IAB Conecta 2012Gian Fulgoni Executive Chairman and Co-founder, comScore

Changing How the World Sees Digital Advertising

1 Branding Advertising’s Digital Challenge

2 Kellogg’s Solution

3 Viewing the Future

SOURCE: IAB for Internet Advertising Revenue and KANTAR for Total Mediaedia Measurement

$31.7 Billion U.S. Online Ad Spending

in 2011

+22% vs. year ago

IAB says U.S. online ad spend is now larger than newspapers, magazines and radio, and equivalent to 46% of TV

10X Faster Growth

ThanAll Media

SOURCE: IAB for Online and Various for Total Media dia Measurement 2011

Online ad spend in Latin America* is growing twice as fast as in the U.S.

3.5X Faster Growth

ThanAll Media

$2.5 Billion Online

Ad Spendingin 2011

+42% vs. year ago

Latin America

*Argentina, Brazil, Chile, Columbia, Mexico, Peru

But, Branding Advertising is Relatively Weak Online

Only One Third of All Online AdSpending is Branding

Direct Response (Mainly Search) Still Dominates

In Traditional Media Branding Advertising Dominates

Branding’s Online Challenge:

Is the Target Audience Guaranteed?

comScore’s Approach to Digital Measurement

2 Million Person Panel 360°View of Person Behavior

CENSUS

Unified Digital Measurement™ (UDM)Patent-Pending Methodology

1 Million PropertiesAdopted by 80%

of Top Global Media Properties

PANEL

PERSON-Centric Panel with SITE-Census Measurement

Web Visiting &

Search Behavior

Online AdvertisingExposure

AdvertisingEffectiveness

Demographics,Lifestyles& Attitudes

Media & VideoConsumption

Transactions

Online& Offline

Buying

Mobile InternetUsage & Behavior

PANEL

V1011

Person Behavior Measured Passively

by Keystroke Typing Signature

In 2007, comScore’s First Post-Buy Analysis Across 8 Digital U.S. Campaigns Showed that Accuracy of Digital Delivery Left a Lot to be Desired

Percent of Ad Impressions for 8 Campaigns

In US But Not Target

Hit Target Frequency

>=5

Hit Target Frequency

<=4

Outside US0%

10%

20%

30%

40%

50%

60%

70%

61%

8%

19%12%

X

Branding advertisers on TV are accustomed to audience guarantees and expect the same in digital

Source: comScore 2011

Cookies Are Not People

Cookie Proliferation

But, accuracy of cookie-based digital plan delivery is problematic:

Cookie Deletion

Because of Multiple Users, Cookies Can’t Accurately Identify Who is Using a Computer at any Given Point in Time

Over 64% of home users share a computer with other users

30% of the time, someone other than

the Facebook logged-in person is actually using the

computer

Cookie Deletion is a Global Reality …and a Global Challenge

Ad Server Cookies

CountryPercent of computers

deleting

Average # of cookies per computer for same campaign

Australia 37% 5.7

Brazil 40% 6.6

U.K. 35% 5.9

U.S. 35% 5.4

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

… to better understand sources of waste and identify opportunities to extract more value from digital advertising dollars

comScore quantified incidence of sub-optimal ad delivery at the individual person level…

Reach, Frequency and Demographics

CE™: Massive Global Market Experience2,600+ Studies for 120 advertisers / agencies in 28 countries

North America Europe Asia Pacific

Allstate

Not an exhaustive list. Includes advertisers currently working with comScore vCE who have agreed to be named publicly.

Some Things We’ve Learned About Digital Media Plan Delivery

The negative impact of cookie deletion– Cookie deletion inflates ad frequency and deflates ad reach

by as much as a factor of 2.5X

Targeting accuracy using cookies:– 70% for 1 demo (e.g. women)– 48% for 2 demos (e.g. women age 18-34)– 11% for 3 demos (e.g. women age 18-34 with kids) – 36% for behavioral targeting (e.g. people visiting travel sites)

Kellogg’s Solution

The KPI Framework: Establishing a model for Advertising Effectiveness – applied initially to Online Media

• Brand Awareness• Purchase Interest• Message Association• Direct Response

• % Impressions to Target/Targeting Index

• Frequency of Exposure• CPM

• Branded Recognition • Brand Buy Next

PRE-MARKET QUALITYDoes my creative have the right to

succeed?

AUDIENCE DELIVERYDid we efficiently reach our Target?

IN-MARKET EFFECTIVENESS

Are we moving the needle?

Looking at a few of Kellogg’s larger campaigns

Data provided by comScore Campaign Essentials is at an individual publisher, individual campaign level

Aaron is there data for this

chart?

Impressions Impressions Avg. Frequency

Targeting Index % on Target Total Campaign

Campaign Total

Publisher 1

Publisher 2

Publisher 3

Publisher 4

Publisher 5

In total, this campaign effectively delivered to target and efficiently balanced the exposures

comScore shows that there have been some clear top performances

Impressions Impressions Avg. Frequency

Targeting Index % on Target Total Campaign

Campaign Total 216 58% 3.2

Publisher 1 163 44% 4.0

Publisher 2 225 60% 3.1

Publisher 3 140 37% 3.5

In this case many impressions are virtually being thrown away as the wrong audience is reached over and over

again

But comScore Also Shows That There Are Some BIG opportunities

Impressions Impressions Avg. Frequency

Targeting Index % on Target Total Campaign

Campaign Total 105 53% 12.0

Publisher 1 97 49% 8.8

Publisher 2 25 13% 21.7

Publisher 3 92 47% 11.4

Publisher 4 143 72% 15.6

Is Kellogg’s Strategy Working?The early results say ABSOLUTELY

Implemented new Digital strategy and analytics in the first half of 2011. ROI results from our first two Brand Market Mix Models

have just come in.

Year 1 Year 2 1H 2011

ROI

3X

6x

Year 1 Year 2 1H 2011

ROI2X

5X

Brand 1 ROI Brand 2 ROI

The Future

Arguably the Most Important Digital Advertising Initiative To Date: Making Measurement Make Sense (3MS) Mission

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

… to better understand sources of waste and identify opportunities to extract more value from digital advertising dollars

comScore quantified incidence of sub-optimal ad delivery across all key ad delivery dimensions…

vCE US Charter Study:12 Major Branded Advertisers Came Together to Lead & Learn

Allstate

18 campaigns2 billion impressions 400,000 sites

15 campaigns640 million impressions 213,000 sites

vCE Charter Study replicated in Europe with similar results

vCE Charter Study: In-view Rates Need to Be Improved

Campaign In-view ad rates ranged from: U.S. 55% to 93% EU 64% to 72%

U.S.69%

AVERAGE67%

AVERAGE

EU

Minimum Average Maximum

7%

69%

98%

Minimium Average Maximum

0.2%

63%

100%

In-View ad ratesacross Top 500

US sites

In-View ad ratesacross top 100

EU sites

vCE Charter Study: Opportunity for improvement at many of the largest sites

Large sites scored better than long-tail sites

Percentage of Ads Served In-View

77% 74% 70%61%

66% 63% 61%55%

US EU

Digital Ad Economics: The Good Guys Aren’t Necessarily Winning

Low correlation of In-View Rates & CPM

An equally as weak correlation was also observed between CPM and ability to hit a primary demographic target

R²=0.0373

vCE Charter Study: Ads Sometimes Fall Outside of Desired Geography

About half of geographic waste was not only out of target but also out of language

U.S.4% of ads were served outside geography. Up to 15% of ads on a

given campaign

7% of ads were served outside geography. Up to 27% of ads on a

given campaign

EU

vGRP can provide more accurate analysis of campaign effectiveness in Marketing Mix Models

Month 1 Month 20

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

GRP: Negative Correlation

vGRPSales

Month 1 Month 20

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

vGRP: Positive Correlation

GRPSales

The KPI Framework: Establishing a model for Advertising Effectiveness – applied initially to Online Media

• Brand Awareness• Purchase Interest• Message Association• Direct Response

• % Impressions to Target/Targeting Index• Frequency of Exposure• % Impressions in View• CPM

• Branded Recognition • Brand Buy Next

PRE-MARKET QUALITYDoes my creative have the right to

succeed?

AUDIENCE DELIVERYDid we efficiently reach our Target?

IN-MARKET EFFECTIVENESSAre we moving the needle?

Where Kellogg’s is Going: In-Market Optimization at a Campaign Level Based on Cost and Effectiveness

• Opportunity to optimize - Budgets follow performance• Multiple publishers, each with high reach potential• Wide variance in performance observed real-time

Brand X - Q3/Q4 Media

PartnerAvg

Frequency

Impressions in

Target

Impressions in View

Lift in Awarenes

sCPM

1 3.5 24.5% 83% 5.74 $2.44

2 3.0 16.9% 91% 0.55 $9.08

3 8.4 23.5% 71% 0 $8.62

There is good news for advertisers and publishers

Analogous to TV audience guarantees Eliminating unseen online inventory supply

results in: More effective / efficient campaigns and less

waste for advertisers

More accurate metrics for market mix models

Better proof of digital ad effectiveness Increased transparency/accountability

means increased confidence in digital …. leading to more branding ad spending moving online

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Thank You!