State of the Market LOCATION POWERED MOBILE ADVERTISING REPORT DEEP DIVE ON CPG

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1 State of the Market LOCATION POWERED MOBILE ADVERTISING REPORT DEEP DIVE ON CPG

2 USING MOBILE ADVERTISING TACTICS TO DRIVE AND MEASURE SALES LIFT FOR CPG The consumer package goods (CPG) vertical has traditionally applied its large media budgets to mass marketing channels such as television and print to reach consumers. However, in recent years, CPG marketers have begun shifting budget to mobile to increase traffic to retail stores and influence consumers as they traverse the aisles with their smartphones. In fact, from 2012 to the middle of 2014, Verve has seen a 219% increase in CPG-related mobile spending.* Verve expects this trend to build momentum going into 2015, as CPG marketers embrace location-powered advertising s ability to drive traffic to partner retailers (shopper marketing), build consumer loyalty, steal share, drive direct response (couponing) and influence consumer in-store behavior (beacons). The precise targeting, and the analytics provided by location-powered mobile advertising partners, along with the data and media insights that they bring to the table from their own providers, are proving to be immensely helpful in understanding our consumers behavior and the ROI of our advertising. - Director, Media at a Major CPG Advertising Agency Methodology Verve analyzed over 200 campaigns from a variety of CPG categories including household products, food and beverage, personal grooming and pet food. Data from these campaigns was collected by Verve s data scientists using a sophisticated set of tools and methodologies to analyze the physical path to purchase of CPG consumers. This report uses data gleaned from detailed attribution models applied to specific advertising campaigns, as well as aggregated brand and engagement metrics. * Source: CPG Campaigns on the Verve Platform,

3 EXECUTIVE SUMMARY: KEY THEMES FOR CPG MARKETERS 1. CPG is in the top three of verticals utilizing location-powered advertising. 2. Location-powered advertising is particularly successful in driving foot traffic to retail partners i.e., Shopper Marketing. 3. Attribution available from location-powered mobile campaigns provides unprecedented data and insights on store-level foot traffic and puchaser-level transactions. 4. The combination of device-level product purchase data for audience targeting and precise proximity targeting increases mobile ROI. 5. Custom targeting strategies based on audience segments like moms, U.S. Hispanics and African- Americans benefit from location data that captures real-world behavioral, demographic, and transactional information, especially when combined with device-to-household matching. 6. Location-aware advertising creative formats that utilize techniques such as location and mapping are effective in driving traffic to retail partners by reaching consumers on their path to purchase. CPG Marketing Objectives National Branding: Increase awareness, build loyalty, augment existing sponsorships/campaigns, shift consideration and target the brand s key psychographic and demographic consumers while on their path to purchase. Shopper Marketing: Reach in-market shoppers, promote incentives and drive foot traffic to key retail partners. 3

4 1. CPG IS A TOP USER OF LOCATION ADVERTISING The CPG category utilizes location-powered advertising tactics to a greater degree than most other advertising categories. Retail, Auto and CPG are the top verticals in leveraging location data for mobile advertising, with CPG being the fastest growing of the three. 15% 14% Vertical Industry Category Spending on Location-Powered Advertising* 28% 10% 10% Retail Automotive CPG Restaurants Financial Services Travel 13% 4% 6% Telecom Other 2. SHOPPER MARKETING A desire to increase foot traffic in measurable ways is the impetus behind advertisers spike in investment in location-powered advertising for CPG and other Shopper Marketing strategies. Specifically, advertisers aim to: 1. Analyze and measure foot traffic into purchase locations, and leverage that data toward understanding how to target the best prospective customers. 2. Measure advertising ROI based on foot traffic lift (FTI), frequency of shopper visits, and increase in product sales. Smartphone GPS technology sends signals during and after a visit to a CPG purchase location a big box, grocery retailer or convenience store which illuminate what had previously been a murkier view of the consumer s path to purchase. Powerful analytics tools made available by some location-powered mobile platforms can provide marketers with real data on places where their consumers are seen most frequently, as well as their weigh stations along the entire shopping journey. This data provides CPG Shopper Marketing teams with hard, actionable data, including household-level insights that previously had been elusive in mobile. Building custom audience segments based on new data points gleaned from the analysis and targeting new physical locations where customers are seen more frequently, are two ways that this data can be utilized to develop new media tactics. *Source: Total Location-Powered Media Impressions on Verve Platform,

5 Additionally, analytics and data suites from location-powered mobile platforms arm marketers with the ability to measure the impact of their advertising campaigns on actual foot traffic into purchase locations, and in some cases also to measure actual purchase activity. This data therefore ties media spend directly to real-world behaviors. Foot traffic insights provide a detailed analysis into the overall foot traffic lift attributed to an ad campaign, and incorporates and delivers other analytics that have proven to be immensely valuable to CPG marketers. Those include, but are not limited to: Overall foot traffic lift: Consumers exposed to the campaign (vs. control group of demographically and geographically identical consumers not served) to specific retailers. Lift in frequency of visits to purchase locations (exposed/test versus unexposed/control groups). Foot traffic lift by media tactic: Which tactic drove more actual visits to a purchase location, geo-fencing or audience targeting? Foot traffic lift by ad creative: Creative message or technique that drove the most traffic. Foot traffic lift by market: Provides valuable market-by-market sales information for shopper marketer teams, which often deal with regional retailer dynamics, as they pertain to specific retailers and to consumer preferences. RETAILERS USING LOCATION POWERED ADS AVERAGE FOOT TRAFFIC LIFT * +74% RETAILERS USING LOCATION POWERED ADS AVERAGE VISIT FREQUENCY LIFT * +56% Importantly, it s not just the fact that these KPIs can now be quantified, but also that the CPG advertiser can leverage this information with key partners, specifically retailers. For example, CPG advertisers running location-informed campaigns on the Verve location mobile platform were able to demonstrate to retailers a 74% lift in foot traffic and 56% lift in visit frequency via their investment in location-powered media.* *Source: Verve Proprietary Foot Traffic Index Across CPG FTI Campaigns,

6 3. STRONG RESULTS COMBINING PURCHASE PROXIMITY DATA Location-powered media companies like Verve are able to match mobile devices to their respective households by combining network data and machine learning to establish a home location. Trusted third-party data sources, like Nielsen Catalina Solutions (NCS), are then layered on top of device data to provide marketers a higher resolution picture of the consumer behind the device. These rich, device-level profiles are immensely valuable in helping CPG marketers target the right audiences. One of the most exciting areas for CPG in the location-powered mobile space is the ability to now utilize consumers previous product purchase information when building target audiences for a brand. Marketers that have successfully used this technique in the online space via cookies are now using offline purchase data from companies like NCS in their mobile marketing. For example, NCS collects household-level purchase information from shopper loyalty cards, scanner data, and consumer panels to determine a household s propensity to buy a certain brand of paper towels and never a competitive brand. This information can now be used for targeting individual smartphones, providing CPG advertisers the ability to target consumers using data sets beyond location history and proximity data. This kind of household/device-level targeting using location and purchase history together is a valuable addition to a mobile marketing campaign for a CPG advertiser. Using Household Matching with Nielsen Catalina VERVE HOUSEHOLD MATCHING Device User Profile (100M Device to HH Match) NCS HH DATABASE with Purchase Data from Loyalty Cards, Scanner Data, etc. CUSTOM AUDIENCE SEGMENT Proximity & Location Data Combine to Create a Clear Picture of a CPG Audience ROI Increased Sales *Source: Verve Proprietary Foot Traffic Index Across CPG FTI Campaigns,

7 4. TARGETING MOMS BY COMBINING LOCATION AND HOUSEHOLD-LEVEL MATCHING DATA Moms with kids in the household are a common bullseye for CPG marketers, and the more finely they can target while understanding what works and what does not, the better. As previously noted, many data sets and technologies are now available to help with that task. Note: For the purposes of this paper, it was useful to specifically examine campaigns that targeted moms. Using Household Level Transaction Data MATCH Devices are matched with actual households. Exposed and control groups identified SCAN Track actual purchases made by consumers in both groups, using scanner data provided by various third parties. REPORT Report on actual product sales between exposed vs. control group to determine lift. 7

8 Success Story Client: Premium Paper Towel Goals: Reframe the expectations of price-conscious U.S. Hispanic moms on why a higher quality paper towel is worth the investment for her real life and budget. Re-establish the brand s superiority on the core category benefits of absorbency and strength. Increase brand awareness among U.S. Hispanic moms shopping at Kroger. Drive targeted U.S. Hispanic mom foot traffic to nearby Kroger locations. Solution: Utilize Verve location data and audience targeting to identify and engage U.S. Hispanic moms at the aisle level: Proximity targeting: Dynamic geo-hex fencing around each Kroger partner store, with the hex fence size determined by the location s population density. Verve s Pre-Purchase Path Analysis : Identify retailers that Hispanic moms visit along a Kroger path to purchase, and apply proximity targeting around the stores. Custom U.S. Hispanic Consumer Segment: Built based on the following blocks of data: 1. Based on real-world behaviors, i.e.: Devices that have a high preponderance of visits to Kroger. Devices that are seen frequently at children s apparel retailers, Toys R Us, and other common points of interest for U.S. Hispanic moms with kids. 2. Household-level matching data: Census data providing high indices of U.S. Hispanic population. Auto registration for minivans and other autos indicating families with kids. Demographic matches of households with children at home. Product purchase matching to those who have bought the premium paper towel and competitor premium paper towel brands. Results: U.S. HISPANIC MOMS EXPOSED TO AD 2.7X MORE LIKELY TO GO TO A KROGER STORE U.S. HISPANIC MOMS ENGAGED WITH AD 3.7X MORE LIKELY TO GO TO A KROGER STORE 8

9 5. LOCATION-AWARE CREATIVE LEADS TO INCREASES IN CONSUMER ENGAGEMENT, FOOT TRAFFIC & VISIT FREQUENCY 1. Regardless of campaign objectives, CPG location-aware advertising creative that utilizes location and mapping engagement to drive consumers to retail drives strong results: % for CTR, with an average.70% % for secondary engagement, with an average of 2.82% % for tap to map, with an average of 2.50% 2. Location-aware creative performs better at driving lift in foot traffic and lift in frequency of visits, compared to non-location-aware creative. In recent CPG campaigns for two distinctly different CPG products battery and beauty which aimed at driving foot traffic to a specific retail partner, location-aware creative produced a higher lift in foot traffic (154%) and visit frequency (182%) to the same retailer, than non-location-aware creative. Furthermore, the campaigns showed its strongest creative engagement on weekends, specifically Sundays, where CTRs reached levels of 0.53%-0.58%. This indicates that consumers were more likely to engage with the creative while in a shopping mindset and running errands. OVERALL CAMPAIGNS VISIT FREQUENCY LIFT +182% FOOT TRAFFIC LIFT +154% BATTERY PRODUCTS VISIT FREQUENCY LIFT +147% FOOT TRAFFIC LIFT +169% BEAUTY PRODUCTS VISIT FREQUENCY LIFT +215% FOOT TRAFFIC LIFT +147% Source: Verve Proprietary Foot Traffic Index Report,

10 WHAT S NEXT BEACONS: LINKING MEDIA BUDGETS DIRECTLY WITH IN-STORE BEHAVIOR Beacon technology such as provided by Gimbal, a Verve partner combined with locationbased targeting connects the dots for CPG marketers to an unprecedented level. Mobile advertising solutions that combine location-base audience targeting, proximity data and offline analytics can boost foot traffic to retail locations and ultimately increase sales and return on ad spend (ROAS). In-store beacons communicate to enabled smartphone apps via Bluetooth technology. With this connection, CPG marketers can now link ad exposure and engagement metrics directly to consumer behavior in the physical world, right down to the aisle level. For example, a CPG marketer can directly correlate consumer s in-store behavior i.e., whether and for how long the consumer dwelled in the aisle where the product was located with a specific ad creative to which they were exposed. With this data, they could optimize campaigns, provide sequential messages to the same consumer, and measure traffic lift attributable to the ad campaign. Beacons: How They Work Customer redeems offer-based messages Beacons allow for aisle-level precision to tailor offers and messaging to customers 2 3 SAVE NOW! Understand when a consumer enters your location 1 10

11 Success Story Client: High-End Hair Care Products Goal: To drive in-salon coupon redemption for high-end hair care products in select salons using mobile coupons via iphone Passbook. Solution: Delivered the ad within a predefined geo-fence around salons where products are sold. Advertising creative included dynamic salon location information and a customized offer redeemable in that salon. Users had the ability to Tap to Add the coupon to their iphone s Passbook. The offer was activated via Verve-supplied ibeacons, allowing the customer to easily redeem coupons. Results: Drove prospective customers into select nearby salons. 3% of consumers exposed to the ad creative to save it to Passbook. Provided consumers with enhanced in-store retail experience. Strengthened retail/cpg sales team relationships and opened up more shelf space. Provided consumers with a seamless and valued retail event. 11

12 DATA FEEDS BOOST RELEVANCE FOR BRAND AND SHOPPER MARKETING OBJECTIVES CPG brands can increase the relevance of mobile ads by leveraging data feeds to dynamically power ad creative. For example, Verve has synced up with a producer of digital shopper circulars. Taking the partner s feed, which is customized based on regional preferences and demands of consumers in different areas including regional pricing, product mix, stocking, etc. advertisers can dynamically update the creative of a proximity targeted mobile ad campaign. Location, product, and promotional data are leveraged to ensure consumers in the right location are served the creative and promotions for corresponding region. For instance, a CPG brand could have a product it was trying to promote during a particular week, aiming to drive sales at specific retailers. A data feed could be connected to a mobile campaign to incorporate product-level information with its own location data and purchase data from third-party partners. Layering in proximity targeting, advertisers could increase ad relevancy by locating consumers closest to the retailer and put the product in the forefront of the consumer s mind at the precise moment and location they are making a purchase decision. Looking forward, this solution has the ability to match proximity and household data in order to act on past purchase behavior. ShopLocal: CPG Advertisers Can Use Custom Dynamic Location-Based Creative to Drive Retailer Promotions & Branding For more, please visit: vervemobile.com Contact us: Verve Wireless, Inc. All rights reserved. 12

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