facebook has taken the lead in 6 new markets across Asia, Latin America, and Europe

Jan-2010 Apr-2010 Jul-2010 Oct-2010 Jan-2011 Apr-2011 Jul-2011 Oct-2011

Facebook 788MM Facebook overtakes overtakes StudiVZ in Windows Germany Live in Portugal Facebook Facebook overtakes Hyves overtakes Yahoo! in the Holland 471.4 Facebook Wretch in Taiwan overtakes Facebook Orkut in India overtakes Windows Live in Mexico Facebook’s Ascent in Recent Years Total Unique Visitors (MM)

Source: comScore Media Metrix, January 2010 - October 2011 © comScore, Inc. Proprietary. 17 Social Networking is Not Just Facebook

linkedin reaches 1@ in 8 online users in India and 1 in 14 @ worldwide Twitter reaches 1 in 12 online @ users in India and 1 in 10 users worldwide

Source: comScore Media Metrix, Worldwide, October 2011 © comScore, Inc. Proprietary. 18 saw the largest decline in engagement with web-based 15-24 year olds email and instant messaging

34% 25% 21% 15% 12% 1%

-4% -3% -8%

-22% -32% -37% -34% -36% -42% Age 15-24 Age 25-34 Age 35-44 Age 45-54 Age 55+

Instant Messengers Email Social Networking

Change in Average Time Spent with Content Category by Age Segment

Source: comScore Media Metrix, Worldwide, October 2011 vs. July 2010 © comScore, Inc. Proprietary. 19 …but also saw the highest increase in engagement with social networking.

34% 25% 21% 15% 12% 1%

-4% -3% -8%

-22% -32% -37% -34% -36% -42% Age 15-24 Age 25-34 Age 35-44 Age 45-54 Age 55+ Instant Messengers Email Social Networking

Change in Average Time Spent with Content Category by Age Segment

Source: comScore Media Metrix, Worldwide, October 2011 vs. July 2010 © comScore, Inc. Proprietary. 20 Online Advertising: Lessons Learned

• The click is at best an incomplete and at worst a misleading metric

• Display advertising is an efficient and effective way to build sales both online and offline

• Accurate delivery of media plan is critical

• Facebook is a very efficient way to amplify reach and persuasiveness

•There were 50% fewer clickers in 2009 (16%) than in July 2007 (32%) • 8% of all Internet users account for 85% of all clicks • Optimizing against clicks means ignoring 84 percent of Internet users

July 2007 March 2009

Clickers Clickers 16% 32%

Non- Non-Cli Clickers 68% cker84 %

Source: comScore, Inc. Custom Analysis, Total US Online Population, persons, July © comScore, Inc. Proprietary. 23 2007 and March 2009 data periods Global Click Rates on Individual Campaigns are Pitifully Low

Worldwide Click-Through Rates*

Austria 0.05% France 0.11%

Finland 0.05% Italy 0.11%

UK 0.07% Germany 0.11%

Canada 0.08% Belgium 0.11%

Australia 0.08% Denmark 0.11%

U.S. 0.09% New Zealand 0.13%

Spain 0.09% Netherlands 0.15%

Switzerland 0.09% Greece 0.17%

Singapore 0.09% India 0.19%

Ireland 0.10% Hong Kong 0.22%

Luxemburg 0.10% China 0.64%

*Click-through rates across static image, flash and rich media formats Source: DoubleClick Benchmarks data representing a cross-section of countries, Jan to Dec, 2010 © comScore, Inc. Proprietary. 24 How comScore measures advertising ROI: Link ad exposure to behavior

Website Visiting & Search

Video

Name & Address Online Transactions

Advertising Exposure

Journal Of Advertising Research: comScore’s “Whither the Click?”

. Journal of Advertising Research, June 2009 “What We Know About Advertising: 21 Watertight Laws for Intelligent Advertising Decisions” Prof. Byron Sharp, Ehrenberg Bass Institute, University of South Australia Prof. Jerry Wind, The Wharton School . comScore’s “Whither the Click?” – 200+ comScore studies conducted in the U.S. to assess behavioral impact of paid search and online display ads.

Even with Minimal Clicks, Display Advertising can Lift: • Site visitation • Trademark search queries • Online and offline sales

26 Despite click rates of only 0.1%, comScore research has shown that display ads can lift retailer sales – both online and offline

Dollar Sales Lift Among Households Exposed to Online Advertising Conclusions

% Lift: 17% . Exposure to display ads doesn’t just impact online $11,550 sales – it lifts in-store $9,905 sales as well

. The absolute dollar lift % Lift: 27% in offline sales is 5x higher than the lift in e-commerce sales $994 $1,263 . The click is misleading Online Offline as a measure of campaign effectiveness Unexposed Exposed

Source: “Whither the Click?” 139 comScore studies in the © comScore, Inc. Proprietary. 27 June 2009 Journal of Advertising Research Branding’s digital challenge

• Branding advertisers on TV are accustomed to audience guarantees and expect the same in digital • Accuracy of cookie-based digital plan delivery is problematic:

Cookie Deletion Cookies Are Not People

Ads Are Not Always Visible

U.S. Users per Computer 2011

Over 64% of home users share a computer with other users 3+ Users 1 User 32% 36%

2 Users 32%

Accurately counting reach with cookies is not possible, yet is currently the method used in most ad servers and analytics systems

Ad Server Cookies Web Site Cookies

Average # of Average # of Percent of Percent of cookies per cookies per Country computers computers computer for computer for deleting deleting same campaign same web site

Australia 37% 5.7 28% 2.7

Brazil 40% 6.6 33% 2.5

U.K. 35% 5.9 27% 2.7

U.S. 35% 5.4 29% 3.5

Target for this health & well being product was females age 35-54

Male 40% of exposed consumers outside of planned gender target

40%

20.6% 15-24

22.4% 25-34

Female Only 43% of females 60% 25.3% 35-44 exposed to the % Composition of Exposed Audience Exposed % Compositionof campaign met the 17.3% 45-54 targeted age group

14.4% 55+

Only 25% of all exposed consumers met planned targeting criteria

Distribution of Exposed People by CPG Campaign Frequency of Exposures • 4 Weeks 64% • 43 GRPs • Reached ~ 8MM People • Average Frequency = 4.5 48%

65% of Exposures

27 Exposures per Person!

16% 22% 13% 8% 5% 3% 3% 2% 2% 1%

1 2 3 4 5 6 7 8 9 10+ Exposures per Person

. Reduce costs of doing business due to complexity of digital advertising ecosystem . ‘Single Tag’ solution to reduce complexity . Improve reporting of ad exposure . Bolster confidence that ads delivered are actually visible

18 campaigns 2 billion impressions 400k sites

Allstate

In-view ad rates ranged from 55% to 93% across 18 campaigns

69% AVERAGE

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Using the comScore panel and proprietary technology, comScore is the first research company to provide continuous measurement of the impact of earned media among Fans and their Friends on Facebook.

Publisher Share of Display Ad Impressions

Source: comScore Ad Metrix, U.S., Q3 2011 © comScore, Inc. Proprietary. 38 SOCIAL ESSENTIALS comScore now measures most major engagements on Facebook

Ad Exposed

Friends Sponsored of Fans Stories

Fans

Facebook Fans are NOT regular visitors to Facebook Fan Pages. Marketers need to reach out Fans in their News Feed with relevant content!

Monthly Unique Visitors Brand No. of Fans* To Facebook Fan Pages** Coca Cola 24.0 Million 39,000

Oreos 17.5 Million 137,000

Best Buy 2.7 Million 175,000

*Source: Facebook ** Source: comScore

Friends of Fans represent a way for brands to efficiently amplify their reach substantially beyond Fans

FANS Earned Exposed Fans Impressions Reach Frequency GRP Southwest 661K 2,457K 0.3% 3.7 1.1 Bing 1,070K 3,353K 0.5% 3.1 1.6 Starbucks 4,841K 13,664K 2.2% 2.8 6.3

FRIENDS Earned Exposed Friends Impressions Reach Frequency GRP Southwest 853K 1,460K 0.4% 1.7 0.7 Bing 2,035K 3,183K 0.9% 1.6 1.5 Starbucks 8,846K 18,073K 4.1% 2.0 8.4

Friends expand Fans Reach by

© comScore, Inc. Proprietary. 41 133% to 186% Fans and Friends of Fans exposed to earned brand impressions on Facebook exhibit higher brand engagement, e.g. site visitation, than the average Internet user

Why do friends of fans have a higher orientation toward the brand? 1. Birds of a feather flock together 2. Trusted persuasion

Friends Friends

Friends

Baseline Internet User

. The digital world is expanding rapidly, driven by new users in some regions and / or by growth in time spent in others . Younger consumers in India are leading the revolution, with higher engagement coming from 15-34 age segments . Social Networking is a key driver of PC and Mobile activity, cannibalizing many other activities . Online advertising is effective, both as a direct response and branding strategy . For online advertising to get its fair share of advertising dollars – Ad effectiveness needs to be measured “beyond the click” – Accurate measurement of the delivery against media plan is critical – Facebook represents an efficient way to amplify reach and trusted persuasion

Gian Fulgoni Executive Chairman and Co-Founder, comScore Inc.