Confidential & Proprietary Copyright © 2007 The Nielsen Company Nielsen Lessons for Effective Advertising Presented to: CARF March 6 th, 2008 Summer Vallillee, Client Consultant Jessica Avery, Client Consultant

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 2 Rising commodity prices “Wheat Prices Surge to Record High” Associated Press, Dec ’07 “Rising Dairy Prices Signal Globalization ” Business Week, Sept ’07 “Oil Prices Nudges to New Historic High ” Associated Press, Mar ’08 Pressure on Canadian Manufacturers Canadian Dollar increasing in value – Manufacturer Implications: – Retailers demand lower prices – Increased scrutiny to Canadian marketing expenses – Consumer Implications: – Consumers are taking notice of US vs Can pricing If American trends can predict Canadian trends, we can expect to see a decline in Advertising spending when the economy declines

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 3 Agenda Long-Term implications of cutting TV Spend Targeting your consumer more efficiently Effectively matching the quantity of spending with concept Efficiently matching vehicle with concept Given pressure on marketing expenses, it is imperative to invest efficiently. A review of the following will shed light on the long-term effects of reducing TV spend and how to make your advertising dollars work more efficiently

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 4 Trade ROI is usually better than TV in the short term, but what are the long term implications of cutting TV? Trade is more attractive in the immediate future Short-term ROI by Vehicle Long-Term ROI – TV vs Trade Effects of TV continue to support base growth 3 years down the road 2 X More! Lesson Learned: ROI of TV doubles after 3 years resulting in cumulative ROI higher than Trade Source: Nielsen Analytic Consulting; Lessons Learned from Marketing Mix Analyses, 2006

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 5 With a $10M Marketing budget, how would profit growth differ with variations in Trade and TV spending? Case Study: Scenario 1 – Brand A spends $5M TV and $5M on Trade Scenario 2 – Brand A cuts TV spending and puts $10M in Trade Lesson Learned: Investing in TV in addition to other vehicles, such as Trade, will derive better profitability in the long-term +18% Profit Source: Nielsen Analytic Consulting; Lessons Learned from Marketing Mix Analyses, 2006

Efficient Targeting

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 7 Unique deliverable of the Consumer Marketing Mix is understanding of ROI at the Consumer Group Level Looking at the Consumption Index in isolation can be misleading… In the case of Brand A, TV was skewed towards Smaller Families with Kids Layering on the Response to the medium, we can see that the advertising actually derived higher responses from Younger Adults without Children Multiplying the Consumption Index by the Response Index gives us an ROI Index by Consumer Group. This fact quantifies the return for targeting each consumer group Lastly, we can compare this to the Average Hhlds ROI to see what the $ potential is for each Consumer Group

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 8 Invest! Optimize ROI Change Tactic Invest? Opportunity Forget It Target Marketing Strategy Matrix: Brand A Startup Families Small Scale Families Young Bustling Families Avg ROI: $1.10 Older Bustling Families Senior Singles Empty Nest Couples Senior Couples Avg ROI: $0.39 LOW HIGH Responsiveness HIGH LOW Consumption Determine which Consumer Groups are most efficient to target based on the Consumption and ROI Index Established Couples Avg ROI: $1.85 Young Transitionals Independent Singles Avg ROI: $2.67

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 9 Consumer habits/interests are linked to each of the Consumer Groups via PMB Data Target the “Invest! Optimize ROI” consumer groups by understanding their media and lifestyle habits Determine How To Reach Them Source: Nielsen Spectra / Print Measurement

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 10 Skewing the TV advertising towards the Invest! Optimize consumer group will drive greater ROI +10% ROI Lesson Learned: When every Marketing Dollar counts, it is imperative to understand the ROI Index and Viewing preferences of your target consumers in order optimize ROI

Efficient Quantity

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 12 The match of advertising spend with the quality of the idea maximizes return.

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 13 The match of advertising spend with the quality of the idea maximizes return.

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 14 Source: BASES Sources of New Product Awareness Tracking - Canada Traditional TV advertising remains the #1 way consumers become aware of products outside of store.

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 15 The more sources of awareness – the stronger the persuasion Purchase interest by number of sources of awareness (indexed to total) Note: Some of this effect may be due to self-selection – consumers who are primary targets for the proposition or have a clear need for the product may also be more receptive to marketing. One source only Two sources Three sources Four or more sources Even in a potential time of recession, it remains important to reach consumers through a variety of means.

Efficient Vehicles

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 17 Communication Effectively convey your distinct consumer proposition Simple Message Focused Message Understandability through simplicity of message is critical to successful communication Consumer takeaway is maximized with a limited number of messages in an uncluttered communication Credibility Given interest in your benefits, consumers evaluate whether they believe you will deliver Consumer Metrics can help guide the optimal media mix for generating awareness

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 18 The risk of using the inappropriate media type for a complex message is large. Complex Message Simple Message

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 19 Understandable Message Do you think that this idea is a simple idea or a complicated idea? 4.1 Top Fifth versus Database Extremely Simple Very Simple Neither Simple Nor Complicated Very Complicated Extremely Complicated Simple Complicated

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 20 Focused Message Convey the key message you intend to impart with support, and no clutter How well do you think the description of this product is focused on a main point? Extremely Focused Very Focused Somewhat Focused 2.9 Bottom Fifth versus Database Slightly Focused Not at all Focused Focused Unfocused Sample Beverage Headline: The great tasting, nutritious drink that keeps your children mentally sharp and physically active

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 21 Credibility Additionally, consumers have to believe the claims being made – and the type of media pursued is key to communicating the credibility of the initiative Scrubbing Bubbles Automatic Shower Cleaner How do you feel about the believability of the statements made about this product? Completely Believable Somewhat Believable Neither Believable nor Unbelievable Somewhat Unbelievable Completely Unbelievable Middle Fifth versus Database

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 22 Source: BASES Sources of New Product Awareness Tracking - Canada Influence on Purchase Internet Read about it in a magazine or newspaper Coupons Magazine Ad Demos/Samples Friend or Family told You TV Ad When credibility is an issue, TV ads with their ability to show demos are the most compelling mean of communication. Small brands especially need to use the appropriate media vehicles to convince consumers their message is credible.

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 23 The simplicity and credibility profile should define the optimal media type(s). Credibility Simplicity/Focused Low High Re-evaluate copy and messaging Billboard Internet Banner Ads At-Shelf Communication On Package Communication Television Demos Samples Print Longer TV Ads

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 24 With pressures to maximize advertising efficiency, consider the following efficiency measures: – Don’t jump to cut your media spending – it pays off in the long term! – If you’re a small brand, it’s also a great time to get aggressive. – Understand response by consumer group as well as consumption by consumer group to maximize ROI – Spend to the quality of the idea – Consider the simplicity, focus, and credibility of the message; the consumer measures can guide use of media types with the best ROI Lessons Learned

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 25