Private & Confidential © 2011 Circular Distribution + Where do we go from here…? 1 Alliance Media a division of NSA Media + NTMC Conference + New Orleans, LA + March 7, 2012

Private & Confidential © 2011 Agenda 2 + The Ultimate Shopper Media + Evolving Distribution Landscape + Growing Concerns Drive Need for Change + Opportunities for Efficiency

Private & Confidential © 2011 The Ultimate Shopper Media 3 A Tool that Empowers

Private & Confidential © 2011 Circulars connect Stores and Shoppers 4 Operational Day of deliveryScaleTargeting/VersioningEfficiency Functional Communicates Product/Price Drives TrafficContent Retention/ Acquisition Habitual Shopper RoutineResearch/ Planning ToolComparison ShoppingCoupons/Sales Inspirational DiscoveryTo-do listExposure Call to action Store Shopper

Private & Confidential © 2011 Usage remains widespread 5 Circular UsageRegularly/ Occasionally Total72% Men67% Women76% 18 – 3465% 35 – 4974% 50 – 6474% 65+76% <$50,00067% $50 – 74,99977% $75 – 99,99975% $100,000+72% 72% of U.S. adults regularly or occasionally read circulars. High propensity users: Female 35+ HHI $50 – 100K  Shoppers seeking value

Private & Confidential © 2011 Evolving Distribution Landscape 6 Shoppers Driving Change

Private & Confidential © 2011 Newspaper circulation trending down… 7 Daily and Sunday trending downward

Private & Confidential © 2011 Alternative Distribution Options Expanding 8 Established to address consumer demand for print circular delivery  Sunday Opt In – Free packets of advertising delivered to newspaper non-subscribers that request it.  Slightly younger, more value conscious reader compared to newspaper subscribers  De-duplicated with paid subscribers  Over 4 Million Opt-In subscribers since 2008  Walk Programs – Free packets of advertising delivered in areas where a viable newspaper option does not exist  Delivered at block group levels with strong demographic composition

Private & Confidential © 2011 Sunday Select is Effective and Efficient 9 + Mainstream acceptance with most advertisers + Consistent YOY growth + High level of consumer acceptance + Capacity to expand long term… + IF properly executed + Opt-In is becoming the new paid

Private & Confidential © 2011 Partially offsetting Newspaper circulation declines… 10 Opt-in programs offsetting Sunday somewhat (4 million+ HHLDs)

Private & Confidential © 2011 Growing Concerns Drive Need for Change 11 Reaching People Effectively in a Fragmented Environment

Private & Confidential © Newspaper Opt-in Digital Mail/Carrier Circular Distribution is at a Crossroads

Private & Confidential © 2011 Some Good News… Newspaper Delivery is preferred by most 13 Age Average Per Person Annual Expenditure NewspaperUSPSDigitalNo Preference 18 – 24$28,11917%30%42%11% 25 – 34$46,49444%20%28%8% 35 – 49$57,30150%24%15%11% 50 – 64$52,46359%22%7%12% 65+$37,56262%19%4%15% However… <25 demo prefers Digital and USPS delivery

Private & Confidential © 2011 Growing Concerns… Solutions? Growing list of concerns requires viable solutions 14 Expense CirculationViabilityBudgets Fragmentation Shiny Toy Syndrome Growing Concerns

Private & Confidential © 2011 Walk Programs Gaining Acceptance 15 Four Factors are Driving Advertiser’s Viewpoint  ROI Pressure  Postal Concerns  Improved Technology  Reliability

Private & Confidential © 2011 ROI Pressure 16 + Rising costs (i.e. paper, energy, and postage) adversely impacting shared mail ROI. + Negative perception of “Junk Mail” “15 years ago mail made its way into the home, now it only makes it to the recycling bin.”

Private & Confidential © Balance of distribution increasingly skewed towards higher cost TMC The trend has exponentially negative impact on ROI. ROI Pressure 17 Source: NSA database: Newspapers with high usage and opt-in products offered to ensure consistency.

Private & Confidential © 2011 Postal Concerns  Weight based pricing is killing retailers who distribute 12+ page preprints  Service cutbacks  Fewer distribution facilities  Fewer shifts  Fewer workers  Fewer delivery days  More difficult to make delivery timing guarantees 18

Private & Confidential © 2011 Enhanced Technology  Improved Precision  Geo-tracking  Real-time tracking  Where and when pieces are distributed  Digital alternatives  Mobile, iPad, websites, e- blasts, consolidators  Alternatives for those who Opt-out of a delivered piece 19

Private & Confidential © 2011 Opportunities to Drive Efficiency 20 For Advertisers and Newspapers

Private & Confidential ©  “Convenience” is situational rather than absolute, and empowers contemporary shopping habits…  We know…  Print circulars remain wildly effective among shoppers What we’re finding…  Digital has become more of an Additive step, as “Discovery” leads to “Action” Convenience is being redefined by the Shopper… Adapting to new realities… Empowered Shoppers

Private & Confidential © 2011 Adapting to new realities… “Costs Must Be Reined In” 22 + Clients demanding: + Greater accountability + Improved efficiency + Pinpoint accuracy + Reach across demographic targets + Multiple touch-points

Private & Confidential © 2011 Reining in costs in print  Doesn’t have to be all or none  Use carrier where practical  Use shared mail for rural or walk adverse geographies  Transition program over-time starting with the easiest ZIP Codes to convert to carrier  Learn what works  Lower your risk 23  Opt-in preferred, Opt-out may work if…  If opt-out is truly an option  If opt-out option is HIGHLY visible  If waste is aggressively weeded out TMC Product SMC/Select Product

Private & Confidential © 2011 Reining In Your Costs  Digital alternatives that are active opt-ins are an asset  These become as valuable as your subscribers  Only you will have a non-duplicated list of consumers, by ZIP Code, who want a digital copy  What is a reasonable CPM for opt-in digital homes?  How should ads be served? ? Consolidator? Direct Link? 24  Suggest a digital alternative to opt-out  Passive, “They are on our website each week.”  Active, “We can them each week.” Digital Products

Private & Confidential © 2011 ReCap  Sunday Opt-In is essential to bring the mass audience an advertiser is looking for and eliminate the threat of continued audience erosion  Mid-week saturation delivered products are becoming harder to justify financially, even more so for those which are mailed  Move what you can to carrier delivery, Hybrid model  Aggressively seek opt-outs 25 Alliance Media a division of NSA Media

Private & Confidential © 2011 Thank You! + Dave Gusse + President, Alliance Media Alliance Media a division of NSA Media