FIVE KEYS TO EFFECTIVE ADVERTISING

FIVE KEYS TO EFFECTIVE ADVERTISING MRC Luncheon: January 26, 2018 Edward Kim Vice President, Strategy Nielsen Catalina Solutions

Who Is Nielsen Catalina Solutions? All Outlet Purchase TV Viewership Verified HHs 90 Million HHs Frequent Shopper Card Data Target, Optimize In-Flight & Measure ACTIVATE NCS DATA ON ANY MEDIA PLATFORM Target & Measure CPG Measure ROAS Only ONLINE MOBILE TELEVISION EMAIL IN- PRINT RADIO STORE CRM Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 2

NCS Connects the Media People Consume With the Products They Buy Exposure Data NCS Publisher Data, Nielsen Media Data Buy Data Set Top Box Data 4.3 MM HH Mobile 80 MM HH Catalina Frequent Shopper Card Data Digital 100 MM HH Client Proprietary Print 50 MM HH Radio 29K HH Anonymous Single Source Households 90 MM HH Nielsen Homescan All-Outlet Data Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 3

Big Question: Do Advertising Basics Still Matter? When it comes to driving sales, which of the advertising principles are most important? Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 4

Meet the Studies Meta-Study #1 Objective: Determine the relative contribution that a campaign s creative and media factors might have on sales. Nearly 500 CPG campaigns that ran in 2016 and Q1 of 2017 all REAL DATA! All major media platforms: linear and addressable television, online digital and video, mobile, magazines and radio. Multiple Analyses on all: Sales Effect 13-Cell Segmentation Decompositions to isolate the effects of the media from the creative elements Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 5

How Do We Know if Advertising Drove Sales? 1 NCS connects the media people consume with the products they buy 2 Match exposed & unexposed HHs on hundreds of variables to isolate ad impact Matched on 500+ Variables 3 Measure exposed and unexposed sales to determine incremental sales impact +14% Exposure Data Buy Data Demographics Purchase Cycle +4 % Unexposed HHs Exposed HHs Anonymous Single-Source Exposed Household Product Preference Campaign Campaign Start End Incremental Sales Lift Unexposed HHs Exposed HHs Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 6

Percent Sales Contribution by Advertising Element Recency 5% Targeting 9% Context 2% Reach 22% Creative 47% Brand 15% Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 7

Balance of Creative vs. Media Then & Now 2006 Project Apollo 2016 Q1 2017 Media 15% "Other" 20% Creative 65% Media 36% Creative 49% Brand 15% Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 8

Traditional Lift Calculation $$$ REACH INCREMENTAL $/HH TOTAL $ LIFT Reach alone doesn t discriminate for Timing (Seasonality, Flighting) or Targeting Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 9

What is the Sales Productivity Metric? INCREMENTAL SALES EXPOSED CATEGORY TRIPS PRODUCTIVITY METRIC Unexposed HHs +14% Exposed HHs Exposed Purchase Occasions Unexposed Purchase Occasions 28 Days Prior Incremental Cents per Exposed Category Purchase YARDSTICK FOR INCREMENTAL SALES PER EXPOSED PURCHASE Weak Creative Less than 2 cents Average Creative Between 2 and 7 cents Strong Creative 7 cents or more Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 10

Sales Productivity All TV vs. All Digital TV (Linear & Addressable) Sales Contribution 12% 37% 50% Creative Productivity Metric & Standard Deviation -$0.12 $0.08 +$0.12 Digital (Video Display & Mobile) 15% 56% 30% -$0.21 $0.08 +$0.21 Brand Creative Media Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 11

TV and Digital by Creative Performance TV Sales Contribution Creative Productivity Metric Digital Sales Contribution Creative Productivity Metric Weak 30% 6% 63% $0.01 Weak 14% 16% 71% $0.01 Avg 10% 38% 53% $0.04 Avg 14% 60% 26% $0.04 Strong 3% 80% 18% $0.19 Strong 6% 89% 5% $0.24 Brand Creative Media Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. Brand Creative Media Note: Display, Video & Mobile yielded nearly identical results Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 12

Meet the Studies Meta-Study #2 REACH FOCUS Objective: to understand the reach of TV and digital campaigns, and measure the unduplicated reach of cross media campaigns. DAR TAR 863 campaigns that ran on both linear TV and digital platforms Tagged by Nielsen Total Audience Ratings (TAR) and Nielsen Digital Ad Ratings (DAR) Included ALL cross media campaigns that ran in Q4, 2016 and Q1, 2017. All verticals/television networks no cherry picking Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 13

Reach % TV & Digital Reach Curve for Cross Media Campaigns Digital Reach + TV Reach Curve Cross Media Campaigns 100 80 60 40 20 Television Reach Average = 58% Digital Reach Average = 2% - 0.00 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 Impressions Millions TV Campaign Reach Digital Campaign Reach Nielsen: 863 TV & digital cross media campaigns from Q4 2016 Q1 2017 on P13+; No advertiser verticals excluded. Analysis performed by Nielsen Catalina Solutions Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 14

Understanding Duplication is Critical! Combined reach is less than random for all campaigns until there is at least 50% reach Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 15

All Media: On-Buyer Target vs. Off-Buyer Target Sales Contribution Weighted Average All Media 15% 48% 37% 100% On- Buyer Target 10% 41% 49% 47% Off- Buyer Target 18% 59% 23% 53% Brand Creative Media Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. On-Buyer Target targeted to correlate delivery to brand and campaign buyers Targeting contributes much more when targeted to buyers Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 16

TV & Digital All Television Campaigns Digital Campaigns On-Buyer Target 80% On-Buyer Target 31% Off-Buyer Target 20% Off-Buyer Target 69% On-Buyer Target is defined as campaigns with higher than.2 correlation of either brand or category sales; Off-Buyer Target is defined as anything below that which include no skew or negatively correlated to sales. Source: Nielsen Catalina Solutions 2017; Period 2016-Q1 2017 Nearly 500 campaigns across all media platforms. Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 17

What s Recency Theory? Definition: Theory that advertisements and promotions are most effective when they air immediately prior to the time of decision, and that the influence of ad exposure diminishes with time. Less Recent More Recent Purchase Occasion Exposed Purchase Occasions Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 18

Recency Thursday/Friday Prime Drives Weekend Sales Sales Index vs. Any Other Programming 353 232 286 Thursday Prime Friday Prime Thu/Fri Prime Note: Advertising lift measured on a 3-day rolling exposure window. Thursday/Friday Prime does not include: News, Sports, Children s or Spanish Language. Source: Nielsen Catalina Solutions 2017 Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 19

Summary: The Basics Really do Matter! Still the most important factor for driving sales, though media is playing a larger role. Critical to reach enough people! Only consumers exposed to advertising can respond. Focus on buyers -- buyers are more responsive to advertising. Exposure just prior to purchase is most effective. More work to be done. Stay tuned! Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 20

Best-Practice Recommendations Be accountable to sales measure, measure, measure or potentially lose the dollars. Test & optimize your creative: Getting it right increases ROAS significantly especially digital TV creative is generally good don t lower expectations and continue to test them thoroughly Use TV strategically to build reach Examine your targeting approach there s a lot of room for improvement, and big potential payoffs. Copyright 2018 Nielsen Catalina Solutions Confidential & Proprietary 21