Variations in Video Advertising Impact

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1 Variations in Video Advertising Impact Beth Uyenco Global Research Director Microsoft Corporation David Kaplan SVP, Research & Product Development Nielsen IAG

2 The Rise of Online Video In an overall down year for online advertising, online video ad spending grew in % And there are now 144 million online video viewers, or 72% of all internet users Online video outpaces TV when measured by the dollars marketers spend relative to the amount of time individuals spend viewing video Source: emarketer.

3 Online Video Audience and Time Spent Is Growing Audience Time Spent (MM) 160 (MM) , ,277 25% % Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 0 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Source: Nielsen VideoCensus, December

4 Online Viewing Growth Online Video Ad Spend THE ECONOMICS OF ONLINE VIDEO (Jan. 18, 2010) More U.S. viewers watch web video than watch recorded TV on DVRs (and often skip the ads), according to Nielsen Online. Still, the economic potential of web video remains mostly unrealized. A major stumbling block for web video is the inability of the biggest TV advertisers to make a direct comparison between the effectiveness of TV and the effectiveness of an equivalent buy online

5 The Business Issues We Need to Answer Can we use GRPs/impressions for valuating the both video platforms? Is impact the same? Will ad impact differ by length of surrounding content? Long-form vs. short-form content Can I re-purpose my TV ads for online? Is there synergy between linear TV and online video advertising?

6 How We Did Our Study Examined all TV and web video data from Nielsen IAG from November 2007 to May Brands 412 Products 951 Ad Executions 14,333 Completed Surveys (P13+) 7,476 in Day-After Period Tracked ads on premium online sites largely on long-form content To parallel conventional TV content for true apple-to-apples comparisons Controlled for same brand advertisements across TV and web Where there were enough cases, compared ads on short-form content to those on TV

7 How IAG Surveys Work 1. Premium Online Video publisher adds dynamic IAG OpenTag to show and ad content delivered via player, and provides IAG a preview of ads with corresponding Creative IDs for survey creation 2. IAG panelist visits Site and watches full episodes (through natural behavior) and we are pinged with info 3. Panelist visits RewardTV.com 4. We recognize that panelist has been exposed to full episodes/ads 5. Panelist has option to take surveys for any of the online programs they viewed (including questions about in-stream ads/product placements)

8 Nielsen IAG Key Metrics The Following Four Metrics Were Surveyed Across All Campaigns 1. General recall: Did those exposed to the ad remember the overall creative concept of it? 2. Brand recall: Did those exposed to the ad remember the brand the day after exposure? 3. Message recall: Did those exposed to the ad remember the primary message of the ad the day after exposure? 4. Likeability: Did those exposed to the ad remember the brand the day after exposure and report to like the ad a lot or somewhat? Note: all metrics measured aided awareness.

9 Ad Surveys for Premium Online Video and Linear TV Are Identical Allowing Direct Comparison of Platforms General Recall Brand Recall Message Recall Likeability In an advertisement during this show, what happened that caused people to clap and cheer as a silver car sped along a desert highway? Grooves in asphalt sounded out a musical composition when driven over Nails in the ground held balloons that inflated when they were passed Miniature cones on short medians fell in a domino effect when clipped Colored lights on fence poles made a light show signaling traffic was clear What was this an advertisement for? Honda Civic Nissan Sentra Ford Focus Toyota Corolla According to this advertisement, why should you purchase a Honda Civic? Gets great gas mileage Seats five comfortably Has a powerful engine How much did you like this advertisement? I liked it a lot I liked it somewhat I am neutral about this advertisement I disliked it somewhat I disliked it a lot Note: Responses randomized for General, Brand and Message Recall questions.

10 Big Learnings Online Video vs. TV Online Video & TV Together Repurposed TV vs. Original Online Ads Online video performed better than TV across every brand metric and for every vertical A campaign combining online video and TV ads improved recall and likeability for all verticals Overall, repurposed TV ads are at least as effective as original online video ads

11 Are all video GRPs equal? Does the platform have an impact?

12 Online Video Ads Outperform TV Ads on All Key Brand Impact Metrics Premium Online Video vs. TV Ad Performance Online Video TV General Recall Brand Recall Message Recall Likeability Source: Nielsen IAG, A18-49, Premium Online Video Measurement , includes individuals only exposed to brand/product on one platform (in prior 15 days). Television norms inclusive of Primetime programming only and based on survey responses during same time period as Premium Online Video survey responses. TV norms are based on all ads for those Brand/Products which ran on both Premium Online Video & TV during time period; specific creative executions may vary.

13 The Difference Is Even More Pronounced Among Younger Viewers Premium Online Video Indexed to Comparable TV Ad Performance By Age Group Brand Recall Index Message Recall Index TV = Source: Nielsen IAG, Premium Online Video Measurement , P13+. Television norms inclusive of Primetime programming only and based on survey responses during same time period as Premium Online Video survey responses. Note: TV norms above are based on all ads for those Brand/Products which ran on both Premium Online Video & TV during time period; specific creative executions may vary. Green shading indicates significantly higher score for Premium Online Video at 90% confidence.

14 In-stream Video Ads in Short-form Content Generate Better Brand and Message Recall as Well as Likeability Video Ads on short-form content TV Ad (same brand/product) General Recall Brand Recall Message Recall Likeability Source: Nielsen IAG, Short-Form Online Video Measurement ; Sample: Adults (N=163 for Short-Form; 65,593 for TV), Persons 13+ (N=252 for Short-Form; 99,422 for TV). Television norms inclusive of Primetime programming only and based on survey responses during same time period as Premium Online Video survey responses. Note: TV norms above are based on all ads for those Brand/Products which ran on both Short-Form Online Video & TV during time period; specific creative executions may vary.

15 Why the Variation in Impact? Higher Engagement with Content Greater attentiveness to content because user has to click to download content Novelty of online video Inability to easily skip units Considerably reduced ad clutter Content sponsorships Persistent companion ad presence

16 Engagement with Premium Online Video Has Far Exceeded the Average Levels on Standard Broadcast TV Premium Online Video vs. TV Program Engagement % Premium Online Video Norm Broadcast TV Primetime Norm Source: Nielsen IAG, A Premium Online Video includes all tagged full episodes measured between Sep 21, Mar 13, 2010; TV benchmark includes all TV programs airing between Sep 21, Mar 13, Note: Premium Online Video measurement includes surveys completed up to 7 days post-stream; TV data is based on completed up to 24 hours post-telecast.

17 Even If a Brand Has a Single Ad in a Long-form Stream, it Generates Higher Recall; Scores Improve Somewhat Further Among Brands with Multiple Spots in a Stream Premium Online Video vs. TV Advertisement Brand Recall TV Online Premium Video (Single Ad from Sponsor) Online Premium Video (Multiple Ads from Same Sponsor) Source: Nielsen IAG, P13+, Sep 2009 Mar 2010, Television norms inclusive of Primetime programming only and based on survey responses during same time period as Premium Online Video survey responses. Data comparatives are based on all ads for those Brands which ran on both Premium Online Video (in single and multiple ad formats) & TV during time period; specific creative executions may vary.

18 Do re-purposed TV ads work in premium video?

19 Repurposed TV Spots Get Greater Levels of Break-through Than Other In-stream Ad Formats Even When Controlling for Prior TV Exposure Creative Type In-Stream Ad Performance by Creative Type General Recall Brand Linkage Message Linkage Likeability Linkage Repurposed TV Ads 66% 76% 80% 55% Web Original Video Ads 58% 72% 72% 48% Flash Animation/ Interactive 47% 78% 68% 46% Source: Nielsen IAG, P13+, Premium Online Video Measurement ; Bottom table excludes those exposed on TV in past 15 days; Note: Web Original ads include those Online ads for which Nielsen IAG has not logged a counterpart ad on Standard Television. Note: Counterpart must contain same core creative, but may not necessarily be of the same length or include identical tag; **Use caution for sample sizes where n<100. Green shading indicates significantly higher score at 90% confidence.

20 Is there synergy between conventional TV advertising and online video advertising?

21 Online Video Streaming Is the Icing on the Cake (h:mm) 168:00 Hours Spent Viewing Video 144:00 120:00 2:01 1:46 1:39 1:51 1:43 2:00 1:53 1:54 2:12 1:47 96:00 72:00 48:00 24:00 0:00 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 TV (Live +7) Streaming internet Source: Nielsen Convergence Research Panel, December 2008 September 2009; Data spikes attributable to months with 5 weeks.

22 TV/Internet Ad Schedule R&F Example Schedule Reach Analysis TV, Online, Combined The potentially small overlap group is often where the greatest Brand Lift is often seen TV Reach Online Reach Total Reach TV Only Online Only Both TV and Online

23 TV Ads Are Significantly More Effective Among Viewers Who Were Previously Exposed to the Brand s In-stream Ads Message Recall Exhibited the Greatest Lift Among the Dual-platform Exposed Group % 44 TV + Premium Online Video TV Only % % +31% TV Ad General Recall TV Ad Brand Recall TV Ad Message Recall TV Ad Likeability Source: Nielsen IAG, A18-49, Premium Online Video Measurement ; TV + Premium Online Video Total Exposed Sample Size = 1,068. TV + Premium Online Video exposure group include those viewers who were exposed to same brand/product ad in Premium Online Video in 7-day period prior to TV ad exposure. Note: Primetime TV data based only time period(s) where impressions were also being delivered on measured Premium Online Video for same brand/product. All metrics are significantly higher for TV+Premium Online Video exposure group at 90% confidence.

24 Even When Controlling for Frequency, the Combination of TV + Premium Video Provides Superior Advertising Impact Than TV Alone TV Advertising Impact at 2-5 Exposures Exposure Cell TV (1 exp) + Premium Online Video (1-4 exp) TV Ad General Recall TV Ad Brand Recall TV Ad Message Recall 49% 30% 25% TV Only (2-5 exp) 42% 23% 16% Index Source: Nielsen IAG, A18-49, Premium Online Video Measurement includes mix of Full Episode programs during April/May TV + Premium Online Video exposure group include those viewers who were exposed to same brand/product ad in Premium Online Video in 7-day period prior to TV ad exposure.

25 TV Ads for This Telecom Advertiser Were Most Effective Among Those Viewers Who Were Previously Exposed to Online Video Ads TV Advertisement Brand Recall by Prior Online Ad Exposure Type TV Only TV + Standard Display Only TV + Rich Media Only TV + Video Only TV + Display + RM + Video Source: Nielsen IAG, A18+, ; Based on online ad exposure in 30 days prior to TV ad exposure.

26 Conclusions Online web ads yield deeper engagement than corresponding TV ads on the basis of branding metrics Using online video advertising together with TV greatly improves advertising effectiveness particularly message communication Re-purposed TV ads can work better than originallyproduced web video ads Perhaps because TV ads are more likely to have been pre-tested (unlike most video streaming ads) or have higher production values Or viewers watching TV programs online may still prefer the absorptive nature of traditional TV ad executions

27 The Business Issues Answered Can we use GRPs/impressions for valuating both video platforms? Will ad impact differ by length of surrounding content? Can I re-purpose my TV ads for online? Is there synergy between linear TV and online video advertising? NO! SOMETIMES! YES! YES!

28 THANKS AND HAPPY VIEWING!

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