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NinthDecimal Mobile Audience Insights Report

Q4 2013 Spotlight on Quick Service (QSR) & Casual Dining Restaurants

NinthDecimal Mobile Audience Insights Report Q4 2013 QSR & Casual Dining Restaurants

Source: NinthDecimal, Q4 2013NinthDecimal.com

OnlineMobile

117%Research OverviewConsumer Dining Frequency 2

Mobile Influence on Path to Purchase 3-7

Mobile Ad Execution & Engagement 8-9

Mobile Ad Effectiveness Benchmark 10

Connected Trends & Adoption 11-12

Worldwide Location Highlights 13-14

Report Overview & Methodology 15

Our Q4 research report focuses on understanding how mobile is impacting consumers’ path-to-purchase behaviors specifically for QSR (quick service restaurants) & Casual Dining establishments. The report analyzes key trends and important industry insights in consumers’ location & mobile adoption and behaviors.

We identified the following industry insights. The first examines how growing mobile usage is reshaping consumer behavior with respect to decisions on restaurant and menu choices. The second examines how timing, proximity and various mobile ads affected audience engagement and path-to-purchase decision-making. To measure mobile ROI, we used the industry’s most accurate drive-to-location metric, NinthDecimal’s Location Conversion Index™, for the QSR and Casual Dining vertical as well as our newly launched quarterly Mobile Ad Effectiveness Benchmark for all ad campaigns. The final section identifies key trends in Wi-Fi public locations and connectivity.

Key Findings •Consumers chose mobile as a source of information influencing dining decisions 117% (2.2x) over online sources. •83% of consumers rely on their mobile device for dining decisions while traveling compared to 63% when in home market. •93% of QSR patrons make same-day decisions on where to dine vs. 64% of casual dining patrons. •Menu info (33%), sales/coupons (24%) & location (21%) are the top 3 content categories driving effectiveness of mobile ads for QSR and casual dining brands. •75% of consumers are likely to try a new menu item after seeing a mobile ad. •Consumers exposed to QSR/casual dining-specific mobile ads visited restaurants 35% more than those who didn’t see an ad.

Source: NinthDecimal, Q4 2013

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Consumers chose mobile as a source of information influencing dining decisions

117% over online sources



The Consumer Dining Habit Landscape

Which type of restaurants have you eaten at in the last 60 days?

Patronage Comparison

77% of mobile consumers have visited fast food or casual dining restaurants in the last 60 days

•Consumers are more likely to dine at fast food restaurants than casual dining chains. •Moms visit fast food restaurants 5x more than dads; and casual dining establishments 3.25% more than Dads. •Women patron fast food & casual dining establishments nearly 2x more than men.

41% 10%

19% 20%

12%10%

2%

13%

4%

23%

36%



Fast Food

Casual Dining

Upscale Chains

Moms

Dads

Women

Men

QSR

QSR

Casual Dining

Casual Dining

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Consumers chose mobile as an info source influencing dining decisions 117% (2.2x) over online sources

•39% of consumers use mobile apps to determine where to eat. •Restaurant review apps are second only to Word of Mouth for both QSR & casual dining restaurants. •Broader restaurant review apps are preferred 4x over branded restaurant apps. •After mobile apps, offline & online information sources are close to equal in their influence.

39% - Mobile apps22% - Offline18% - Online21% - Other

Consumers Discovery Methods

Source: NinthDecimal, Q4 2013 Source: NinthDecimal, Q4 2013

How do you typically discover information about fastfood or casual dining restaurants?

How are you most likely to discover info on fast food or casual

dining restaurants?

Word ofMouth

Restaurantreview app

Billboard orsign

Restaurant’swebsite

Other Restaurant’sapp

58%64%

39% 43%

31% 28%23% 25

%23% 21%

10% 10%

39%

22%

18%21%

Fast Food Patrons Casual Dining Patrons

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83% of consumers rely on their mobile device for dining decisions while traveling compared to 63% while in their home market

•Menu options are most important for mobile consumers while in their home market (61%), while a QSR’s proximity is most important to consumers while traveling (58%). •When traveling, Wi-Fi availability is 61% more important than when in the home market, and directions are 150% more important than when in the home market.

Source: NinthDecimal, Q4 2013Source: NinthDecimal, Q4 2013

When Mobile Impacts Decision-Making for the QSR/Casual Dining Audience

Which of the following are important when you’rehome versus when you’re traveling?

Is your mobile device important in helping you decide

where to eat?

MenuOptions

Proximity NutritionFacts

SpecialPromotion

DirectionsWi-FiAvailability

Drive-Thru

StoreHours

Features forKids

When Home: Yes

When Traveling: Yes

61%

52%

43%

58%

33%27% 27%

21% 23%

37%

22%27%

14%

35%

14% 14% 14% 12%

63%

83%

61% 150%

Home Traveling

4



93%

4%

9%17%

11%9%

20%20%

14%

2%

93% of QSR patrons make same-day decisions on where to dine

•Fast food patronage is consistent throughout the week with Friday & Saturday being the most popular days. •Consumers engage with mobile QSR ads most on Thursday & Friday by almost a 2x margin compared to other weekdays, and a 1.7x margin compared to weekend averages.

Consumer QSR Dining Decision Behaviors

When do you decide if you’re going to eatat a fast food restaurant?

Consumer QSR Dining by Day of Week

Days Consumers Respond to QSR Ads




Same Day

1 Day in Advance

Several Days in Advance

12%14% 15%

13% 13%17% 16%

Mon.

Mon.

Tues.

Tues.

Wed.

Wed.

Thurs.

Thurs.

Fri.

Fri.

Sat.

Sat.

Sun.

Sun.

5



64%

28% 8%

64% of casual dining patrons make same-day decisions on where to dine, but 36% decide one or more days in advance

•Friday & Saturday were the most popular days for consumers to frequent casual dining restaurants. •51% of consumers were most responsive to casual dining restaurant ads at the beginning of the week.

Consumer Casual Dining Decision Behaviors

When do you decide if you’re going to eat ata casual dining restaurant?


22%

29%

10%5%

15%12%

6%

Consumer Casual Dining Patronage by Day of Week

Days Consumers Respond to Casual Dining Restaurant Ads



11%13% 14% 14% 13%

18% 18%

Mon.

Mon.

Tues.

Tues.

Wed.

Wed.

Thurs.

Thurs.

Fri.

Fri.

Sat.

Sat.

Sun.

Sun.

Same Day

1 Day in Advance

Several Days in Advance

6



Have you ever tried a new restaurant or menu item as the result of seeing an ad?

What information in a mobile ad is most likely to get you to eat at a restaurant?

How likely are you to try a new menu item after seeing a mobile ad for it?

46%4%

33%

24%

21%

10%8%

75%7%

54%

18%

Yes

Likely

No

Not Likely

Never

75% of mobile consumers are likely to try a new menu item after seeing a mobile ad

•Menu info (33%), sales/coupons (24%) & location (21%) are the top 3 content categories driving effectiveness of mobile ads for QSR & casual dining brands. •Menu information is 38% more important than sales or coupons in influencing consumers’ dining choices. •46% of consumers have tried a new restaurant or menu item as a result of a mobile ad.

Mobile Advertising’s Influence on QSR & Casual Dining Patronage



Menu Information

Sales or Coupons

Locations

Nutrition Information

Other

Giveaways

7



32%

68%

48%52%

74%

26%

43%

6%

40%

15%21%

Menu info & deals/offers were the primary ad creative focus for QSR & casual dining

•68% of mobile ads leveraged rich media ad formats. •Ad engagement was led by location information at 74%, followed by connecting to brands’ mobile website at 42%. •40% of campaigns include video as post-click actions.

Banner AdRich MediaAd

Ad Engagement/CTABanner ContentAd Type

Locations OffersMobileWebsite

Menu TabVideo DownloadApp

CustomDeals/Offersin Banner

Menu Infoin Banner

QSR & Casual Dining Mobile Ad Creative Executions


8



1-2 mi.<1 mi.On Site 2-5 mi. 5-10 mi. 10-25 mi.

-14%+8% +10%

+5% +4%

+15%

Consumer Ad Engagement by Proximity to QSR & Casual Dining Establishments

QSR & casual dining restaurant ad performance vs. Avg. CTR by proximity to location


QSR & casual dining restaurant ads perform 15% better than the average CTR when 10-25 miles from the establishment

•QSR & casual dining ads underperform by 14% when a patron is on site vs. our average campaign CTR. •Mobile ad campaigns for this vertical perform best within 2 miles of the establishment or 10 miles+ from the location, which is supported by home market vs. out-of-market behavior.

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Methodology: Using Location Conversion Index™ we benchmarked all drive-to-location campaigns from the 2nd half of 2013 to measure the overall success of our clients’ mobile ad campaigns. First we established a normal visit rate for the general population to the locations as an index of 100. Then we compared visits of audiences exposed to the mobile campaigns to a mirror control group of unexposed consumers. The result measures the incremental visits driven specifically by mobile advertising.

Mobile ads drove 21x the store visits vs. consumers not exposed to the ads for all 2H 2013 campaigns

•Mobile ad campaigns delivered a 54% lift over the general population and a 37% lift over the control group. •Marketers effectively executing drive-to-location mobile campaigns can see significant lift in foot traffic.

Exposure to mobile QSR & casual dining ads drove 33x the store visits vs. consumers not exposed to the ads

•Mobile ad campaigns delivered a 47% lift over the general population and a 35% lift over the control group. •QSR & casual dining marketers saw positive ROI and significant lift in foot traffic via drive-to-location mobile ad campaigns.

54%37%

100

137

154

General Population

LCI™

Audience Matched

Control LCI™

Exposed Audience

LCI™Source: NinthDecimal, Q4 2013 Source: NinthDecimal, Q4 2013

47%35%

100135

147

General Population

LCI™

Audience Matched

Control LCI™

Exposed Audience

LCI™

Drive-to-Location for all 2H 2013 Campaigns Drive-to-Location for QSR & Casual Dining

10

Mobile Ad Effectiveness Benchmark:



21%

16%How are consumers connecting to Wi-Fi? Year-Over-Year Device Adoption

Q4 2013Q4 2012 Q1 2013 Q2 2013 Q3 2013

TabletSmartphone Laptop

19% 22% 24% 23% 23%

39% 38% 40% 45% 44%

42% 40% 36% 32% 33%

Growth in the percentage of mobile connections,

year over year

Decline in the percentage of laptop connections,

year over year

Connected Device Trends: Public Wi-Fi Usage

Mobile devices grew from 58% to 67% of Wi-Fi connections year over year, a 16% lift

•67% of all public Wi-Fi usage was represented by mobile devices, with smartphones at 44% & tablets at 23%. •Laptop usage decreased to 33% of usage, a relative decrease of 21% year over year. •In Q4 2013, mobile Wi-Fi connections plateaued.



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Top 10 Wi-Fi Mobile Devices: Q4 2013 Top Wi-Fi Mobile OS: Q4 2013

1 Apple iPhone 35.1% 1 - 6.0%

2 Apple iPad 28.6% 2 + 35.9%

3 Samsung Galaxy S III 8.1% 3 + 2.7%

4 Apple iPod Touch 3.6% 4 - 32.3%

5 Samsung Galaxy S II 2.4% 5 - 14.6%

6 Samsung Galaxy Note II 2.1% 9 + 21.5%

7 Kindle Fire 7 1.9% 6 - 0.5%

8 Samsung Galaxy S 4 1.2% 8 - 30.2%

9 Google Nexus 7 0.6% 12 + 54.3%

10 LG Venice 0.5% N/A* + 50.0%

1 iOS 64.5% 1 - 0.5%

2 Android OS 33.1% 2 + 1.3%

3 RIM OS 1.0% 3 - 9.0%

4 Windows OS 1.0% 4 + 27.7%

5 Other OS 0.4% 5 - 27.8%

Q4Rank Mobile Device Top 10

Q4 2013% of Ad

Requests

Q4 2013% of Ad

Requests

Q3 2013Rank

Q3 2013Rank

% Change in Market Share

% Change in Market Share

Note: NinthDecimal measurement includes all mobile device types in order to provided complete view of how the on-the-go audience is connecting.

Connected Device Trends: U.S. Highlights

Samsung accounts for 4 of the top 10 devices connecting to public Wi-Fi for the fourth quarter in a row

•The iPhone & iPad remain in the top 2 spots with the iPad gaining 35.9% market share after losing 31.7% last quarter. •The Samsung Galaxy Note II outpaced Kindle Fire for the first time.

iOS & Android continue to dominate the market as the top Wi-Fi mobile operating systems

•Android is consistently increasing market share for the fourth quarter in a row. •Wi-Fi usage with Windows OS increased 27.7%.

Source: NinthDecimal, Q4 2013Source: NinthDecimal, Q4 2013* LG Venice was below the 100th rank in Q3

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Q4Rank Mobile Device OS



Worldwide public Wi-Fi locations 2009 – 2013

Worldwide quarterly growth in public Wi-Fi locations

817,793

826,887 826,087

841,783

289,476

414,356

682,929

820,262 841,783

2009 Q1 20132010 Q2 20132011 Q3 20132012 Q4 20132013

Worldwide Location Highlights: Public Wi-Fi Locations

Worldwide public Wi-Fi locations YOY growth plateaued in 2013

•While Q4 2013 saw the most significant increase in global quarterly growth in public Wi-Fi locations, 2013 in general only saw a 3% increase. •Global public Wi-Fi locations increased 293% from 2009 – 2013, and 124% from 2011 – 2013.


13



Public Wi-Fi business models: Worldwide Q4 2013

Public Wi-Fi business models: U.S. Q4 2013

1 South Korea 186,758 1 - 0.02%

2 United Kingdom 182,610 2 0.0%

3 United States 152,069 3 + 5.9%

4 China 104,106 4 0.0%

5 France 35,433 5 0.0%

6 Taiwan 24,148 6 0.0%

7 Russian Fed. 16,829 7 0.0%

8 Japan 15,735 8 0.0%

9 Germany 15,108 9 0.0%

10 Sweden 9,546 10 + 0.01%

Q4Rank Country

Q4 2013Number of Locations

Q3 2013Rank % Change

Paid

Free

Paid

Free

23.9%

15.6%

76.1%

84.4%

Worldwide Location Highlights: Public Wi-Fi Locations

Free Wi-Fi accounts for 84.4% of U.S. hotspots and 23.9% of worldwide hotspots

•The U.S. saw the most growth in free Wi-Fi with a 5.9% increase. •South Korea remained the country with the most public Wi-Fi locations with minimal expansion in Q4 as was the case with every country other than the U.S.




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Q4 2013 NinthDecimal Mobile Audience Insights ReportThe Q4 Insights Report highlights recent mobile market audience usage trends offering advertisers insights they can apply to their mobile strategies and campaigns. This quarter focused on quick service (QSR) and casual dining restaurants.

NinthDecimal is the leading location-powered mobile advertising and data platform. Used by major retailers and marquee brands across verticals, NinthDecimal leverages proprietary historical and present location data to engage advertisers’ desired audiences across all mobile devices at scale. Our ROI-driven approach and unique data platform integrates our Wi-Fi and mobile location big data to deliver true one-to-one mobile audience targeting at four times higher performance over traditional mobile targeting or geofencing. NinthDecimal has been an innovative leader in evolving mobile advertising and delivering mobile audiences since 2003. Today our ad technology is powered by our location big data platform of over 20 billion location tags from more than 850 million devices.

Q3 Launched the market’s first Mobile Ad Effectiveness Benchmark leveraging NinthDecimal’s Location Conversion Index™ (LCI™), the mobile industry’s most accurate drive-to-location metric. In this report we measured the effectiveness of our 2nd half 2013 drive-to-location campaigns across all verticals. NinthDecimal’s LCI™ offers marketers the ability to measure the ROI of their mobile spend by providing the actual increase of in-store visits directly attributed to their mobile ad campaign.

Methodology

NinthDecimal’s Mobile Audience Insights Report research is based on data compiled from a survey of 2,260 randomly selected mobile users, as well as the billions of data points from NinthDecimal’s proprietary Wi-Fi and mobile advertising platform. Location Conversion Index™ measures ROI by finding the normal visit rate for the general population, then comparing it against audiences both exposed and not exposed to mobile campaigns in order to measure incremental store visits.

The survey data was collected from November - December 2013 while the platform data analyzed was from Q4, and the Mobile Ad Effectiveness Benchmark results were from 2H 2013. Quarterly public Wi-Fi location rankings and business model distributions are based on the final day of the quarter.

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