The Sales Impact of Radio A Look at Radio Performance for Department Stores & Telecom Nielsen 2015 ROAS study ROAS: Return-On-Ad-Spend

We now have empirical data We must be the evangelists! For too long we’ve been dealing with anecdotal evidence of performance not empirical data We now have empirical data We must be the evangelists!

Who conducted this research? Nielsen did Largest global marketing research firm worldwide Also measures TV, Online, VOD So has no horse in this race---completely unbiased Nielsen would never put their name on any research that couldn’t withstand the scrutiny of research experts worldwide

Background: DEMO A18+ To measure the sales impact of radio advertising RESEARCH OBJECTIVE To measure the sales impact of radio advertising Department Stores 4 Brands Test Period: Q3 2014 Pre Period: Same Time Prior Year Telecom 1 Brand Test Period: Q1 2014 Pre Period: 3 months prior

Nielsen’s PPM Audio Technology: To record Listening PPM encoding solution identifies broadcast and online audio content 1. The meter, worn all day, detects the watermark embedded in the audio broadcasts 2. Data collected by the meter are sent to Nielsen Audio 3. Capable of measuring radio, television and Internet broadcasts, retail video and audio broadcasts. Meter automatically detects inaudible codes embedded in audio portion of broadcast program or commercial. Proprietary codes identify media to which participant is exposed.

Nielsen Audio Reporting This listening data is then Matched to Media Monitors commercial occurrence data (Was the listener tuned in when the commercial ran) Nielsen Audio Reporting Nielsen Audio Panelist Exposures – Radio Commercials Advertisers air commercials on radio stations. The “listening” to those stations is captured by Nielsen Audio providing minute-by-minute listening to each station. Media Monitors provides the occurrence data which details the station and time of airing for each commercial. These two are matched to report the audience to each commercial in a radio campaign. NCS is extremely grateful to Clear Channel for providing Media Monitors data for this analysis, and extremely grateful for all the support provided by Media Monitors to enable this methodology. Matched to Radio Commercial Occurrence Data*

This information is then fused with credit and debit card purchases SINGLE SOURCE (Individual) DATABASE PURCHASE BEHAVIOR: Credit & Debit Card Expenditures of 125 MM unique cardholders 80%+ US credit card transactions 30% of US debit card transactions 12B transactions accounting for $1.2 trillion spent annually

It boils down to this…. Comparing the purchasing habits of those exposed to the commercial and those not exposed to the commercial They match Radio PPM listening with Media Monitors commercial occurrence data to determine if the participants were exposed to the advertiser’s commercial and if they were exposed they determine how purchasing behavior (via their credit and debit card records) differed from those not exposed to the commercial

3 PILLARS THAT DRIVE ROAS- Return-On-Ad-Spend MORE BUYERS BUYERS SHOPPING MORE OFTEN BUYERS SPENDING MORE PER TRIP

Incremental spend for customers exposed to the Q3-2014 radio campaigns DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO EXPOSURE TO RADIO CAMPAIGNS DROVE A +10% INCREASE IN SALES OVERALL RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED 3% increase in total number of buyers 6% increase in dollars spent per buyer IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT Long term will be higher- residual effects $17 ROAS $356,966,946 Incremental spend for customers exposed to the Q3-2014 radio campaigns $20,999,788* Total Q3 2014 radio ad spend Q3 2014 - Four brands - Compared to same time prior year * Ad spend source is SQAD

Incremental spend for customers exposed to the Q3-2014 radio campaigns DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED Develop into loyal customers 3% increase in total number of buyers 6% increase in dollars spent per buyer IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT $17 ROAS $356,966,946 Incremental spend for customers exposed to the Q3-2014 radio campaigns $20,999,788* Total Q3 2014 radio ad spend Q3 2014 - Four brands - Compared to same time prior year * Ad spend source is SQAD

Incremental spend for customers exposed to the Q3-2014 radio campaigns DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED 3% increase in total number of buyers 6% increase in dollars spent per buyer Radio advertising impacted behavior IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT $17 ROAS $356,966,946 Incremental spend for customers exposed to the Q3-2014 radio campaigns $20,999,788* Total Q3 2014 radio ad spend Q3 2014 - Four brands - Compared to same time prior year * Ad spend source is SQAD

Incremental spend for customers exposed to the Q3-2014 radio campaigns DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED 3% increase in total number of buyers 6% increase in dollars spent per buyer IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT Long term will be higher- residual effects $17 ROAS $356,966,946 Incremental spend for customers exposed to the Q3-2014 radio campaigns $20,999,788* Total Q3 2014 radio ad spend Q3 2014 - Four brands - Compared to same time prior year * Ad spend source is SQAD

Incremental spend for customers exposed to the Q3-2014 radio campaigns DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED Develop into loyal customers 3% increase in total number of buyers 6% increase in dollars spent per buyer Radio advertising impacted behavior IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT Long term will be higher- residual effects $17 ROAS $356,966,946 Incremental spend for customers exposed to the Q3-2014 radio campaigns $20,999,788* Total Q3 2014 radio ad spend Q3 2014 - Four brands - Compared to same time prior year * Ad spend source is SQAD

10% 43% 10% DEPARTMENT STORES HISPANIC AND AFRICAN-AMERICAN INSIGHTS % Change TOTAL SPEND 10% 43% 10% PERSONS 18+ HISPANICS 18+ AFRICAN-AMERICANS 18+ Previous Nielsen study Q1 2014 also showed that Hispanic ROAS was larger than general market

Hispanic radio dollar share point gains by advertiser 2014 study: Hispanic consumers show higher response to campaign exposure Hispanic radio dollar share point gains by advertiser +22% Source: Nielsen Catalina Solutions Studies of 3 radio ad campaigns, March 26, 2014 indexed to general market share point gains from study

Black radio average dollar share point gain by advertiser 2014 Study: Black consumers show higher response to campaign exposure Black radio average dollar share point gain by advertiser +19% Source: Nielsen Catalina Solutions Studies of 3 radio ad campaigns, March 26, 2014 indexed to general market share point gains from study

TELECOM $14 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO The Telco company radio campaign reached almost 88 million people (P18+) in PPM markets Telco company buyers exposed to radio campaign spent $8 more per month than consumers who were not exposed IMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT $14 ROAS $210M Incremental spend on Telco Brand by customers exposed to radio campaign $15.3M* Spend on radio SOURCE: Nielsen Buyer Insights P18+ Telco Brand campaign (1/1/14-3/31/14) * Ad spend source was Client Provided Budget

TELECOM MILLENNIAL AUDIENCE INSIGHTS Not only do Millenials listen to Radio they respond to its commercials During the campaign period, Millennials exposed to the campaign had double the increase in monthly spending for the Telco company’s products and services ($16 increase in monthly spending vs. $8 increase for A18+ exposed audience).

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES RADIO PAYBACK PER $1 AD INVESTMENT Q1 2014 Q3 2014

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES RADIO PAYBACK PER $1 AD INVESTMENT Retail A +B average out to $17 as well Q2 +Q3 2013

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES RADIO PAYBACK PER $1 AD INVESTMENT

A $3 or $4 ROAS is still strong and noteworthy Retail and Department stores ROAS will always be higher for two reasons: - Higher ticket items than chips, candy and soda - Market basket potential: i.e. I go to purchase the product advertised in the department store but end up buying other products in various departments

Now let’s put these Radio ROAS results into some kind of perspective

Below came from a recent Bloomberg article Ron Amram works for Heineken “Late that year he (Amram) and a half-dozen or so colleagues gathered in a New York conference room for a presentation on the performance of the online ads. They were stunned. Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with of at least 6 to 1 for TV.” Makes Radio’s performance in both ROAS studies look pretty good!

Advertising Age What Medium Scores Highest ROI Advertising Age What Medium Scores Highest ROI? It May Be Radio Nielsen Catalina Study Shows Big Returns for Small Outlays Published on March 25, 2014 Brands averaged a sales lift of more than $6 for every $1 spent on radio ads – an ROAS double that of even the best results from many recent studies of digital or TV media, including one from France and Coca-Cola that Facebook recently touted.

Great Book written by Erwin Ephron: titled Media Planning A little noted fact from the 2014 Nielsen study Found that radio delivered a powerful sales lift when heard within a few days of purchase. A consumer exposed to an ad within a day of purchasing increased the brand share by +9%, while messages delivered 28 days prior to purchase increased share by +3.4%. Speaks to the importance of continuing brand presence- Being there! Of delivering a message within the window of opportunity— one of Radio’s key strengths Recency Great Book written by Erwin Ephron: titled Media Planning Ephron was named on of the 5 most influential people in media in the past 25 years

There are other benefits of Advertising beyond immediate ROAS Neutralizing effect: No business competes in a vacuum. Maintaining a current customer base and revenues against competitive advertising “conquesting” designed to take what you’ve got Maintain share of mind: Share of mind= share of market Share of mind is accomplished by maintaining a marketing share of voice Long term Brand building—establish a competitive “firewall” Long term positive impact of “legacy” advertising- advertising just keeps giving Impacts other non ROAS metrics necessary for short and long term success Awareness- only thing that grows in the dark is a mushroom. Business/revenue doesn’t Intent Consideration- can’t buy from if your not in their consideration set Affinity Advocacy- word-of-mouth- best type of advertising

Studies conducted while at Katz: Advertisers see lifts in 5 key branding metrics when Radio is used in marketing campaigns Average % Lift: Radio-targeted consumers vs. Control groups Awareness + 17% Consideration + 23% Purchase Intent + 19% Affinity / Likeability + 38% Advocacy + 37% Source: Radio Advertising Effectiveness Program, Ipsos OTX, 2010-13; conducted for Katz Marketing Solutions.

Creative can account for as much as 75% of a campaign’s impact Creative can make 100 GRPs perform like 200 GRPs or 50 GRPs Likeable Emotive Factual Informative Motivating Differentiating Average of Top Quintile 56% 45% 72% 69% 42% 43% Average of Bottom Quintile 26% 15% 25% 20% 13% 14%   Buy Believable Soft Sell Share Talking 2 Me Entertaining Average of top ads 70% 85% 50% 58% 75% Average of Bottom Ads 27% 52% 19% 41% 35% To be read: the top ranked commercials on average were ranked as likeable by 56% of the respondents vs the bottom ranked averaging 26%. “The most expensive cost in advertising is the cost of running creative that doesn’t work.” - Erwin Ephron Creative- Yes, it's a subjective call that can be argued. But listen to locally-produced commercials today and you don't need to compare them to anything to say they're bad If you don't change the message on a format by format basis, then your message plays to the lowest common denominator, which defeats the purpose of being targeted with your media vehicles  

Need some world class creative ideas? Good artists borrow, great ones steal Go to: www.radiomercuryawards.com and search archives - you can search by category, advertiser, year, etc.

Practice discussing and presenting this info. Any questions, just call Summary $17:1 ROAS Department stores $17: ROAS Retailers- Key local account $14:1 Telecom Beats TV Other studies on the way Additional benefit of Advertising: Neutralizing conquesting, SOV, SOM, branding Dramatically impact 5 key brand health metrics- awareness, intent, consideration Practice discussing and presenting this info. Any questions, just call

bob@uppingthevolume.com Cell: 203-585-7815 Questions bob@uppingthevolume.com Cell: 203-585-7815