Today’s Multi-Platform Path-to-Purchase Spark Retail Summit October 22, 2014 Gian Fulgoni Co-Founder & Executive Chairman Emeritus comScore, Inc.

Topics for Today Shoppers’ Multi-Platform Journey Digital Commerce Impact of Digital on Shopping Rise of the Digital Omnivore Digital Advertising Lessons Learned

Data sourced from comScore’s global panel of 2 million Internet users 2 Million Person Panel 360°View of Person Behavior PERSON-Centric Panel with WEBSITE-Census Measurement Web Visiting & Search Behavior Online & Offline Buying Online Advertising Exposure PANEL CENSUS Person Behavior Measured Passively by Keystroke Typing Signature Advertising Effectiveness Transactions PANEL Media & Video Consumption Demographics, Lifestyles & Attitudes Unified Digital Measurement™ (UDM) Patent-Pending Methodology 1 Million Domains Participating Adopted by 90% of Top 100 U.S. Media Properties Mobile Internet Usage & Behavior Plus 5 Million TV Set Top Boxes for 3-Screen Measurement V0411 3

Shoppers’ Multi-Platform Journey to Purchase

The Shopper’s Multi-Platform Journey Today: Not so much a funnel, more like a flight map Source: Google ZMOT Handbook

Shopping Tools Evaluated “Traditional” Shopping Tools Consumers were asked to rate a wide variety of shopping tools, including “traditional” (e.g. newspapers, TV) + digital/mobile Shopping Tools Evaluated “Traditional” Shopping Tools Digital Shopping Tools Mobile Shopping Tools Direct mail Magazines Newspapers Radio Recommendations from friends and family Television Deal of the day sites Digital coupons Facebook Online circulars Online customer reviews/ratings Online search engine Printable shopping lists Retailer or manufacturer email Retailer website Twitter Mobile brand websites Mobile coupons Mobile location-based services Mobile payments Mobile retailer websites Mobile search Retailer smartphone app Scannable QR codes Text alerts from a retailer Use of a smartphone in a physical store Source: comScore Survey – February 2014

Source: comScore Survey – February 2014 “Helps Me With New Ideas” Different tools for different purposes…and still a role for traditional media. Mobile coupons become the first mobile tool in top-10 Overall Rankings for Each Tool, by Statement (Ranking among tools, % Top-2 Box, 7-pt scale) Source: comScore Survey – February 2014 “Saves Me Money” “Saves Me Time” “Helps Me With New Ideas” #1 Digital coupons Online search engine #2 Digital Coupons Retailer website #3 Retailer or manufacturer email Recommendations from friends and family #4 Newspapers Online circular Television #5 Printable shopping lists #6 Online customer reviews/ratings #7 Magazines #8 Deal of the day (e.g. Groupon) #9 Direct mail #10 Mobile coupons Denotes Traditional Media

Digital Commerce

Year to date, desktop retail e-Commerce is up +11% Y/Y overall, totaling $111 billion through the first six months of 2014 Desktop e-Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce Measurement +11% +13% $322 $289 +12% +7% +9% $256 +17% -2% +10% $228 $214 +19% $209 $200 +8% Billions ($) +22% +9% $174 $171 +26% +11% $143 +29% +6% +9% $117 -5% +12% +8% $93 +13% $72 +20% +28% +33% +26% +26% +24% +24% +20% +6% 0% +10% +14% +15% +13% +11%

Mobile plus desktop e-commerce reached a combined total of $61 Mobile plus desktop e-commerce reached a combined total of $61.6 billion digital retail dollars in Q2 2014, up 13% vs. YA Desktop + Mobile Retail Digital Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce Measurement +21% +17% +15% +16% +14% +12% +13% +13% $71.4 $64.0 $63.4 $61.6 $56.1 $54.5 $54.3 $48.8 $47.0 $45.4 Billions ($)

Mobile commerce, $6.8 billion in Q2, accounted for about 11% of total digital commerce dollars in Q2, up 2.5 percentage points over Q2 2013 m-Commerce Share of Total Digital Commerce Dollars Source: comScore m-Commerce Measurement

Q2 2014 Y/Y Retail Spending Growth by Channel Mobile commerce growth accelerated in Q2, however, a soft Q2 2013 also contributed to the strong Y/Y growth rate Q2 2014 Y/Y Retail Spending Growth by Channel Source: Dept. of Commerce, comScore e-Commerce & m-Commerce Measurement

Desktop & Mobile e-Commerce Share of Corresponding Consumer Spending* When including both mobile and desktop spending, Digital Commerce accounted for 11.6% of consumers’ discretionary spending in Q2 2014 Desktop & Mobile e-Commerce Share of Corresponding Consumer Spending* Source: comScore e-Commerce/m-Commerce & U.S. Department of Commerce (DOC) for Retail The share of consumer spending via digital tends to peak in Q1 and Q4 – Q1 ‘14 saw a 13.2% share, the highest ever 10.6% (Q2 ‘13) 11.6% Q2 ‘14 9.5% (Q2 ‘12) 10.3% Q2 ‘14 9.7% (Q2 ‘13) 8.7% (Q2 ‘12) *Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores.

Digital’s Impact on In-Store Buying

Pricing Power in the hands of the consumer: online retailer sites 226 million monthly visitors 21 visits per visitor comparison shopping sites 85 million monthly visitors 3 visits per visitor Pricing Power in the hands of the consumer: Finding the lowest price has never been easier coupon sites 97 million monthly visitors 8 visits per visitor search 236 million monthly visitors 31 visits per visitor SOURCE: COMSCORE MEDIA METRIX MULTI-PLATFORM, US, JUL-2013

Has the Internet helped drive down prices? Categories mainly purchased off-line Categories often purchased online

The Influence of Digital on In-Store Sales Total In-Store Sales Influenced by Digital Shopping Source: Deloitte $1.5 Trillion $1.1 Trillion

Rise of the Digital Omnivore

Number of U.S. Device Owners The Brave New Digital World: Adoption of Smartphones & Tablets has dramatically changed the digital media landscape Number of U.S. Device Owners (Smartphone and Tablet) Source: comScore MobiLens/TabLens 3 month average ending June14 172 Million +22% vs. YA 93 Million +36% vs. YA

Digital media usage has doubled in the past three years, led by massive growth in mobile engagement, but Desktop engagement has not declined Total U.S. Internet Usage in Minutes (Billions) by Platform Desktop, Smartphone and Tablet 1,159 +17% 995 +83% +16% +1040% 543 +17% +237% +7% +15% Source: comScore Media Metrix Multi-Platform, December 2013 Note: Dec-2010 Mobile is estimated based on earliest observed comScore smartphone engagement data calibrated by number of smartphone users at that time. Note: Tablet Dec-2010 numbers were custom calculated as well,

Strong growth in mobile app usage has propelled apps to a majority of digital engagement at 52%, while total mobile activity is at 60% Mobile 52% Mobile App 40% Desktop

Overall, >34% of top 10 retailers’ monthly UVs are mobile-only Overall, >34% of top 10 retailers’ monthly UVs are mobile-only. Compared to multi-channel retailers, pure plays’ mobile engagement relies on apps over browser. Target’s Cartwheel app is notable exception Selected Leading Retailers: Total U.S. Digital Population Unique Visitors (MM) by Platform Source: comScore Media Metrix Multi-Platform, U.S., July 2014 % of Mobile Time Spent – Browser vs. App Source: comScore Mobile Metrix, U.S., July 2014 34% 162 43% 104 Apple Sites 67% 91 44% 61 57% 45 Note impact of Target’s Cartwheel app 54% 30 41% 27 41% 24 43% 23 47% 21 Mobile = Smartphone + Tablet Mobile app usage for Apple.com Sites includes all Apple property apps (e.g. iTunes, Apple Maps, etc.)

Some Lessons Learned About Digital Advertising’s Impact on Buying Behavior

For multi-channel retailers, higher offline sales lifts are seen from search vs. display advertising, but combined the synergy provides an even greater lift Incremental Lift in Retailers’ Offline Sales per (000) Exposed Source: comScore Ad Effectiveness Solutions +119%

Total Sales Volume Lift Index % of Households Reached Display ads get a far higher reach than search. But, synergy gains can be obtained by using display overlaid on a search campaign The overall number of people reached by display ads is typically much higher than search As a result, even though the sales lift among those exposed to a search ad is higher, the total dollar sales gained from display ads is often larger than search due to the smaller lift acting on a larger base Incremental Impact on Offline Sales per (000) Exposed Total Sales Volume Lift Index % of Households Reached 198 +11% Note: 0 equals par in above chart. Source: comScore Ad Effectiveness Solutions

Despite click rates of only 0 Despite click rates of only 0.1%, display ads can successfully lift sales – both online and offline CONCLUSIONS Exposure to display ads doesn’t just impact online sales – it lifts in-store sales as well The absolute dollar lift in offline sales is 5x higher than the lift in e-commerce sales The click is misleading as a measure of campaign effectiveness Dollar Sales Lift Among Households Exposed to Online Advertising % Lift: 17% % Lift: 27% Today, in fact, Google DoubleClick reports that CTRs on display ads in a campaign are extremely small, with CTRs in selected European markets ranging from 0.14% in the UK to 0.32% in France. That’s only 1.4 to 3.2 clicks per one thousand impressions! While the click on a display ad is still being used by some as a measure of campaign effectiveness, comScore and other industry research has proven time and again there is no significant, positive correlation between clicks and key effectiveness measures of advertising, such as sales lift. Source: “Whiter the Click?” 139 comScore studies in June 2009 Journal of Advertising Research © comScore, Inc. Proprietary. 26

Measurement of Viewability, Targeting Accuracy, Brand Safety and Non-Human Traffic provides much-needed transparency in an increasingly opaque, programmatic world. Industry benchmarks can help media buyers and sellers set campaign delivery expectations. © comScore, Inc. Proprietary. 27

Because of inaccuracies associated with cookies, demographic in-target rates are low and can vary significantly across industry verticals % In-Target: Overall* and by Select Advertiser / Product Category** Source: comScore vCE Benchmarks, U.S., Q1 2014 Our vCE benchmark for in-target across all campaigns is 44%. This includes campaigns that go beyond the categories listed above to also include other categories as well as studies run directly by publishers and ad networks. As you look across the product categories here, we see quite a large variance from Computer and Technology – with 64% in-target – all the way down to CPG – with 41% in-target This isn’t necessarily because Computer and Technology advertisers are doing a better job of targeting than CPG advertisers. There are two likely reasons why CPG performed slightly under the overall norm. 1) First, many of these CPG manufacturers targeted Females 18-49 -- the same target commonly used in TV advertising. This target is relatively narrow, making it harder for these CPG campaigns to reach the intended target. 2) We also know that many of our CPG clients are layering on additional targeting – beyond just demo targeting. So, they are doing things like retargeting or purchase-based targeting – and might be less concerned with hitting a certain demo group. Many of our CPG clients use first-party data to target coupon downloaders from their site. If a lot of these coupon downloaders are Males, and don’t fall in that Female 18-49 target, they won’t have a high in-target rate but the client might still deem the performance of the campaign a success. Again, this speak to the fact that you can’t always take these numbers at face value and have to look at them in the context of a campaign’s objective. The Health/Wellness category is another example. It delivers slightly lower than average in-target rates. But Health/Wellness advertisers don’t typically execute a lot of audience-based targeting. They tend to buy ads directly on endemic-content sites. So, in-target delivery benchmarks aren’t the best indicator of success. *The Overall Norm comprises data from more than 200 billion impressions over the course of a 12-month rolling period. This includes campaigns that go beyond the select Advertiser / Product categories listed above to also include additional Advertiser / Product categories as well as studies run directly by publishers and ad networks. **Target audience is categorized based on the primary target selection in vCE, which is self-designated during campaign set-up. ***The Health / Wellness category includes campaigns for brands, products and/or services in the following sectors: health associations, health insurance, hospitals, over-the-counter, pharmaceutical, public health and wellness

Viewability of Digital Ads is Poor, But Premium Publishers Boast Higher Average In-View Rates than Ad Networks/Exchanges

ARF Audience Measurement 8.0_2013 Advertisers get huge return from increasing viewability: A 40% increase in viewability drives a 75% increase in in-store sales lift for Kellogg’s 4/11/2017 7:24 AM Sales Lift Index In-Store Sales Lift Indexed to 100 for Less Than 50% Viewability of Impressions 175 100 40% improvement in viewability generating 75% increase in sales impact D#_KIF_SpeakerLastName_v0X.ppt

Kellogg’s benefits from in-flight campaign optimisation Brand 1 ROI Brand 2 ROI And this approach is working quite well for Kellogg’s. Market mix modelling results for two Kellogg’s brands – which leveraged comScore data for in-flight optimisation – showed an increase in ROI for digital advertising of 5X and 6X. Source: comScore and Kellogg’s case study, 2012. © comScore, Inc. Proprietary. 31

Mobile brand lift metrics show that mobile advertising DOES work, driven by high engagement & lower funnel targeting Percentage Point Lift From Advertising Desktop Mobile Source: comScore BSL Benchmarks, U.S., 2014

Summary of Key Findings Digital media materially influences today’s path to purchase, but still a role for traditional media The channel shift to digital commerce continues unabated Driven by mobile devices, the digital omnivore has arrived, accessing the Internet whenever and wherever he / she wants Digital advertising proven to lift e-commerce and in-store sales Forget the click Measure attitudinal and behavioral changes Viewability, targeting accuracy, brand safety and NHT are key drivers of impact and ROI Mobile advertising does work, driven by high engagement and lower funnel targeting

And now for the panel .. For copy of presentation please email: Learnmore@comscore.com