Toward a More Equal Footing with Television: A New Approach for Incorporating Print and Digital Media Into Marketing Mix Models

SCOTT MCDONALD- SVP MARKET RESEARCH, CONDÉ NAST SUNIL GARGA – FOUNDER M-PHASIZE, LLC Today’s Discussion

1. Condé Nast AdMix Study 2. How is Admix Different 3. Better Data & Improved Models 4. Case Study 5. What’s Next VOGUE W STYLE GLAMOUR ALLURE SELF

GQ DETAILS ARCHITECTURAL BRIDES LUCKY DIGEST Condé Nast. Media’s Most Powerful Brands.

VANITY FAIR BON APPÉTIT EPICURIOUS CONDÉ NAST CONCIERGE WIRED TRAVELER

REDDIT JAUNTED HOTEL CHATTER VEGAS CHATTER NUTRITION DATA Condé Nast: A Multimedia Continuum

CONSUMER OWNERSHIP

TWITTER

WEB INTEGRATED FACEBOOK PROPERTIES MARKETING

MAGAZINES

EXCEPTIONAL EVENTS Brand CONTENT

MOBILE CONSUMER DIGITAL JOURNALISM READERS DIGITAL BLOGGING VIDEO

YOU TUBE

CONTENT AMPLIFICATION TIME Comprehensive Ad Effectiveness Measures

CNMG Insights AdLab/AdIQ AdMix • Database and Brand Affinity • Creative Testing • Marketing Mix Model ROI Network • Pre/Post Ad Effectiveness

CN DATABASE & THE PREFERRED DIGITAL PRINT SUBSCRIBER NETWORK (PSN)

FASHION $ TECHNOLOGY AUTOMOTIVE RETAIL FINANCIAL PHARMA TRAVEL BEAUTY TV AdMix Overview

• AdMix is a custom Marketing Mix Modeling Study conducted in 2009 by Conde Nast Media Group and M-phasize LLC

• This study was designed to;

1. Understand the role of print and digital in context of other media 2. Quantify Media synergies 3. Improve the media inputs to ensure accurate quantification

• Three categories were evaluated:

1. Liquor 2. Pharmaceutical 3. Beauty What Makes AdMix Unique

MOST MARKETING MIX STUDIES ADMIX

• Brand & Campaign specific • Category-level perspective • Use internal spending data • Syndicated industry data • No competitive norms • Competitive norms • More detail on TV ad exposure inputs, less • Careful specification of ad exposure inputs from ALL media sources care with other media inputs • 2007-2009 time frame allows view • Limited time horizon determined by specific of sales impact in both boom and campaigns bust cycles Up to 156 Weeks of Data Analyzed June 2007-May 2009

• IRI Sales Data • NPD • IMS

• TNS

Media • Nielsen Exposure/Spending Data • comScore • MRI

Macro-Economic • University of Data Michigan Model Variables

BRAND PROMOTIONS BRAND DISTRIBUTION

BRAND PRICE TELEVISION Direct & Halo

BRAND SEASONALITY PRINT • CN and Other Publishers COMPETITION

ONLINE/DIGITAL ECONOMY • Search • Consumer Confidence • Website • Consumer Price Index • Displays • Unemployment Rate Three Sales Drivers

Core Media Marketing

Price Print In-Store Promotions Distribution

Competition

Seasonality TV Consumer Promotions Weather

Economy

Items in store Digital DM Long term brand equity Print in Media Mix Modeling

• The role of print within traditional media mix models has typically been understated and diluted as a result of misrepresentation compared to other media (TV, digital, etc).

• Print’s primary challenges vs TV: • Lack of consistent and accurate weekly data • Inconsistent data for local markets • Longer audience accumulation times Improved Print Data

• Used actual audience delivery data for print – not planned delivery 1.

• Utilized date from the day issues hit the stand – not cover date 2.

• Print delivery was calculated by magazine accounting for difference in 3. weekly, monthly magazines

• Corresponding TRP’s & audience accumulation to accurately account for 4. consumer exposure

• Average page exposure applied to audience accumulation curves 5. As an example, readership curves aid in understanding the audience accumulation of Print, particularly the exposure achieved prior to the issue date

AUDIENCE ACCUMULATION-ADULTS

100

80

PERCENT OF 60 TOTAL AUDIENCE 40

20

0

7 0 7

-

42 14 14 21 28 35 48 56 63 70 77 84 91 98

-

105 126 133 126

ISSUE AGE (DAYS)

Magazine A Magazine B Magazine C

* SOURCE: HUDSON RIVER GROUP Granular Digital Data

Internet Website Search/ Advertising Activity Contextual Ads

TOTAL DISPLAY ADVERTISING EXPOSED SEARCH AD IMPRESSIONS AD VIEWS (000) UNIQUE VISITORS (000) (SPONSORED)

SEARCH CLICKS Today’s Discussion

1. Condé Nast AdMix Study 2. How is Admix Different 3. Better Data & Improved Models 4. Case Study -- Learnings & Implications 5. What’s Next Just the Facts… SPENDING* BY MEDIA TYPE (ALL CATEGORIES)

Total Spend = $ 3.6 Billion 1. 3 Mega Categories 2% 2. 60+ Major Brands 3. Over $3.5B in Media Spending 36% 4. Diversified Media Spend 62%

% TV SPENDING % PRINT SPEND % DIGITAL SPEND

*Source: TNS = June 07 – May 09 Better Data = Improved Results

1. TV & Print stayed in all brand models 2. Digital stayed in 40+ brands (spending too low in the remaining) 3. Media contributions higher 4. Media synergies quantified 5. Print & Digital variables exhibit higher significance Higher Media Spending = Higher Sales

75%

55%

35% 23% 19% 13% 15% 8% 2% 1% 1% -5% -2% -7% -25% -17% -20% -23% -27% -45% Cosmetics (NPD) Cosmetics Skincare (NPD) Spirits Haircare Pharma Fragrances (NPD)

YOY % CHANGE IN UNIT SALES YOY % CHANGE IN MEDIA SPEND

* CY Current 52 Weeks YAGO Last 52 Weeks All Media Contribute to Sales. Print And Digital Contribute The Majority of Media Driven Sales For High End Retailer Categories

TV VS. PRINT & DIGITAL % of Total Media Driven Sales

High End Categories Mass Categories

8% 24% 24% 33% 15% 61% 12% 71% 100% 38% 78% 11% 61% 55% 2% 28% 26%

Prestige Fragrances Prestige Spirits Mass Cosmetics Pharma Haircare Cosmetics Skincare TV % Contribution Digital % Contribution Print % Contribution •Media helps to insulate against Price Increases •Print Effectiveness increased for brands where Price has increased.

Media Effectiveness and Price

Brands with Higher Price Increases Brands without Price Increases

2,500 2,380 12,000 10,237

2,000 10,000 8,169 8,471 1,524 8,000 1,500 6,000 1,000 4,000 467 500 2,000

- - Period 1 Period 2 Period 3 Period 1 Period 2 Period 3

Period 1: 6/25/06 – 7/29/07 Period 2: 8/5/07 – 7/27/08 Period 3: 8/3/08 – 6/14/09 20 Category Results Media Spending Mix of All 8 Brands

28% TV

60% PRINT 2% DIGITAL 10% OTHER MEDIA*

Source: TNS *Other media includes: Newspapers, Radio, Outdoor, Local TV, Cable TV, B-to-B magazines, and all Hispanic media. Print includes: Magazines and Sunday supplements. Brands Selected With Varying Media Mix

June ‘07 – May ’09 Percentage of Total Media Spending

TOTAL PRINT TOTAL TV US INTERNET ALL OTHER MEDIA VEHICLES Brand 1 63.4% 23.3% 8.5% 4.8% 2 0.9% 94.1% 1.7% 3.2% 3 87.0% 5.6% 1.2% 6.2% 4 67.1% 13.1% 1.4% 18.4% 5 48.2% 37.1% 2.4% 12.3% 6 31.3% 48.9% 1.3% 18.6% 7 82.5% 6.5% 0.3% 10.7% 8 64.5% 23.9% 0.8% 10.7%

Source: TNS *Other media includes: Newspapers, Radio, Outdoor, Local TV, Cable TV, B-to-B magazines, and all Hispanic media. Print includes: Magazines and Sunday supplements. Media drives 5% of short-term total sales*

8 Brands

79.5% CORE

5.0% MEDIA

15.5% TRADE MARKETING

*Sales = Cases sold Client Brand Analysis Model Fit: Highly Predictive and Accurate Media contributes more to client brand sales than the category average

Client Brand (Cases Sold)

79.4%CORE

5.8% MEDIA 14.8% TRADE MARKETING

*Sales = Cases sold Print And Digital Drive The Majority of Sales

PERCENT OF BRAND SALES DUE TO MEDIA

TV PRINT DIGITAL

Client Brand Brand 1 Brand 2 Brand 3 Brand 4 Brand 5 Brand 6 Brand 7

TELEVISION 1.2% 2.8% 1.4% 2.2% 1.2% 1.4% 0.0% 1.9% PRINT 3.5% 6.4% 5.2% 3.3% 3.3% 3.0% 2.1% 0.8% DIGITAL 1.0% 0.0% 1.2% 0.7% 0.5% 0.3% 0.0% 0.7%

TOTAL: 5.8% 9.2% 7.8% 6.2% 5.0% 4.7% 2.1% 3.4% Together, Print and Digital represent 80% of Media driven sales

CLIENT BRAND 20% TV 5.8% MEDIA

79.4% CASES SOLD CORE 62% 18% PRINT 14.8% DIGITAL TRADE MARKETING Print and Digital are more cost efficient than TV

MEDIA SUPPORT $MM MEDIA ROI TNS Incremental Cases Sold Per $MM 2,533 $19.4

$7.1 738 585 $2.6

TV PRINT DIGITAL TV PRINT DIGITAL Print and Digital Synergy Overall Print effectiveness was greater during the period where

Digital Support was present in the media mix. No Digital Support Present Digital Support Present

PRINT SUPPORT TREND PRINT EFFECTIVENESS GRPS Incremental Cases Sold per GRP 35 402 +21% +35% 333 26

2 Years Ago Latest 2 years 2 Years Ago Latest 2 years

*Sales = Cases sold Reallocating Media Spend

• Reallocating 4% of the total Media spending to Print & Digital drives an additional 0.5% to total volume sales. % CHANGE IN TOTAL SALES

Move $ • Reduce PRINT by $1MM -0.2% to TV • Move to TV

Move $ • Reduce TV by $1MM PRINT & DIGITAL to Print • Move to Print +0.2% +0.5% Move $ • Reduce TV by $1MM to Digital • Move to Digital +0.3%

*Sales = Cases sold What are we doing next

• Multi equation models 1.

• Improved data for all media 2.

• Media attribution 3.

4. • Media synergy

• Portfolio Effects 5. Media Attribution

Analyzing response channels in isolation can The entire series of response channels must potentially generate misleading findings. be view as an interdependent system.

NAA Impression Response NAA1 NAA2 NAA3 Channels Channels Media Synergy

TV + Paid Search+Dispay

TV + Paid Search

Display + PaidSearch

TV

Paid Search

Display

Percent Sales Lift Portfolio -- Optimizing Resources As an example leveraging actual results from a previous financial services study, this approach generates the New Account Apllications contribution of impression channels, i.e. television, print, direct mail and digital through the potential response channels of URL, Phone, and Direct Mail. Key Messages

1. Improved Inputs = Equal Footing for All Media = Right Budget Allocation

2. Condé Nast Investing in Improved Inputs & Category-Brand Specific Media Insights

3. Offline & Online Media Attribution a Key Focus Area Thank You

Scott McDonald SVP Market Research, Conde Nast [email protected]

Sunil Garga Founder, M-phasize [email protected]