GREATER GAINS FROM DIGITAL CAMPAIGNS

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4151 Middlefield Road, Palo Alto, CA 94303 T: (650)328-5555 F: (650)328-5016 www.cmocouncil.org © CMO Council – January, 2011

GREATER GAINS FROM DIGITAL CAMPAIGNS™

Optimizing the Value of Online Advertising Spend and Digital Media Channel

Performance In Furthering Customer Acquisition, Engagement and Conversion

"The next five years will hold more change for the advertising industry than the previous 50 did. Increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked…{sic} Traditional advertising players, broadcasters, distributors and advertising agencies – may get squeezed unless they can successfully implement consumer, business model and business design innovation."

Excerpt from a recent IBM Global Media & Entertainment Business Services paper titled, "The End of Advertising as We Know It"

Introducing the CMO Council

The Chief Marketing Officer (CMO) Council (www.cmocouncil.org) is a peer-powered network that has become one of the most influential and prolific authority leadership channels for strategic marketing decision makers in the world. Membership in the Council numbers exceeds 6,000 in over 110 countries worldwide. These individuals collectively control more than $200 billion in annual marketing

expenditures. Regional membership groups operate in North America, Europe, Asia Pacific, India, the Middle East, Africa and Latin America.

Founded in 2001, the CMO Council is a well-established channel of insight, access and influence. More than 60,000 marketers are in the Council’s database worldwide. Its web site attracts some 15,000 unique visitors and 30,000 page views a month. Nearly 20,000 downloads of CMO Council reports and studies were recorded in 2010. More than 250 media channels and news outlets sourced CMO Council content and reports in 2010. Its highly valued Marketing Magnified eJournal has a wide circulation within business and academia and the Council’s content syndication and affiliate network encompasses more than 2,000 different functional, vertical and geographic marketing associations; business schools, online

communities; news groups; media channels, and blogs

The Council has seven regional advisory boards with more than 300 active member executives who bring reality-based insight and experience to the leadership of the Council. The CMO Council also operates a number of sub-groups including the Digital Marketing Performance Institution (DMPI), Coalition to Leverage and Optimize Sales Effectiveness (CLOSE – www.closebiz.org), Customer Experience Board, Marketing Supply Chain Institute, GeoBranding Center, Content ROI Center, and the Client - Agency Effectiveness Forum. Among the thought leadership campaigns and resources services to be activated in 2011 are:

 Creative Advertising Performance Index with Ace Metrix (Television Commercials)  Keeping a Closer Eye on Content ROI with Open Text

 Scorecard and Benchmarking of Client – Agency Effectiveness with Decideware

 Interactive Assessment Tool for Mapping + Tracking the Optimized Marketing Supply Chain  Activating and Amplifying Advocacy with Zuberance and the Word-of-Mouth Marketing Association

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4151 Middlefield Road, Palo Alto, CA 94303 T: (650)328-5555 F: (650)328-5016 www.cmocouncil.org

Market Environment

According to The McKinsey Quarterly, “the rapid growth of online advertising hides a serious challenge: the digital world has developed faster than the tools needed to measure it. This problem has made it difficult for marketers to fully exploit the Web’s promise as the most targeted and measurable medium in the history of marketing…Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digital world’s full power.”

The management journal went on to state that “unless this problem is addressed, the inability to make accurate measurements of digital advertising’s effectiveness across channels and consumer touch points will continue to promote the misallocation of media budgets and to impede the industry’s growth.” Studies by McKinsey show that companies introducing rigorous measurement techniques report a higher level of satisfaction with digital marketing. The consulting firm also notes that over half of respondents to its online digital marketing survey of 340 senior marketers are not satisfied with the current process of allocation and measurement and are mostly using qualitative (subjective), not quantitative techniques.

Facts and stats from diverse industry research studies also highlight evolving areas of marketing spend across an increasingly fragmented, complex and globally distributed digital media environment:

 Worldwide Internet advertising expenditures are expected to surpass $106 billion in 2011, according to IDC’s Digital Marketplace Model and Forecast. The U.S. will account for the largest share of spend with $45 billion projected this year.

 This covers both wired and mobile and includes search engine marketing, online display marketing, classified, email marketing, lead generation, online video marketing, sponsorships and emerging channels.

 According to Kantar Media Intelligence, Internet display advertising had the second largest growth rate among media sectors (7.7 percent) during the first nine months of 2010.  comScore, Inc. reports that U.S. Internet users received a record 1.3 trillion display ads

during the third quarter of 2010, a 22 percent increase versus year ago. The average Internet user was delivered more than 6,000 display ads over the course of one calendar quarter.  For the first time, spending on digital/online advertising and marketing will overtake print in

2010, according to new projections from Outsell, Inc. In an industry crossover event, companies will spend $119.6 billion on online and digital strategies, from search engine keywords to webinars, while committing $111.5 billion to print methods such as newspaper and magazine ads.

 According to TNS Media Intelligence and AdAge, top categories for Internet marketing and advertising are financial services, telco/ISPs, retail, automotive, general services, media, travel/hospitality, technology, education, health care and pharmaceuticals, entertainment, insurance, food and beverage, personal care, toys and games, real estate and home goods.  Online video ads generated more than 167 million eyeballs in 2009, reports eMarketer, and

online video ad spend exceeds $750 million says the IAB/PwC. Forrester Research estimates online video marketing investments approached $1.9 billion in 2009.

 According to a study by the Pew Research Center in 2010, 81 percent of online news users “do not mind” online advertising. However 77 percent said they tend to ignore ads with 42 percent saying they “never” click on them and 35 percent claiming they “hardly ever” click on ads.

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Introducing the Digital Marketing Performance Institute (DMPI)

Given the significant shift and re-allocation of marketing dollars into interactive digital media channels, the CMO Council has up a dedicated research center focused on measuring and tracking the effectiveness, relevance and value of online marketing programs and spend. It will examine and advocate the need for more unified and integrated approaches to managing and optimizing the fragmented interactive marketing discipline, especially across leading vertical markets. These include travel and hospitality, health care, financial services, retail, CE/tech, media & entertainment, CPG, telco/ISP, automotive, etc.

Authority leadership and content aggregation programs by the Digital Marketing Performance Institute (DMPI) will drive best practice adoption; audit and assess competencies and proficiencies; establish measurement models, metrics and techniques; evaluate enabling platforms, solutions and technologies; and help marketers increase visibility, compliance, accountability and ROI.

The institute will aggregate content from multiple sources, advance best practice adoption, develop competency and proficiency audits, advocate centers of excellence models, and help with the

specification and uptake of digital marketing platforms and disciplines to better manage and quantify the value of digital media spend. The DMPI will also seek further clarity on digital advertising debates, disparities and dilemmas highlighted by vested interest studies.

For example, a new report released by the Online Publishers Association (OPA) claims that advertising effectiveness scores by OPA member sites are numerically higher than on other Web sites, portals or ad networks. OPA says its member sites are consistently more effective at raising awareness, creating message association, generating brand favorability and driving purchase compared to other destinations, sites and networks. Separately, in a ClickZ article on The Great Click Debate, much is made of the discourse around the value of clicks versus branding, and makes reference to an early study by the Interactive Advertising Bureau which argues that online ads are an effective way to expose the brand even if people aren’t clicking on them.

According to ClickZ reporter, Sean Carton, new technologies have added to the debate. While various social media formats provide somewhat "traditional" display advertising models in one form or another, now "clicks" have been overtaken by measures of "social engagement," which seeks to couple brand awareness with social media activities around the brand. Not to be outdone, mobile media also is being touted as the great brander, with some studies finding that "mobile ad campaigns are five times more effective" than traditional online ad units.

Teaming with professional organizations like SEMPO, SOMA, WOMMA, and eMetrics, the CMO Council and the DMPI will conduct strategic briefings and workshops for senior marketing executives. It will also collaborate with leading solutions providers, analyst groups, consultants, functional marketing

organizations and media partners, to explore various facets of online market engagement; lead acquisition and on-site conversion; customer intimacy, listening and conversation; individualized relationship management; market research/feedback, as well as viral, word-of-mouth advocacy. Among the themes, platforms and topics of interest to be targeted are:

 Online display advertising effectiveness – response, recall, engagement, return  Web content delivery, content management and effectiveness

 Integration and alignment of online, mobile and offline campaigns  eMetrics and web analytics; new campaign measurement models  Search engine marketing optimization

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4151 Middlefield Road, Palo Alto, CA 94303 T: (650)328-5555 F: (650)328-5016 www.cmocouncil.org  Multi-channel customer interaction

 Online analytics, multi-variable testing, adaptive targeting and predictive modeling  Customer experience and customer voice monitoring and optimization

 Viral online video promotions  Experiential online events

 Virtual worlds and social networks  User-generated content and communities  Interactive entertainment and Internet TV  Online Webisodes and branded entertainment  New disruptive digital technologies

The CMO Council’s annual Marketing Outlook study for 2011 underscores key points regarding how chief marketing executives view and fund their digital marketing programs and advertising campaigns:

 When it comes to marketing transformation, 39 percent of more than 500 global marketers surveyed by the CMO Council said digital marketing makeovers – involving platforms, programs, and people – will be their top priority in 2011.

 Improved digital marketing and online customer engagement capability was ranked as the second most important accomplishment by senior marketers in 2010.

 Adding new digital media and interactive marketing talent was the second most urgent organizational and operational change expected for 2011.

 Understanding and embracing new technologies and engagements channels are seen as among the top two issues or challenges in 2011 by 41 percent of top marketers.

 Two of the top four ways senior marketers plan to maximize the impact and value of marketing in 2011 include 1) Investing in digital demand generation and online relationship building 2) Exploring alternative media and new routes to market.

 Forty one percent of marketers expect to spend between 10 and 30 percent of their

marketing budgets on digital programs in 2011, and 11 percent expect this to be more than 30 percent (Marketing Outlook 2011 Audit).

 Chief marketing executives expect to allocate nearly 9 percent of their marketing budgets on web site properties and digital platforms in 2011, compared to nearly 12 percent for

advertising/media (Marketing Outlook 2011 Audit).

 When it comes to program spend, senior marketers on average plan to allocate 7 percent to online advertising, 6.6 percent to search marketing, and 7.8 percent to social media and viral word-of-mouth activities (Marketing Outlook 2011 Audit).

 Top measures and metrics for tracking the effectiveness of online marketing and advertising spend by CMOs include: 1) Page views, click throughs and registrations 2) Volume and origin of site traffic 3) Search prominence and site preference 3) Acquisition of new accounts or customer transactions 5) Brand awareness, loyalty and receptivity levels.

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New Initiative: “Greater Gains from Digital Campaigns”

The CMO Council will collaborate with underwriters on a series of thought leadership programs to create new content based on best practices and process improvements from innovators and leaders in global digital campaign design, development, localization, execution, and performance measurement. The continuity campaign will focus on showcasing breakthrough technologies and methodologies for tracking and harvesting the value of online advertising and digital media channel spend relative to customer acquisition, engagement and conversion. This content will be widely syndicated, promoted, publicized and merchandised to CMO Council members and affiliate groups throughout North America and ROW. Content consumption and downloads will be tracked for lead generation purposes and the process of creating the content will enable discussions with key advertising and marketing decision makers.

Underwriter Benefits

Underwriting and partnership programs with the CMO Council and it’s Digital Marketing Performance Institute gives sponsors the following benefits and considerations:

 Intimacy, opportunity and potential with key brand name marketers serving on the CMO Council (over 6,000 members representing more than $200 billion in marketing spend).  Validation, credibility and prominence through cooperative content and program delivery to a

global marketing and sales audience of over 60,000.

 Qualified opportunity and prospect flow from an estimated 20,000 marketers expected to download content, participate in events and respond to market audits in 2011.

 Brand reference inclusion in all publicity and promotional activities relating to sponsored DMPI programs and thought leadership initiatives.

 Visibility and exposure in all service marketing e-mail notifications and bulletins distributed to members of both the CMO Council and DMPI.

 One-on-one relationships and introductions to senior brand marketers participating in events, dinners, summits and workshops worldwide.

 Complimentary attendance at select events, gatherings and awards programs.

Typical ways to quantify and measure the value of funding CMO Council authority leadership programs and advocacy campaigns include:

 Access and introductions to global marketing decision makers  Relationships and ongoing conversations initiated by the program  Number of participants in audits, surveys and polls

 Volume of content downloads and leads generated  Level of media attention and quality of news coverage

 Incidence of online conversations and blogging relating to the topic  Number of respondents taking advantage of service or subscription offers  Strategic value selling content for contact, conversion and closure

 Market recognition and demand for sponsor solutions and services  Success of sponsor's channel in leveraging data, findings and content  Brand perceptions of sponsor as an authority leader and trusted supplier

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About the CMO Council

The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The CMO Council's 6,000 members control more than $200 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and its strategic interest

communities include over 20,000 global executives in nearly 100 countries covering multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East and Africa. The Council's strategic interest groups include the Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), LoyaltyLeaders.org, Marketing Supply Chain Institute, Customer Experience Board, Market Sense-Ability Center, Digital Marketing Performance Institute, GeoBranding Center, and the Forum to Advance the Mobile Experience (FAME). More information on the CMO Council is available at www.cmocouncil.org.