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Dynamic Logic

Best Practices in Cross-Media Advertising Measurement

Return on Marketing Investment 2005

The New Era of Accountable Marketing

Miami, FL

January 2005

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Outline

1. Background On Dynamic Logic2. Trends That Can No Longer Be Ignored3. CrossMedia Measurement Overview4. Media Synergy Case Studies

• General Motors XUV• Levi’s• Quaker Oats• Tylenol

5. Cost Effectiveness Case Study• Philips

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Dynamic Logic Background

• Founded in 1999

– New York, London, San Francisco, Los Angeles, Chicago

• Independent market research company

– Focus on measuring marketing effectiveness

• We have conducted studies for:

– 47 of the top 50 U.S. advertisers

– Top US Agencies like Carat, FCB, JWT and Ogilvy

– Major Media Companies like Dow Jones, AOL, Disney, Viacom, Yahoo!,Meredith

– Millions of surveys and over 1600 studies in all as of Dec 2004

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Dynamic Logic CrossMedia Experience

• We have conducted more than 75 CrossMedia studies to date for leadingU.S. and European brands. Including 8 of the Top 10 Advertisers.

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What People are Saying about DL Research

"Developing CrossMedia research tools and insights isthe number one research issue among advertiserstoday", said Bob Barocci, president of the ARF, "andwe support unequivocally the intelligent work ofDynamic Logic, a premier marketing effectivenessresearch company, who has done more crossmediastudies than any other company."(September 2004)

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Trends

'Frasier' Finale: Amid Nostalgia, A Product Plug

“May 12, 2003. In tomorrow night's finalepisode of the NBC sitcom "Frasier," oneguest star is crisp, sweet and inanimate-- and symbolizes the lengths to whichmarketers and media are going thesedays to capture consumers' attention.”

TV

Magazine (TV Guide)

Online (Email)

http://online.wsj.com/article/0,,SB108432262147108863-email,00.html

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65%

73%

9%

39%38%

77%

45%

68%

0%

20%

40%

60%

80%

100%

Morning Daytime I Daytime II Early Fringe Early News Prime Time Late Fringe Late NightInternet TV Magazines Newspapers Radio

Total Media Audience By DaypartAt Work Users

Media Consumption

Source: Online Publishers Association/MBIQ Media Consumption Study, May 2003Q. M1-2/M2-2/M2-5b/M3-2/M4-2: How much time did you spend on the following <media> yesterday between <daypart>? Base: At Work (1053)

RadioInternet TelevisionTelevision NewspaperMagazines

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Multi-Tasking

70% of consumers, at one time or another, use mediasimultaneously:

Radio: 57.3% simultaneously go online, 46.9% read newspaper and17.7% watch TV.

TV: 74.2% read the newspaper simultaneously, 66.2% go online

Newspapers: 52.4% watch TV and 49.6% listen to radio

Online: When waiting to download something 52.1% listen to radio,61.8% watch TV, and 20.2% read the newspaper.

Source: The Media Center and BIGresearch Oct 2003 Survey, n=13,414

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Does this look like you?

TV

Radio

Magazine

Online

Media PlanningOrganizational Structure

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Media and Marketing Trends We Can No Longer Ignore

• Media Fragmentation

• Multi-tasking

• Emergence of digital and “new” media

• Clutter and consumer push back

• Time-shifting and commercial avoidanceAnd…• The “A” word

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Demand For Branding Measurement

"We need a method to determine the effectiveness of our efforts. We need to measure

how effective our advertising is at influencing purchase intent -- the ultimate goal.”

“We must find a way of measuring holistic marketing...I see e-mails every week on better

decisions we're making because of [marketing-mix modeling]," Mr. Stengel said. But while

marketing mix does a ‘great job of refining what you know’ he notes that the analysis still

primarily looks at how each part of the mix works independently rather than at

optimizing how all parts work best together”.

Jim Stengel, Global Chief Marketing Officer, Procter & Gamble

Source: Wall Street Journal, February 12, 2004

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Cross Media and Holistic Measurement Today: MSS and CES

• Media Synergy Studies

– What was the branding effect of the various mediacomponents? How well did they work together?

– How did that differ across objectives and audiences?

– Recommendations for improving integrated campaigns

• Cost Effectiveness Studies includes the above, plus:

– What was the ROI in various media and in combination?

• Cost per impact

• Return on Marketing Investment

– Recommendations for optimizing budget allocation

MSS: Synergy Focus

CES: Cost and Optimization Focus

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The Hierarchy of Advertising Effects

Brand AwarenessMeasures the level of familiarity respondents have with

the brand (aided and unaided)

Message AssociationMeasures the extent to which respondents can match the

message in the creative to the brand

Brand FavorabilityMeasures the extent to which respondents have a

positive or favorable opinion of the brand

How do you measurewhere consumers are

in the continuum?

First, consumersneed to be awareof a brand

Then they need tounderstand thevalue to them, orwhat the productis used for

The consumerforms an opinionabout the brand

Finally, the consumerconsiders whether he orshe is likely to consumeor use the brand

1.

2.

3.

4.

Purchase IntentMeasures the likelihood of

respondents to purchase the brandin the future

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CrossMedia Methodology

• Respondents are recruited via web intercepts, reflective of the audience reachedby the integrated campaign

– Recruitment can be supplemented using phone interviews and subscriber lists

• Cross-media measurement is based on opportunity to see (OTS) advertising– Reported media consumption data determines offline exposure opportunity

– When Internet advertising is a component, electronic data is used as OTS measure

• Comparison of brand attitudes of different respondent groups (cells) is made todetermine impact of advertising campaign

• Two Types:

– Media Synergy Studies (focus on the media, audience, and combinations)

– Cost Effectiveness Studies (cost and ROI focus, media mix)

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Cross Media Methodology: Schematic

Control

Magazine-Only

Web-Only

NO

MagazineExposure

Opportunity

Web+Magazine

NO

NO

Web ExposureOpportunity

NO

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Cell Assignment/Analysis

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General Motors – Envoy XUV

Sample of Online Creative Units Sample of Magazine Creative Units

GM was promoting the introduction of a new model of SUV, theEnvoy “XUV” which has a special retractable roof. GM ran amultimedia campaign with TV, Magazine, Online and Out of HomeThere was a relatively heavy and targeted magazine schedule whencompared to the other media.

Because TV ran first and with a relatively heavy weight ouranalysis focused on the combinations of other media in additionto TV.

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GM Envoy XUV Case Study – Sample Learning

Aided Brand AwarenessHeavy TV Viewers

(25+ hrs/week)Index Vs. Control

Control=100

117

136

TV Only TV + Online

Index Vs. Control

Control=100

136 139

TV Only TV + Online

+16% +2%

Aided Brand AwarenessLight TV Viewers

(< 7 hrs/week)

It was somewhat surprising that the impact of OnlineAdvertising seemed to impact Heavy TV viewers (over 25 hoursper week) more than Light TV viewers (less than 7 hours perweek)

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GM Envoy XUV - Persuasion Metrics (Magazines)

Brand FavourabilityTotal SampleIndex Vs. Control

Control=100

154 163 171 169

TV Only TV +Online

TV +Magazine

TV +Magazine +

Online

Index Vs. Control

Control=100

159146

180 192

TV Only TV +Online

TV +Magazine

TV +Magazine +

Online

Purchase ConsiderationTotal Sample

Brand Favorability, Purchase Consideration and Brand Attributesimpacted the most by the addition of Magazines in the mix.While we saw that all combinations of media impacted Brand Favorabilitypositively – the biggest increase was seen by those exposed to TV and Magazine.In terms of purchase consideration, Magazine had the biggest impact whencombined with TV – however even in this case the biggest lift still came fromthose exposed to all three media.

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Levi’s Case Study – Excerpt from ESOMAR, Geneva 2004

In the Summer of 2003 Levi’s Celebrated it’s 150th birthdaywith the launch of “Levi’s Type 1 Jeans”. Levi’s incorporatedtelevision, cinema, print and online (Yahoo!) to attract the 13-24 year old target.

The media elements included:Network TV: That 70’s Show, Friends, Willand Grace, and Saturday Night Live.Cable: MTV, Fox Sports, and ESPN.

Magazines: Cosmopolitan, FHM, YM, Maximand Vibe.Cinema: Nationwide ran prior to featurefilms.Online: Yahoo! Network

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Levi’s Various Analysis Matrices

Control

TV + Print

NO NO

TV, Print+ Online

NO

NO

Cinema only

Online only

Cinema+Online

Control NO NO

TV + Print+ Cinema

TV, Print+Cinema+ Online

NO NO

NO NO

Cinema/Online

TV+Print/OnlineTV+Print+Cinema/Online

TV (with andwithout otheroffline)

TV +Online

Control NO NO

NO

TV/Online

Control

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Levi’s TV+Print+Online: Awareness Metrics

Message Association Advertising Awareness

10.4%

15.5%A19.6%AB

0%

5%

10%

15%

20%

25%

30%

Control TV+Print TV+Print+Online

61.6%72.2%A 74.7%A

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Control TV+Print TV+Print+Online

• Online advertising provided significant value in getting respondents to link thebrand with the message

• While TV+Print created a substantial increase in Ad Awareness; online did notadd significant incremental value to this combination of media

A/B/C = Statistically significant difference at a 90% confidencelevel

n=1210

A

n=478B

n=688C

n=1210

A

n=478B

n=688C

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Levi’s Cinema/Online: Female Target Audience

A/B/C = Statistically significant difference at a 90% confidencelevel

Purchase Intent (Females 18-24)

51.7% 48.0% 46.6%

60.4%ABC

0%

10%

20%

30%

40%

50%

60%

70%

80%

Control Cinema Only Online only Cinema+Onlinen= 497

An=100

Bn=296

Cn=106

D

In this example when looking at the female 18-24 target audienceit appears that exposure to either cinema or online alone has littleimpact, but the combination of the two created the desired effect,lifting purchase intent by 8.7 points (17% lift) .

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Quaker Oats Case Study – Excerpt from ESOMAR, Geneva 2004

Online

MagazineIn August 2003, Quaker launched the Oatmeal BreakfastSquares – the first no bowl oatmeal. It unveiled a multi-platform program to present this product as thenutritious, hand held oatmeal ideal for the on-the-golifestyle. Primarily targeting 35-54 year old adults.

The media elements included:Network TV: Third Watch, West Wing,Friends, Alias,Today Show, and GoodMorning America.Cable: Food Network, History Channel, TVLand, Sci-Fi, American Movie Classics.Magazines: Good Housekeeping, Redbook,Southern Living, Newsweek, Time, Men’sJournal, and Jet.Online: Yahoo! Network

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Quaker: Awareness Metrics

26% 24%

33%

0%

20%

40%

60%

80%

Pre-Wave TV/Mag TV/Mag/Online

Unaided Brand Awareness (Quaker)

• Combination of all 3 media created strongest brand awarenessmetrics

• After exposure to all three media, average Brand Awareness wasat 76%

58%67%

76%

0%

20%

40%

60%

80%

Pre-Wave TV/Mag TV/Mag/Online

Aided Brand Awareness

n=2082A

n=483B

n=969C

n=2082A

n=483B

n=969C

AB

AB

A

A/B/C = Statistically significant difference at a 90% confidence level

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Quaker - Target Audience: Cumulative Effect Of All MediaPurchase Intent

• As with the awareness scores, online created a sizable increasePurchase Intent after exposure for those who have purchased acereal bar within the last 3 months.

43% 45%

66%

0%

20%

40%

60%

80%

Pre-Wave TV/Mag TV/Mag/Online

Purchase Intent

n=396A

n=286C

n=151B

AB

A/B/C = Statistically significant difference at a 90% confidence level*Purchased Cereal/Breakfast bar in the past 3 months

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ESPN/J&J Case Study – Tylenol 8 Hour and the Weekend Warrior

In May 2003, Tylenol launched a new productextension, Tylenol 8 Hour specially formulated forthe extended relief of aches and strains associatedwith active pains. They partnered with ESPN toreach the critical “Weekend Warriors” men 18-34who exercise.

The media elements included:

ESPN Television NetworksESPN.com

ESPN the MagazineESPN Radio

28* Control = 501, ESPNMedia = 243

ESPN/Tylenol 8 Hour Case Study: Overall Results

48.9

83.1

20.6

63.4

3.6

37.4

4.6

47.7

27.2

56.8

39.5

60.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Aided Brand

Awareness

Online Ad

Awareness

Message

Association

Sponsorship

Association

Brand

Favorability

Purchase

Consideration

/ Intent

Control ESPN Media Cumulative EffectPe

rcen

tage

%

This particular study highlights the potential benefits of working with a dedicatedmedia partner to pull together a program of various assets or channels.

Cumulative meansat least oneexposure to eachESPN media: TV,Magazine, Radio andOnline.Minimal freq. = 4

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Cost Efficiency Calculation

Spend in Medium or Media Combination

Branding Effect x Target ReachCost PerPerson =

• Branding Effect = Exposed minus Unexposed brand scores

• Target Reach = Reach X Target market size

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Web5%

Radio10%

Print15%

TV70%

Media Mix Recommendations:Overall Spend and ROI Based Media Decisions

Web5%

Radio5%

Print8%

TV82%

Campaign Allocation Recommended Allocation

Recommendations are provided for differentobjectives and target audiences

HolisticMeasurement:

ROMI, BCPP

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Dependent Variables: Branding Metrics

$1.96$2.36$2.86$2.97$4.45Purchase Consideration

$2.29

$2.59

$1.29

$1.85

TV +Online

$2.18

$2.53

$3.58

$3.83

Print

$2.56

$1.85

$2.29

$2.62

Online

$1.57$1.32Aided Brand Awareness

$1.93$1.65Unaided Brand Awareness

$2.01$2.62Brand Favorability

$2.17$3.26Message Association

TV + Online+Print

TV

$1.93$2.08$3.00$2.46$2.66Average per Medium$2.19$2.55$2.45$3.22$2.32Target Audience A

$2.66$2.09$4.71$1.96$2.45Target Audience B

• Impact of various combinations of media on traditionalbranding measures

• This data can complement brand tracking and media mixmodeling

Demonstration Data

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Brand Metrics by Media Channel

A/B/C/D/E/F/G = Statistically significant difference at a 90% confidence level

An=497

Bn=227

Cn=173

Dn=224

En=292

Fn=523

Gn=354

Pre-Control Online Print TV TV + Print TV + Online TV + Print + Online

0%

20%

40%

60%

80%

100%

39% 41%35%

40%

51% 51%

59%ABCD ABCD

A-DF

Awareness by Media ExposureQuestion: Which of the following brands have you heard ofbefore?

• Exposure to two or more media was necessary to produce increases in “AwarenessA” Metric

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Results: Cost Per Person $$$Dollars Indexed to Average of Media Sums (100)

• Television was generally ineffective when working by itself

• Print advertising was extremely cost-effective in this campaign, alone and in combination

• Online advertising alone was not cost efficient, but delivered good results when workingwith other media

•Combination of all media (TV+Print+Online) was cost efficient and had highest overallreach

61

163

44

193

41

0 100 200

TV+Print+Online

TV+Online

TV+Print

Online

Print

Average per Medium

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CrossMedia Learning: Magazines, Television, and Online

Effect of Medium on Brand MetricsAverage Percentage Point Increase over Unexposed Baseline in 8 CrossMedia Campaigns

Average Delta Increase (Percentage Points)

4.41.7 2.6

6.1

6.0

3.1

5.1

11.1

2.8

3.37.2

11.0

5.5

4.2

1.3

0

10

20

30

Aided BrandAwareness

Aided AdAwareness

MessageAssociation

BrandFavorability

Purchase Intent/Consideration

Avg

Del

ta

Magazine

Internet

TV

Excerpt: Good News for Magazines - By Wayne Eadie, SVP Research for MPA

“Importantly, they show that...magazines increase advertising ROI. The Dynamic Logic results supportprior studies that speak to how magazines add value to the mix, specifically in their ability toinfluence purchase behavior.”

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Think of the CrossMedia Challenge Like a Cake

The Right Ingredients:

Don’t Guarantee the Best Results:

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You need the right MEDIA PROPORTIONS:

1 _ cups 2 1 stick 2 cups 3 oz. 1 tsp. 2 tsp. 1 cup

MEASUREMENT makes it work!

Think of the CrossMedia Challenge Like a Cake

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Thank You!

Tom DeierleinChief Operating Officer

tom@dynamiclogic.com212-844-3732

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WIFM: Measurement Breeds Success

“Companies that measure marketing results increasedtheir annual marketing budgets an average 11.2% thisyear, while companies that don’t measure marketingresults increased their budgets by only 6%.”

B to B Magazine, March 8, 2004. Source: Black Friars Communications (n=100 Executives surveyed)

LESSON: Those marketing professionals that measuretheir efforts get budget increases nearly DOUBLEtheir counterparts who do not regularly measuremarketing effectiveness.