Insights from a Conversant® ExecutiveKurt Hawks, General Manager – Conversant Mobile

UNDERSTAND THE CROSS-DEVICE CONSUMER IN JUST 15 MINUTES

INTRODUCTION

MOBILE DEVICE ADOPTION

THE MULTI-DEVICE PHENOMENON

CROSS-DEVICE BROWSING BEHAVIORS

THE MOBILE SHOPPING PHENOMENON

CROSS-DEVICE MARKETING RECEPTIVITY

WHAT TO DO NOW?

ABOUT THE AUTHOR

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Table of Contents

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Percent of group interested in learning more about cross-device in 2014

Source: Conversant Research, 2014

70%Agency Media Professionals

60%Sr. Marketing Leaders

Cross-device is the hottest topic in Digital in 2014. According to two recent surveys conducted by Bovitz Research for Conversant, both agency media pros and senior marketing leaders list cross-device as the number one topic they want to learn more about.

Additionally, a 2013 survey of leading media buyers, underwritten by Conversant, showed that:

• 89% say it is critical for marketers to target the same person across devices

• 75% say they have already seen increased marketing effectiveness with cross-device campaigns

• 30% of total digital budgets were devoted to cross-device programs in 2013

In order to understand what role cross-device should play in YOUR marketing, the most important thing you can do is understand how consumers have adopted and now use their various digital devices to connect, communicate, shop and buy.

Here, in a few short pages, is a collection of the essential information about the cross-device consumer, along with four important ways you can begin reshaping your marketing to reflect cross-device consumer behaviors.

INTRODUCTION

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MOBILE DEVICEADOPTIONAlmost 60% of adults in the US have a smartphone, according to the Pew Research Center. Figures continue to grow by two-to-three percent a year, and I expect growth to continue as more smartphones and smartphones at lower price points flood the market.

Tablets are now used by 42% of Americans, growing by eight percentage points in the past year alone. While iPad continues to dominate, new tablets using the Android operating system are making strong inroads. Since their introduction just a few years ago, tablets have shown the fastest consumer adoption rate of any class of devices, ever.

When you look at who owns smartphones, you see patterns other than the typical wealthy-Caucasian-male-dominated digital adoption pattern evident in other sectors. While males are slightly more likely to own a smartphone, and higher income groups do enjoy higher penetration, the demographics of smartphones are quite egalitarian and multiracial.

THE MULTI-DEVICE PHENOMENONIt’s no surprise that there are a lot of mobile devices in use today. A lot. In fact, the average American now uses three digital devices to connect to the web, with similar rates of device usage in other developed economies.

SMARTPHONES AND TABLETS ARE INCREASINGLY POPULAR

Percentage of US adults with a...

Average number of connected devices

SMARTPHONE TABLET

45% 24%

58% 42%

2011 2011

2013 2013

2012 2012

2014 2014

35% 10%

56% 34%

Source: Pew Research Center Internet Surveys, 2014.

3.0

USA

2.7

CANADA

2.6

AUSTRALIA

2.7

UK

FASTEST DEVICE

ADOPTION RATE EVER

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THE MULTI-DEVICE PHENOMENON (CONT.)All research indicates that people will be adding MORE devices in the future. A CISCO/IBSG study predicted that the number of connected devices will continue to grow rapidly throughout the decade.

TOTAL CELL INTERNET USE EMAILINTERNET

APR-09 MAY-10 MAY-11 APR-12 SEP-12 MAY-13

Source: Pew Research Center, 2012

25% 25%

34%38% 38%

44% 44%

53%50%

56%52%

60%

63%

59%55%

47%43%

31%

HOW MANY DEVICES DO YOU HAVE?These figures are corroborated by the amazing growth in penetration of both smartphones and tablets. If those figures surprise you, consider how many devices you use to connect.The worksheet below will help you calculate your personal total.

CELL INTERNET USERS - 57% OF ALL ADULTSChances are, you use three or more devices if you are involved in the digital marketing industry. Accessing the Internet through mobile devices has grown rapidly according to Pew.

Percentage of people who access eachservice type from their phone

______ PCs

______ Connected TVs

______ Mobile Phones

______ Tablets

______ eReaders

______ Connected Gaming Systems

______ Grand Total

Source: Cisco/IBSG, April 2011

6.3B

500M

0.08

6.8B

12.5B

1.84

7.2B

25B

3.47

7.6B

50B

6.58

WORLD POPULATION

CONNECTED DEVICES

CONNECTED DEVICES PER PERSON

MORE CONNECTED DEVICES THAN PEOPLE

2003 2010 2015 2020

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CROSS-DEVICE BROWSING BEHAVIORS

THE DIGITAL MIGRATOR

People don’t use one device on one day and another on the next. Instead, what we see is that the consumer switches, seamlessly from device to device throughout a given day.

Increasing evidence suggests that consumers are barely aware of these shifts from device to device. The device used to connect matters very little to them. It is simply a means to an end. This underscores the need to consider the brand experience across all devices as a single totality.

The data for Internet usage by device type are quite telling. In May 2014, comScore reported that mobile browsing minutes were greater than PC minutes. What’s clear here is that with MORE than 50% of Internet time now spent on devices other than PCs, we need to rethink PC-only digital marketing.

Most mobile Internet time is spent in apps rather than on mobile websites, according to comScore. In fact, more than 80% of total mobile device time is spent in apps. Nielsen agrees. Their May 2014 report revealed that 86% of total mobile-connected time took place in apps.

Time spent on the Internet, by device, in the US(Total Minutes per Month, February 2013 - January 2014)

Total Mobile (App Only) Total Mobile (Browser Only) Desktop

Source: comScore 2014

600k

500k

400k

300k

200k

100k

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN

P

Breakfast Browsing At Work Afternoon Break Evening on Sofa

477

466 589

408

2013

2014

PC Mobile Tablet

98

71

59%41%Source, comScore 2014

Time spent on digital devices in May(Billions of Minutes)

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THE PC–ONLY BROWSER

The number of people who browse ONLY on a PC is in fast and steady decline. The group tends to be older, middle- income and technology laggard.

THE MOBILE-ONLY BROWSER

A variety of data sources suggest that about a fifth of the connected population have only mobile access. Again, this is more fodder for the idea that we need to rethink digital marketing strategies that only rely on PC access.

Additionally, in 2012, Pew reported that 31% of consumers use a mobile device as their primary Internet device. That number rises to 45% for adults in their twenties.

Those numbers have likely grown since the date of that survey. The rise of mobile browsing has affected both B2C and B2B companies. For B2C, many of our clients report as much as 50% of their traffic now comes through mobile devices.

For B2B sites, we regularly see days where 35% or more of total visits come from Mobile – even though the vast majority of our access comes during North American working hours from corporate IP addresses.

The reason why these people access the web primarily through cellphones relates primarily to device access and convenience.

The size of the cell-mostly Internet populationBased on US adults within each group.

Source: Pew Reasearch Center’s Internet & American Life Project, March 15 - April 3, 2012 Tracking Survey. N=2,254 adults ages 18 and older.

Go online mostly on cell phone

Use Internet on cell phone, but go online mostly using other device

Use both equally / it depends

Don’t go online using cell phone

31%

60%

9%

n/a

PERCENTAGE OF CELL INTERNET USERS WHO...

Main reasons for going online mostly using cell phone

Cell phone is more convenient

Cell phone is always with me

Mostly do basic activities online

Don’t have a computer at home

Cell phone is easier to use than a computer

Use phone for work, or to go online while at work

Only have Internet access on phone / No Internet at home

Speed / phone is faster than computer

Someone else is usually using computer

Other

Don’t know / refuse

Summary of reasons

Convenience / availability

Usage

Access

38%

23%

7%

6%

6%

4%

4%

2%

1%

6%

3%

64%

18%

10%

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THE MOBILE SHOPPING PHENOMENON

In-Store and Showrooming Behavior

Today, the majority of consumers who have smartphones use them while shopping. A 2013 Usablenet study reported by MarketingProfs showed that 82% of smartphone owners have used their phones in-store. The study also showed that a majority of consumers regularly engage in a number of mobile activities while shopping. According to Shopatron, about 58% of consumers use their phones to compare prices. 38%to get product information. 22% to look up product reviews.

These figures are driving many retailers to take major steps to transform their merchandising environments. Again, all this underscores the need to take a cross-device view toward consumer communication. For without one, there is no way to reach and connect with consumers in important times and environments.

But in-store isn’t the only way that consumer behavior is changing because of cross-device connectivity.

MCommerce Growth

MCommerce, or the purchasing of goods through a phone,now makes up more than 15% of total eCommerce, accordingto Piper Jaffray and eMarketer.

Companies in many categories are getting more aggressive in mCommerce. One of the most active industries is CPG, where in-store coupons, product info, and other app-delivered messages and offers are becoming increasingly commonplace.

It’s important to note that a great deal of product browsing and buying is now conducted via tablets. While some consider tablet activity part of mCommerce and others classify it as part of desktop commerce, the growth in the amount of purchases made via tablets underscores the need to think about all devices, not just PCs and smartphones, when formulating an effective digital marketing strategy.

A few years ago, most people felt that their phones were primarily for voice and perhaps email. And the email part primarily for business people. Times have changed. A lot.

58% 580= COMPARE PRICES

38% 380= GET PRODUCT INFO

22% 220= READ PRODUCT REVIEWS

14% 140= FIND OTHER PRODUCT OPTIONS

7% 70= SCAN QR CODES

Percentage of customerswho use their mobile phones to:

Source: Shopatron Retailer eCommerce Study, June 2013

Role of mCommerce growing rapidly

250

200

150

100

50

0

30%

25%

20%

15%

10%

5%

0%

2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E

Source: Piper Jaffray and eMarketer, 2013

MCOMMERCE ($B)% OF TOTAL ECOMMERCE

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CROSS-DEVICEMARKETING RECEPTIVITYA growing body of case studies are showing that consumers respond atfar greater levels with cross-device marketing programs instead of single-device programs. Conversant research showed that response rates are far higher for both interactions/engagements and conversions. For interactions, we have seen 3.4 times the response from cross-device.For conversions the figures are even more compelling, with5.4 times the conversion rate.

Why? First, we can develop a more precise target audience with a more complete view of the user. Second, we can message to a user at more opportune moments. Finally, we can garner richer user insights for optimization.

Conversant data shows cross-device programs deliver superior performance

3.4x

1x

5.4x

1x

AVERAGE ENGAGEMENT RATE

AVERAGECONVERSION RATE

Cross-Device Single-Device

THE MOBILE SHOPPING PHENOMENON (CONT.)

Multi-Device Shopping and Buying

There is growing evidence that more and more consumers are making their purchase decisions across multiple devices. A 2013 Google and IPSOS study showed that 2/3 of shoppers begin some purchases on one device – with tasks like information gathering, price comparison, searching for reviews – and then buy using another device. The study showed that the rates varied by category, but that the behaviors appear to be prevalent in many industries. Again, more evidence that cross-device marketing strategy is essential to effective marketing in 2014.

START SHOPPING ON ONE DEVICE AND CONTINUE ON ANOTHER

START ON A SMARTPHONE

61%CONTINUE ON A PC/LAPTOP

4%CONTINUEON A TABLET

START ON A PC/LAPTOP

19%CONTINUE ONA SMARTPHONE

5%CONTINUEON A TABLET

START ONA TABLET

10%CONTINUE ONA PC/LAPTOP

65%

25%

11%

67%

Source: Google, 2013

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Many companies have already become active in cross-device marketing. Others have moved toward mobile marketing, but without developing programs designed to reach the same user across multiple devices. Others are still on the fence in regard to anything beyond PC-based digital marketing. Wherever you are on the continuum I have just described, I offer the following four suggestions as next stepsto improve your marketing effectiveness:

1 Commit - really commit - to the need for a cross-device marketing approach. Cross-device isn’t optional. We all need to stop thinking in terms of device silos and instead place the consumer at the center of everything we do. Where the consumer is, we need to

be. And these days, where the consumer is spending digital time is across a broad – and growing - set of devices. True commitment to cross-device requires personal belief as well as evangelizing for the need across your organization. It’s not just an advertising commitment. It’s about rethinking every element of your consumer contact and product availability strategies – stores and estores, CRM, social, content, etc.

2 Start with a strategy. Billions of Digital dollars get wasted every year by companies that act before they think. As a result of this ready-fire-aim tendency, digital is often fad-driven. That needs to change across the industry, and certainly in our own companies.

Strategize quickly so you can get going, but strategize first so that your plans reflect both your target behaviors and your business objectives.

3 Get the facts about your target. I’ve given you a bunch of average stats above. Find out the specifics for your consumers. Find out about how people behave in your stores. Find out how people are shopping within and across devices. A little market research

will help you devise the perfect plan. Then keep conducting research and analyzing in-market data to stay abreast of the latest consumer behaviors. The pace of change in digital consumer behavior is like nothing we have ever seen before in marketing. You need to keep up with – no, to stay one step ahead of – consumer behavior among your target audience.

4 Think about cross-device in terms of three things – data, delivery and measurement. Cross-device isn’t just about delivering ads to your audience on multiple screens. First, you need to ensure that you have cross-device data on each of

your prospects and customers, united into single profiles. With people spending more than 50% of their connected time on mobile devices, you can’t simply rely on PC-only third-party data to identify the right people to target. You need all of their behaviors, united in real-time in a single DMP. That’s why Conversant spent millions to unite its platforms across devices – so we can deliver that sort of complete consumer view. Then you need to work with a partner that can deliver ads to the same user across devices with a high degree of accuracy. You need to work with a company that has great cross-device matching credentials, like Conversant. Finally, you need to measure your programs so that you understand cross-device behaviors in addition to your basic campaign measurement. Only then can you assess and optimize your cross-device approach.

Four short tips can’t provide all the answers you need, but they are a good start to help define the way forward. As you can probably tell, I have a great passion for keeping the consumer at the center of marketing strategies – which requires helping marketers master the cross-device fundamentals as well as its nuances. I welcome your comments on this paper. Please write me at:

KurtHawks@conversantmedia.com

WHAT TODO NOW?

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ABOUT THE AUTHOR

Kurt Hawks serves as General Manager, Mobile Advertising for Conversant, Inc. (NASDAQ: CNVR). In this position, Mr. Hawks is responsible for development and execution of Conversant’s mobile strategic objectives and oversees all aspects of its mobile business operations. Prior to Conversant, Mr. Hawks was COO of Greystripe (acquired by Conversant, Inc.), a venture-backed mobile advertising start-up, where he was instrumental in the launch, growth, and sale of the company to Conversant. Prior to Greystripe, Mr. Hawks was in Venture Capital where he focused on evaluating investment opportunities and building early-stage businesses in the areas of mobile, media, software and business services. Mr. Hawks also served as an Engagement Manager at Monitor Group where he advised clients on various corporate strategy issues including development of growth strategies, organizational design and new business creation. He is a graduate of Boston College.

ABOUT CONVERSANT, INC.Conversant, Inc. (Nasdaq: CNVR) is the leader in personalized digital marketing. Conversant helps the world’s biggest companies grow by creating personalized experiences that deliver higher returns for brands and greater satisfaction for people. We offer a fully integrated personalization platform, personalized media programs and the world’s largest affiliate marketing network - all fueled by a deep understanding of what motivates people to engage, connect and buy.

For more information, please visit: www.conversantmedia.com.

Copyright 2014 Conversant, Inc. All Rights Reserved.11