Amplifying Audio Marketing The Audio Consumer Demand Landscape

Farshad Family SVP, Local Product Leadership Nielsen John Rountree Principal, The Cambridge Group #Consumer360

Audio listening is as Strong As Ever Audio Remains Among the Leading Entertainment Choices 75% Listen to Music 57% YouTube (Music)

Audio is a Valuable Companion Unique Media Due to Complementary Nature and Captive Audience Perfect for Multitasking Though Strong for Advertising % Indicating Top 2 Box % Indicating as Typical Concurrent Activity % Indicating Who Listen with % Indicating Top 2 Box 65% 72% 56% 11% “When I listen to audio, I’m usually doing something else at the same time” “Nothing” “Alone” Limited/no distraction from others “When I hear something interesting, I will shift my focus to pay more attention to the audio I’m listening to” Will disengage from activity and engage in audio Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

audio Drives Compelling ROI 6.21 11.15 23.21 7.33 4.33 4.17 3.81 1.38 1.97 3.12 1.81 Ratio of incremental sales revenue per thousand to advertising cost per thousand = Payback

Tremendous Growth in Audio Options AM/FM Broadcast Radio Streaming Online Broadcast Radio Satellite Radio Personalized / Custom Streaming Services #Consumer360

The cambridge group

Overview of The cambridge group Who We Are Growth Strategy Consultants Nielsen Subsidiary What We Do Help Clients Identify and Drive Profitable Growth How We Do It Proprietary Insights into Current, Emerging and Latent Demand How We Are Different Combine Consumer Insights, Strategy and Economics Who We Work With Leading CPG, Retail, Media and Financial Services Companies #Consumer360

Understanding Audio Consumers Nielsen commissioned The Cambridge Group to understand the overall landscape of consumer demand for audio across multiple platforms Identify the different consumer segments and define the listening need states across different audio platforms Assess the different ways that consumer listening and the overall audio market could evolve in the future Understand the most attractive market opportunities for advertisers and broadcasters

Insights Include All major broadcast and digital audio PLATFORMS AM/FM Broadcast Radio AM/FM broadcast radio received via over-the-air AM/FM signal Satellite Radio Programming received via satellite signal requiring a subscription Streaming Online Broadcast Radio AM/FM or online-only broadcast radio streamed over the Internet Personalized Streaming Services Music streamed over the internet via an app or a website that tailors content to the listener’s tastes Custom Streaming Services Music streamed over the internet via an app or a website that allows the listener to select specific songs or playlists Talk or music content, generally in episode format, downloaded or streamed via the Internet Podcast

Developed from Extensive Quantitative Consumer Research Sample Methodology and Timing Survey Topics 5,000 consumers Ages 18-74 Past week listeners Decision makers for audio format, content, etc. 45 minute survey Fielded in English with online panel Survey fielding 3/18-3/27 Listener category motivations and behaviors Benefit-driven listening need states/occasions Audio platform usage trends, associations, satisfaction, etc. Listener spending and potential value Other media behaviors Lifestyle/demographics Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

Consumer behavior is Evolving Rapidly AM/FM Radio is Most Listened To Younger Audiences Also Use Alternatives Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis #Consumer360

Demand landscape: To Whom, For What Demand Analysis Identifies Consumer Segments and Listening Need States Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers Motivation Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Relaxation Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers “To Whom” Consumers grouped by their underlying motivations for audio listening Enjoyment Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Distraction Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Knowledge Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers “For What” Listening occasions with a distinct combination of rational and emotional benefits Basic Information Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Background Sound Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

Consumer Segments Seek Different Benefits Audio Demand Landscape Consumer Segments Information Seeking Loyalists 15% of population Convenience Seeking Traditionalists 17% of population Background Driving Defaulters 14% of population Discriminating Audiophiles 18% of population Techie Audio Enthusiasts 13% of population Music Loving Personalizers 23% of population Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

distinct Motivations AND Behaviors Audio Demand Landscape Segment Example Information Seeking Loyalists % of Population % Share of Audio Hours Audio Listening Hours Index Motivational Description PLATFORM DISTINCTIONS Median Age Household Income Index Other Demographic Distinctions Consumer Spending 15% 25% 170 Heavy listeners AM/FM Radio 53 95 Male, Caucasian, Retired Lower Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

distinct Motivations and Behaviors Audio Demand Landscape Segment Example Music Loving Personalizers % of Population % Share of Audio Hours Audio Listening Hours Index Motivational Description PLATFORM DISTINCTIONS Median Age Household Income Index Other Demographic Distinctions Consumer Spending 23% 22% 97 Avid music consumer Streaming Platforms 32 82 Female, Student Lower Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

distinct Motivations and Behaviors Audio Demand Landscape Segment Summary Traditional Platforms Alternative Platforms Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers % of Listeners % Share of Audio Hours Audio Listening Hours Index Motivational Description PLATFORM DISTINCTIONS Median Age Household Income Index Other Demographic Distinctions Consumer Spending 15% 25% 170 Heavy listeners AM/FM Radio 53 95 Male, Caucasian, Retired Lower 17% 16% 94 Convenient options AM/FM Radio 43 92 Female, Homemaker Average 14% 7% 51 Less engaged AM/FM Radio 57 104 Caucasian Average 18% 97 Highly engaged Satellite Radio 47 124 Male, Most Educated Higher 13% 12% 91 Early adopters Streaming Platforms 32 111 Male, Ethnic, Educated Higher 23% 22% 97 Avid music consumer Streaming Platforms 32 82 Female, Student Lower Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis #Consumer360

For example: Information Seeking Loyalists Information Seeking Loyalists are heavy listeners of AM/FM radio for news, information and education 15% of Listeners, 25% Share of Listening, Average Weekly Audio Hours = 40 Distinguishing Motivations Audio Platform Distinctions Distinguishing Demographics Description Audio Benefits Audio is source for US/world news (53%/168) Audio is source for local info (56%/162) Use audio for education (48%/162) Love audio talk programs/news (44%/161) Have a daily listening routine (56%/159) Primary Benefits Sought Up-to-date information (20%/195) Enjoyable experience (19%/95) Additional Distinguishing Benefits Sought Intellectual stimulation (10%/195) More likely older: 45- 74yr (70%/152) More likely retired (29%/146) Slightly more Caucasian (76%/115) Slightly more male (58%/113) AM/FM Radio (126 Index) Information Seeking Loyalists are heavy listeners who routinely listen to favorite talk programs for news, education and to stay informed of current events. Streaming Broadcast (103 Index) Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis #Consumer360

For example: Music Loving Personalizers Music Loving Personalizers are the heaviest users of streaming services but also listen to AM/FM radio nearly 1/2 the time Platform Behaviors Access Behaviors Listening Behaviors Content Behaviors Platform % of Hours Primary Devices Car AM/FM Radio (81%/95) Laptop Computer (52%/131) Smartphone (52%/131) Streaming Services Used Personal: Pandora (85%/109) Custom: Spotify (61%/128) Radio: iHeartRadio (52%/99) % of Audio Hours by Location At Home (40%/112) In the Car (29%/77) At Work/School (22%/129) Top Activities while Listening Chores around the house (66%/126) Errand/short trip (60%/100) Using the internet/an app (56%/132) % Content Hours Music (87%/114) Talk (13%/55) Primary Formats Top 40 (60%/115) Classic Rock (57%/108) Alternative Rock (51%/136) Oldies (47%/93) 100% Index 3% 103 Podcasts 4% 65 Satellite 126 Broadcast 197 Custom Streaming Streaming 214 AM/FM Radio 69 Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis #Consumer360

seven Distinct Listening need states Audio Demand Landscape Need States Motivation 15% of occasions Relaxation 15% of occasions Enjoyment 13% of occasions Distraction 16% of occasions Knowledge 15% of occasions Basic Information 13% of occasions Background Sound 12% of occasions Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis #Consumer360

Demand landscape: To Whom, For What Demand Analysis Identifies Consumer Segments and Listening Need States Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers Motivation Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Relaxation Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers “To Whom” Consumers grouped by their underlying motivations for audio listening Enjoyment Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Distraction Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Knowledge Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers “For What” Listening occasions with a distinct combination of rational and emotional benefits Basic Information Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Background Sound Information Seeking Loyalists Discriminating Audiophiles Background Driving Defaulters Convenience Seeking Traditionalists Techie Audio Enthusiasts Music Loving Personalizers Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

Key Listening Need States for each Segment Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers Background Sound Motivation Knowledge Distraction Relaxation Basic Information Enjoyment Background Driving Defaulters Techie Audio Enthusiasts 19% Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Techie Audio Enthusiasts 13% Information Seeking Loyalists Convenience Seeking Traditionalists Opportunity to work with advertisers and broadcasters to identify the “high value” listening need states and occasions for segments and how best to engage them Which platforms, formats, genres? Where (location) and when (daypart)? When are they most receptive to advertising? Background Driving Defaulters Techie Audio Enthusiasts 14% Background Driving Defaulters 19% Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers 14% Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers 12% Information Seeking Loyalists Convenience Seeking Traditionalists Background Driving Defaulters Discriminating Audiophiles Techie Audio Enthusiasts Music Loving Personalizers 9% 25% 16% 7% 18% 12% 22% 100% = one percentage point of total audio listening = 3%+ of total audio listening = 5%+ of total audio listening Note: Based on custom primary consumer research, not Nielsen measured data sources Source: Audio Demand Landscape (2014); TCG Analysis

Summary Insights AM/FM radio maintains strength in key audience segments Growing interest in alternative audio services Services attracting consumers with purchasing power #Consumer360

Implications: Higher ROI for Everyone Audio providers can deliver more tailored, targeted content to listeners Advertisers can optimize their budgeting and platform mix planning Alternative audio providers can develop more precise targeting capabilites #Consumer360