L’Oreal Regional TV case study November 2011

RTM is the marketing bureau for Regional free to air TV

RTM reviewed L’Oreal regional skin care sales and TV ROI for 13 months to July 33% of L’Oreal and Garnier sales come from regional markets and up to 37% for mature age brands – in line with regional population L’Oreal regional BDI improved 10% vs. metro following increased share of TV $ to RTV RTV demonstrably more effective when used at same weights to metro RTV driving 40% to 50% of launch sales

PLAY TALKING REGIONAL VIDEO

Regional TV covers all areas outside capital cities and reaches 36% of population QLD NNSW SNSW TAS VIC REG. WA DIARY

Regional TV coverage includes large cities and fast growing coastal suburbs Newcastle & Central Coast Gold Coast Wollongong & Illawarra Canberra

Populations of major regional TV markets are comparable with the metros People Source: ATR & OZTAM 2011, Nielsen Media Research 2010 NNSW 2,079SNSW 1,410

Population Increase: 2001 vs Source: ATR & OZTAM 2011 Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas National average QLDNSWVICTASMETRO

Urbanisation and high population growth changing the profile of regional Australia Seachange: Baby boomers and young families Lower cost of living and lifestyle are main attractions Rural populations moving to regional hub towns Less than 4% of households depend on farming

Regional consumers’ willingness to spend grew this year slightly this year against “national” trend Spending per discretionary $1000 Source: foreseechange 2005 – 2010 annual average, 2011 June & November 2011 survey average

Average household incomes in regional TV markets are within 10% of national average Source: Roy Morgan Single Source (12mths to Mar 2011 ) P25-54: Average household Income

Regional consumers are more optimistic about their current financial outlook… …and are more likely to spend on discretionary items over the coming year.

Regional women attitudes and purchasing of skincare are the same as metro Source: Roy Morgan Single Source (12mths to March 2011)

Brand shares of total category sales: June 2010 to July 2011 L’Oreal average regional and metro share of total skin care sales are the same Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

33 % of all L’Oreal Australian Skincare sales are from regional consumers Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

L’Oreal share of skin care in Reg. NSW and TAS is above average Total L’Oreal share of total skin care category sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

L’Oreal regional sales are 33% of national total – but Reg. NSW is more significant & TAS/WA/SA value above ADE Total L’Oreal Skin Care sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

4 weeks to W/E Total L’Oreal share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $6.5m Reg share: 14% L’Oreal share of regional markets improved relative to national trend over the year Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E L’Oreal Youth Code share of total Facial Moisturisers/Specialist sales vs. TV Spend June 2010 – July 2011 Total TV: $2.1m Reg share: 16% L’Oreal Youth Code drove much of the growth and regional consumers particularly responsive to TV. Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E L’Oreal Revitalift share of total Facial Cleanser/Moisturisers/Specialist sales vs. TV Spend June 2010 – July 2011 Total TV: $1.4m Reg share: 24% L’Oreal Revitalift share declined but was very responsive to higher TV activity in 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E L’Oreal Age Perfect Clean share of total Facial Cleanser sales vs. TV Spend June 2010 – July 2011 Total TV: $497k Reg share: 16% L’Oreal Perfect Clean achieved exceptional launch success in regional markets from TV advertising Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

RO 3 I x Cost efficiency and ROI from L’Oreal regional TV is 3 times better than metro TV Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium

L’Oreal TV advertising ROI by market Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium

Total Garnier regional sales are 32% of national Total Garnier Skin Care sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

Garnier share of regional skin care varies only slightly by market but TAS below average Total Garnier share of total skin care category sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

4 weeks to W/E Total Garnier share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $3.2m Reg share: 16% Garnier share of regional skin care grew strongly in 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E Garnier Body Intensive 7 Days share of total Body Moisturisers sales vs. TV Spend June 2010 – July 2011 Total TV: $602k Reg share: 13% Garnier Body Intensive was a successful launch in regional markets – approx. 50% of sales growth from RTV Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E Garnier Body Intensive 7 Days share of total Body Moisturisers sales vs. TV Spend June 2010 – July 2011 Total Reg TV: $78K RTV not used for Garnier Body Intensive in TAS – launch share half of active markets and appears to be declining Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

RO 2.5 I x Cost efficiency and ROI from Garnier regional TV is 2.5 times better than metro TV Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium

Garnier: ROI by Metro + Agg Markets Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium

Regional TV share of skin care brands’ national TV budgets has grown but opportunities remain Source: Nielsen Media Research AdEx Category: Skin Care - All Total TV Spend $5.4m $5.1m $6.5m $5.9m $3m $3.2m $358k $2m $926k $1.6m $34m Period: w/c 13/6/10 to w/c 31/7/11

4 weeks to W/E Olay share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $5.1m Reg share: 18% Olay maintains higher share of regional skin care sales through consistently strong suppport Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E Nivea share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $5.9m Reg share: 18% Nivea share recovered in 2011 especially in regional with boost in RTV Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

Regional TV share higher for L’Oreal youth and mature brands Source: Nielsen Media Research AdEx Category: Skin Care - All Period: w/c 13/6/10 to w/c 31/7/11 Total TV Spend $602k $2.3m $815k $308k $1.4m $653k $1.6m $497k $2.1m $10.3m

Regional women 55+ are affluent consumers and just as engaged with skincare Source: Roy Morgan Single Source (12mths to March 2011)

L’Oreal Revitalift regional sales are 35% of national Total L’Oreal Revitalift Skin Care sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

Garnier Ultra Lift regional sales are 37% of national Total Garnier Ultra Lift Skin Care sales: June 2010 to July 2011 Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT)

Source: Roy Morgan Single Source (12mths to June 2011) Regional men are just as relevant to L’Oreal skincare

Male skin care category development in Reg QLD, SNSW and rural in line with Sydney / Melb % of Men who purchased skincare P6M Source: Roy Morgan Single Source 12 months to June 2011

4 weeks to W/E L’Oreal Men Expert share of total Facial Cleanser/Moisturisers/Specialist sales vs. TV Spend June 2010 – July 2011 Total TV: $1.6m Reg share: 0% L’Oreal Men Expert is less popular in regional Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E Nivea Men share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $733k Reg share: 4% Nivea Men has similar share in regional to metro Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

4 weeks to W/E Dove Men Care share of total Skin care sales vs. TV Spend June 2010 – July 2011 Total TV: $518k Reg share: 18% Dove Men Care had widespread regional TV support and achieved similar market share as metro Source: Scan Data (4 W/E 04/7/10 to 31/7/11) Coles /Woolworths/Bi Lo (Excludes NT), Adquest Millennium Category share by value TV spend

Increasing regional TV share of national budget will boost sales growth and advertising ROI Adding new regional markets will boost growth ROI for regional TV will boost overall campaign return Equal weights in all markets would require approx. 23% of total TV budget …and will deliver 35% or more of national sales and 40% or more of national growth

Vaseline case study objectives Identify key media drivers of sales. Measure response to media activity in Regional vs. Metro areas Generate predictive models enabling insight into budget allocation across channels and regions. Measure impact of Vaseline price and distribution. Identify competitive impact: – Price/Distribution – Advertising

Project Scope Product: Vaseline Hand and Body Range Key Metric: Total Vaseline baseline sales in Woolworths Time Period: 2008 through to end of 2010 Interval: Weekly Number of Periods:148 Geography: Sydney, NNSW, SNSW, Melbourne, Regional VIC, Brisbane, Regional QLD, Tasmania

Key findings summary The study found a re-alignment of TV market investment using the same 2010 TV budget could increase annual TV generated sales by 38%. And improve ROI by 43% The model recommends 40% share of total TV budget should be allocated to regional markets to achieve this outcome TV flighting patterns in regional are optimal with continuous lower weights

Media Investment Summary 2008 – 2010 Eastern Regional Aus

These variables help explain over 80% of Woolworths sales variation. Variables Tested

Model vs. Actual Model is highly accurate: Sales 90.7% Sales $ NSW, VIC, QLD & TAS

TV drives the majority (67%) of advertising generated Vaseline sales

Over the period of the study regional areas deliver 38% of advertising generate sales for only 16% of budget and hence better ROI compared to metro areas. Melbourne and Sydney have a greater capacity to generate high volume sales but require large levels of spend

Adstock investment in regional areas during trial was less than optimal = Average Weekly Adstocks

Adstock investment in regional areas should be increased to maximise total advertising generated sales. = Average Weekly Adstocks

Optimum allocation to Regional TV is 41% of total TV budget

Using 2010 TV, the model suggests that annual TV generated sales could be increased by 38% by adopting a more continuous flighting pattern and improving spend allocation by region. ROI would improve by 43% 41% annual increase

Due to higher decay in regional areas, a continuous flighting pattern may be more appropriate. Whereas in Sydney where advertising decay is lower, a large burst followed by shorter ones is most efficient. Investment Sales Week Number Investment Sales Week Number Investment Sales Week Number Investment Sales Week Number

Melbourne may also benefit from shorter more concentrated bursts of activity resulting from higher point of diminishing returns compared to Brisbane and regional areas. Investment Sales Week Number Investment Sales Week Number Investment Sales Week Number Investment Sales Week Number

Overall Radio achieved the strongest ROI but this is based on limited data points. Total media return on investment is $0.08 (NB WW sales only). Regional TV achieved the next best ROI after Radio. Potential ROI from optimised TV investment is $0.10

Key findings summary The study found a re-alignment of TV market investment using the same 2010 TV budget could increase annual TV generated sales by 38%. And improve ROI by 43% The model recommends 40% share of total TV budget should be allocated to regional markets to achieve this outcome TV flighting patterns in regional are optimal with continuous lower weights