1. Key Category Trends Jon Swallen TNS Media Intelligence Sept. 6, 2007

2. 2 TNS Media Intelligence What We Do Leading provider of strategic advertising and marketing information to U.S. advertisers, agencies and media properties Competitive intelligence across 20 media Monitoring the industry: 2.8 million brands $150 billion in ad expenditures 190 million ad occurrences (400,000 occurrences collected every day)

3. 3 Today’s Agenda An economic focus centered on ad expenditures Spending levels Media allocation – where the money is going Select, high-value categories Key segments and advertisers Categories AutomotiveRestaurants Financial ServiceMotion Pictures TelecomDepartment Stores

4. 4 Methodology All of the ad expenditure figures were pulled from the TNS MI database Internet spending reflects display advertising only – search not included For 2007, actual figures from January-May were used The notation “2007 (e)” An estimate developed by applying Jan-May 2007 growth rates to year-end 2006 actuals

5. 5 Automotive

6. 6 Automotive Category Definition INCLUDED Passenger cars and light trucks Manufacturers, dealer associations, local dealers EXCLUDED Motorcycles, mobile homes and RVs Commercial vehicles Aftermarket accessories, equipment, services

7. 7 Background Stagnant sales Domestic manufacturers losing market share Attempting to reduce cost structure 7 consecutive quarters of declining advertising spend Falling ratio of ad spend to unit sales Still the # 1 ad category – 11% of total measured ad spend

8. 8 Auto Advertising A 3 Year Slump $1.72 -3.9% -6.3% -8.0% +9.1% Source: TNS Media Intelligence

9. 9 All Segments Are In Decline Source: TNS Media Intelligence

10. 10 Total Nameplate Spending % Change: Jan-May 2007 vs. Year Ago Source: TNS Media Intelligence

11. 11 Where Is The Money Going? Big Losers Newspaper spending off 35% from 2005 levels Smaller Losers (comparatively) National TV losses are widening Spot TV falling back in ‘07 Magazine spending has stabilized after the 2005-06 cutbacks Radio - a steadily leaking bucket Winners Internet display spending up 177% from 2005 levels

12. 12 MediumFactory Dealer Associations Local Dealers National TV+5.9------- Spot TV(-1.0)+5.0+3.5 Newspapers(-6.2)(-5.3)(-6.5) Magazines(-1.8)--- Internet+3.10.8+1.7 Radio(-0.2)(-1.3)+0.6 Share of Spend: Scorecard Point Change: 2007 (e) vs. 2005 Source: TNS Media Intelligence

13. 13 The Media Mix Has Shifted $19.16 Billion 32.2% 25.9% 24.8% 25.7% 25.6% 10.1% 21.8% 10.8% $16.51 Billion (est) Source: TNS Media Intelligence

14. 14 Spot TV – Gaining Dealer Share $5.62 Billion 68.6% 62.1% 16.4% 20.0% 11.8% 11.3% $4.72 Billion (est) Source: TNS Media Intelligence

15. 15 Recap A bloody mess A $3 billion hit Newspapers and TV had the most to lose…..and did It can’t get any worse…..can it?

16. Financial

17. 17 Financial Advertising - $11.93 billion in 2006 Up 43% From 2003 +28.5% +92.7% +39.0% +27.7% -2.5% +42.7% Source: TNS Media Intelligence

18. 18 Auto Insurance Background Fragmentation Concentration State Farm + Allstate + Progressive + GEICO = 43% share of market Short purchase cycle $15-25 billion in churn annually A price-driven marketplace Advertising’s role: build/maintain awareness and recognition

19. 19 Auto Insurance Advertising Nearly Trebled Since 2003 +40.3% +27.4% +10.3% +45.0% Source: TNS Media Intelligence

20. 20 Category Spending Is Concentrated 2003 Ad $ (millions) 2006 Ad $ (millions) 2003 % Share 2006 % Share TOTAL$600$1,557100.0% Top 4 Advtsrs$494$1,14082.3%73.2% Remainder$106$41717.7%26.8% Source: TNS Media Intelligence

21. 21 Spending Concentrated Among Top 4 Companies 2003 Ad $ (millions) 2006 Ad $ (millions) % Change $184$497+ 170% $149$257+72% $109$234+116% $52$152+89% TOTAL$494$1,140+131% Source: TNS Media Intelligence

22. 22 Growth Continuing Into 2007 January-May YTD % Change vs. Prior Year +16.7% +24.6% -16.4% +0.7% +7.3% Source: TNS Media Intelligence

23. 23 Where Is The Money Going? TV share of category spend holding steady at 75-80% Split between national and spot TV varies by company Radio has 8-10% share Internet display has 3-5% share Would be considerably higher if search were measured and included

24. 24 $1.14 billion in spend $417 million in spend 61.3% 15.0% 48.8% 35.5% Source: TNS Media Intelligence

25. 25 Top Brands Pursue Different Media Mixes 2006 vs. 2003 Allstate  Winner: National TV (+20 share points)  Losers: Magazines (-15 pts) and Spot TV (-9 pts) GEICO  Most diversified mix  National TV dollars moved to spot TV and radio Progressive  Dollars shifting from national TV to spot broadcast  Deep spot market list State Farm  National TV share has declined from 90% to 74%  Internet display share has risen from 1% to 14%

26. 26 Recap Auto insurance hot category – but presently running a bit cooler 30% growth rates are not sustainable Fierce competition among 4 national brands – which is sustainable Allstate, GEICO, Progressive, State Farm National TV still the preferred medium Allocations beginning to evolve as top brands seek to maintain consumer awareness and achieve competitive differentiation

27. Telecommunications

28. 28 Background Shifting terrain Mergers and consolidation Convergence and competition Wireless penetration growth is subsiding

29. 29 A Downturn in 2007 2006 Levels Inflated by AT&T $1.72 +1.5% +9.9% -5.6% +12.3% Source: TNS Media Intelligence

30. 30 Segment Definitions Wireless Telephony  All wireless services Wired Telephony  Copper wire & VOIP  Local and long distance ISP  Internet service providers TV Service  All TV services  Cable, satellite or phone company Bundles  Packaged offers of voice, video and ISP All Other  Equipment, directories, corporate ads, et al

31. 31 Wireless Still Advancing Other Segments Lagging -35.8% -3.9% -29.8% -37.4% +11.7% +114.5% 0 500 1,000 1,500 2,000 2,500 $ Millions WirelessWiredTV SvcISPBundlesOther Jan-May 2006Jan-May 2007 Source: TNS Media Intelligence

32. 32 20052006 Jan-May 2007 Ad Spend ($MM)1,6632,184866 % Change(-19.3%)31.4%(-13.6%) Ad Spend ($MM)1,5931,769793 % Change8.1%11.1%13.1% Ad Spend ($MM)1,0901,140535 % Change(-2.4%)4.6%18.8% Source: TNS Media Intelligence

33. 33 20052006 Jan-May 2007 Comcast+16.3%+19.7%+45.5% Time Warner+7.6%(-22.9%)(-56.9%) DirecTV +8.5%+6.7%+5.9% Echostar +43.4%+35.9%(-37.0%) Alltel +4.4%+29.9%+56.0% Qwest (-22.7%)2.3%(-20.6%) Source: TNS Media Intelligence

34. 34 Where Is The Money Going? Increased category spend has been disproportionately allocated towards national TV, leading to share gains Newspaper dollars have been flat, leading to share loss Internet display budgets holding steady at 8% of category spend Expanding faster among the Top 3 advertisers Spot TV spending has been comparatively more robust among the mid-size advertisers

35. 35 Source: TNS Media Intelligence

36. 36 % of Budget Allocated To Major Media Select Telecom Segments: Jan-May 2007 SegmentNat’l TV Spot TV NewspRadioInternet Wireless42.0%31.4% Wireline31.4%17.1%22.8% TV Services29.6%17.6%18.6%16.8% ISP29.4%39.2%17.8% Source: TNS Media Intelligence

37. 37 National Chain Restaurants

38. 38 Background A slow-growth, highly competitive industry Industry sales growing at low single-digit rates More than 350 advertised brands in 2006 Fresh concepts and new product offerings Health and nutrition

39. 39 National Restaurants Modest Growth Rate $1.72 +5.8% +4.4% +1.5% +5.9% Source: TNS Media Intelligence

40. 40 National Restaurants 100% = $4.75 Billion Source: TNS Media Intelligence

41. 41 Top 10 Advertisers 2006 Rankings In Parentheses Ad Spend Trending Up Ad Spend Trending Flat/Down In Limbo McDonalds (1)Burger King (4)Wendy’s (3) Subway (2)KFC (6)Applebees (8) Taco Bell (5)Pizza Hut (7) Dominos (9) Chili’s (10)

42. 42 20052006 Jan-May 2007 Ad Spend ($MM)672.4707.3307.9 % Change+9.7%+5.2%+7.2% Ad Spend ($MM)319.8353.5169.2 % Change+0.7%+10.6%+21.3% Ad Spend ($MM)231.6260.0109.4 % Change+9.8%+12.3%+6.2% Increasing Budgets Source: TNS Media Intelligence

43. 43 Where Is The Money Going? TV the medium of choice for all the top chains National TV extending its share-of-market lead over Spot TV QSR and Casual Dining have different splits between National and Spot TV Radio share holding steady at around 9-10% But slipping within some segments Other media are minor players in this category

44. 44 Spending Allocation Casual Dining vs. QSR $1.07 Billion (est) $3.00 Billion (est) Source: TNS Media Intelligence

45. 45 Share of Budget: National vs. Spot TV Select Advertisers: Jan-May 2007 Advertiser % of Spend on National TV % of Spend on Spot TV McDonald’s52.2%20.9% Burger King70.7%3.3% Wendy’s67.2%13.8% Source: TNS Media Intelligence

46. 46 Share of Budget: National vs. Spot TV Select Advertisers: Jan-May 2007 Advertiser % of Spend on National TV % of Spend on Spot TV Olive Garden92.6%6.6% Outback Steakhouse50.4%14.2% Denny’s84.9%8.9% Source: TNS Media Intelligence

47. 47 Recap A $4.8 billion category dominated by TV advertising Budgets at most of the large chains are currently flat or down Large budget QSRs devote smaller share of spend to national TV than the casual dining restaurants with their mid-size budgets

48. Motion Pictures

49. 49 Background Welcome to the digital revolution Traditional revenue streams being challenged Can Hollywood adapt? Advertising tactics largely unchanged Reach early, frequency late Thursday night fever

50. 50 2004200520062007 YTD* Ad Spend ($Bn)3.883.933.921.63 % Change+0.7%+1.3%(-0.3%)+3.5% Box Office ($Bn)9.428.849.216.45 % Change+2.5%(-6.1%)+4.2%+6.8% Median Ad Budget ($ millions) 12.9813.6710.65--- * YTD periods: Jan 1- May 31 for ad spend; Jan 1 – Aug 16 for box office Ad Spend Lagging Box Office

51. 51 Where’s The Money Going? National TV  Dollars increasing at 3-6% per year  Share of spend from 48% to 54% since 2004 Newspapers  Down $240 million (-19%) since ‘04  Movie location and time info available elsewhere Spot TV  Dollars and share trending flat  50% still goes to the Top 5 DMAs Internet Display  Despite gains, still <4% of spend  Next play: broad- band video?

52. Department Stores

53. 53 Background Industry sales in decline since 2000 Mergers and consolidation Ad budgets moving towards national media

54. 54 Source: U.S. Census Bureau

55. 55 Department Stores Ad Spending Also Stagnant $1.72 -3.5% +0.8% -3.5% +2.7% Source: TNS Media Intelligence

56. 56 Company 2006 Ad Spend ($ Millions) % Share of Category Spend % Change in Spend vs. ‘05 Macy’s1,06523.9%(-4.2%) Target64414.4%+10.0% Sears Holding58913.2%(-1.9%) Wal-Mart45610.2%(-10.0%) Kohl’s4359.8%+8.3% JC Penney4309.6%+8.7% 6 Holding Companies – 80% Share of Spend Source: TNS Media Intelligence

57. 57 Parent Company 20032007 (e)% Change Ad Spend ($MM)466679+45.5% # Stores1,2251,502+22.6% Ad Spend ($MM)308460+49.4% # Stores542824+52.0% Expansion…. Sources: TNS Media Intelligence; Company annual reports

58. 58 Parent Company 20032007 (e)% Change Ad Spend ($MM)1,2111,056(-12.8%) # Stores847858+1.2%) Ad Spend ($MM)718529(-26.4%) # Stores2,3822,323(-2.5%) …Contraction Note: Macy’s data are pro-forma and encompass the continuing operations of the former Federated and May companies.. Sears data are pro-forma and include the Sears and K-Mart divisions. Sources: TNS Media Intelligence; Company annual reports

59. 59 Where Is The Money Going? Newspapers maintaining a plurality share of spend – but it’s shrinking Money is shifting into national media – both TV and magazines Macy’s; Target; Kohl’s Internet display still accounts for less than 5% of budgets

60. 60 Kmart-Sears merger: March 2005 Federated-May merger: Aug 2005 Sources: TNS Media Intelligence;

61. 61 Recap Anemic performance Mergers lead to consolidation of brands and ad budgets Pronounced shift from local media to national media

62. 62 Wrap Up

63. 63 Category 2006 Ad Spend ($ Billions) 2007 % Change: (Jan-May) Automotive$ 17.95(-6.3%) Auto Insurance$1.56+10.3% Telecom$ 9.18(-5.6%) Nat’l Restaurants$ 4.75+1.5% Motion Pictures$ 3.92+3.5% Dept. Stores$ 4.46(-3.5%) Where The Money Is Source: TNS Media Intelligence