AUDIENCE MANAGEMENT PETER VANDRE, MERKLE VP, DIGITAL ANALYTICS

RICK HEFFERNAN, TRAVELERS 2VP DIGITAL MARKETING

Identity Management

Audience Management

Consumer Privacy &

Compliance

Platform Data

Platform Execution

Platform Enablers

Audience Management Audience management is the discipline of identifying, sizing, and tracking audiences with the purpose of driving higher customer value

Name: Tom Malthus Address: 1001 Semblance Dr. DOB: 10.03.1965 Alias: MarketableDig Handle: @MarketableTom IP: 192.168.1.201 Cookie: 49526F636B Phone: 443.542.4000

Personalization

Device

Offer

Treatment

Message,

Product

Time

Contact Management

Behavioral Triggers

Models Segmentation

Audience Management is the bridge between identity management and media and channel optimization

Identity Management

Audience Management

Media or Channel Optimization

3

Audience management framework should be expansive

+400%

Unqualified prospects & waste

Addressability at Scale

Upper funnel

Mid funnel

Lower funnel

Customer (New, Active, Lapsed)

Unknown

High-value

Low-value

• Upper thru lower funnel

• Known and anonymous

• Segment and individual

• Prospect to customer

• Digital and offline channels

…but rollout should be pragmatic and

systematic

4

Components to effective audience management

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Contact Management

Behavioral Triggers

Models Segmentation

How we understand customers and design experiences

Who to target and how to optimize

message components

Individual consumer actions that trigger a response

Optimizing connections across touch points

How audience management impacts the customer journey

6

Online display

Search for ‘new mower’

•Creative: Suburban Gardner segment

• Contact Mgt: 10 per week

• Targeting: Lapsed buyer segment direct match, Programmatic Model

•Message: Suburban Gardner segment, Google, RLSA segment 25

•Targeting: Google RLSA

Click to landing page

Message: Behavioral Trigger Contact Mgt: Other Email contact suppression

Email Trigger

Creative/offer Personalization engine, Gardner segment, Preferred store model

•Product: Product recommender model

Personalized Header: Loyalty segment

Segmentation

• Manage, plan around, and strategize on consumers

• Determine groups of consumers that align with corporate strategy

• Strategic targeting • Corporate branding and strategy • Product development • Mass market promotions

Enterprise Segment

• Smaller groups of individuals • Examples are lifecycle and value

segmentation • Acquisition, retention, cross sell

program • Channel strategy, program and offer

development

Micro Segment

• The “most granular” targetable entity • This is the last mile of deciding who to

target and what to say • Models for targeting, personalization,

and next best action • Behavioral triggers

Individual

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Segmentation is addressable across anonymous and known media and channel interactions

Anonymous Consumer Interactions

Segmentation Retrofitting existing segmentation rarely

works

Anonymous Audience Data

Identifiable Audience Data

Design based on data you actually have

(online and offline) not based on what you

wish you had

• Built on sample audience and research data

• But can be mapped across entire known and anonymous individuals universe

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Research Data

Known Consumer Interactions

Cookie IDSocial ID

Name / AddressEmail

Merkle DataSouce TM

Optimized Data Content

Comscore

Audience Platforms

Merkle Brilig

Social Networks

DSPs

Search Engines Other Publishers

Ad Networks

Population Scale Targeted Pop CPM Budget Apps Policies Product

Mix CPA Value

Programmatic 73,100,000 30% 21,930,000 $2.00 $2,280,720 34,991 1,671 51% $1,365 $16,742,863Guaranteed Direct 47,300,000 30% 14,190,000 $2.00 $1,475,760 25,157 937 29% $1,575 $6,380,407PS-Branded 58,050,000 20% 11,610,000 $2.00 $1,207,440 20,583 360 11% $3,350 $5,015,497Ps-Unbranded 21,500,000 20% 4,300,000 $2.00 $447,200 7,623 156 5% $2,868 $1,218,449Affiliates 15,050,000 20% 3,010,000 $2.00 $313,040 5,336 124 4% $2,531 $1,381,351Total 215,000,000 55,040,000 $2.00 $5,724,160 93,689 3,248 100% $1,763 $30,738,567

Programmatic 73,100,000 40% 29,240,000 $2,50 $3,801,200 41,989 2,005 55% $1,896 $20,091,436Guaranteed Direct 47,300,000 40% 18,920,000 $2.50 $2,459,600 30,188 1,124 31% $2,188 $7,656,488PS-Branded 58,050,000 20% 11,610,000 $2.00 $1,207,440 20,583 360 10% $3,350 $5,015,497Ps-Unbranded 21,500,000 10% 2,150,000 $3.00 $335,400 3,812 78 2% $4,302 $609,224Affiliates 15,050,000 10% 1,505,000 $3.00 $234,780 2,668 62 2% $3,796 $690,676Total 215,000,000 63,425,000 $2.44 $8,038,420 99,239 3,629 100% $2,215 $34,063,321

Programmatic 73,100,000 20% 14,620,000 $2.00 $1,520,480 25,919 1,238 58% $1,229 $12,402Guaranteed Direct 47,300,000 20% 9,460,000 $2.00 $983,840 16,771 625 29% $1,575 $4,253,604PS-Branded 58,050,000 10% 5,805,000 $2.00 $603,720 10,291 180 8% $3,350 $2,507,748Ps-Unbranded 21,500,000 5% 1,075,000 $2.00 $111,800 1,906 39 2% $2,868 $304,612Affiliates 15,050,000 10% 1,505,000 $3.00 $234,780 2,668 62 3% $3,796 $690,676Total 215,000,000 32,465,000 $2.05 $3,454,620 57,555 2,143 100% $1,612 $20,158,762

Simulation

Prospecting

Remarketing

Total

$39MM $104MM $170MM $382MMNPV of Revenue Impact

Year 1 Year 2 Year 3 Years 4+5

Addressable Media

Channel Optimization

Average customer value

$15MM $43MM $73MM $206MM

$24MM $61MM $97MM $176MM

+5 +25 +10 +5

• Use Connected data to understand/predict/model NPS results across subscriber base and target subscribers for Promoter maintenance or Detractor intervention strategies

• Roughly 1bp (~31k subs) reduction in Voluntary Churn YoY over next 5 years• Combine Customer service, Billing contacts with customer data to improve churn rates

• 1%-3% increase in customer acquisition over 5 years• Increased response/conversion from digital media efficiency by connecting Anonymous

Data to CRM data for better targeting, measurement and segmentation• Increased effectiveness of remarketing and personalization (offer/package) in Search,

Display, Site and Email

Current plan performance

Media Saturation

Merkle Client benchmarks

Business assumptions

Geo

AgeIncome

Credit

Attribution/ Measurement

Strategy/Planning

Approach

Optimization

TacticsTracking

Define the Target Audience

Map and SizeAudience

Map target to Audience Platforms

Analyze current Media Plan vs. Competitors

Create new Addressable Plan

Final Output and Review

Plan Performance Simulations

Target Audience

• 40 MM HH’s • 70 MM Individuals

Audience Sizing and Linking to Opportunity

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Travelers Case Study Rick Heffernan

Background – Travelers Insurance • Travelers is the 5th largest U.S. Property & Casualty Insurer with more

than 30,000 employees and had $26 billion in revenue in 2013. • Traditionally operated through independent agent and broker distribution

channel • Heavily invested in developing and rapidly expanding the direct to

consumer channel with a primary focus on the Preferred market. • Strong belief and commitment towards leveraging the power and

efficiency of digital media and channels. • Recently launched new product that appeals to a broader customer

segment.

Capture in-market prospects and drive to action, reconnect with shoppers who have already engaged but did not convert

Audience: Remarketing

Cultivate Interest and create engagement

Audience: Customer Look-A-Likes

Create awareness and drive Interest/consideration

Audience: New / Non-Visitors Upper funnel

Mid funnel

Lower funnel

Segmentation and Targeting are Crucial to Attract the Right Audience and Ultimately Lead Them Down a Path to Conversion

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How Travelers does audience management

Travelers CRM (Foundational

Marketing Platform)

Creating golden customer record of engagement across online and offline interactions

DMP DSP sPMD

Annonymized Customer Data

& Offline Transaction

Data

Audience Creation, Syndication & Management

Media Execution

Digital Attribution Platform

Transaction Data

Media Analytics Lab

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Segment building, audience modeling & ad hoc analysis

Segments & Rules

Cookie & Customer Data

Online Display Mobile

Paid Search

Online Video

Digital Media Execution

Paid Social

Private Marketplaces Programmatic Prospecting

Custom models with 1st and 3rd party data

2014 program dimensions (examples only)

Highly Targeted Segment Driven Approach to Drive Scale in Mid and Lower Funnel

Mid funnel

Lower funnel

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Search remarketing Segmented site remarketing Custom audiences for x-sell

Geography Customer Value

Contact Frequency

Behavioral Triggers

Key milestones and challenges • Sponsorship required at CMO level to drive investments and strategy • Major investments in technology and analytics • Challenges of optimizing and driving down costs • Organizational and agency alignment at each major step

Technology Assessment

and Business Case

DSP Consolidation

Logfile Integration with DSP

Digital Attribution launched

Major product redevelopment and re-launch

Foundational CRM Marketing Platform go live

Business case approved for expansion of AAS digital

program

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Jan 2014

Mar 2014 Aug 2013

May 2012 Oct 2013

Dec 2012 May 2012

Our approach is driving strong results

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Acquisition costs have dropped significantly: We are driving more and more scale:

YOY new lead acquisition costs

decreased by 75%

Cost per sale was down by over 60%

Over same period, sales were up over 185%

75% 60+%

185%

Questions? Peter Vandre, pvandre@merkleinc.com

Rick Heffernan, RHEFFERN@travelers.com

Strategic Tactical

• Based on research • Rich insight into consumers • Informs strategy

• Based on behavior • Actionable; tied to database • Informs tactics

Rich Actionable

© 2013 Merkle Inc. All Rights Reserved. Confidential 19

Media Budget Allocation

100%

135% 135% 135% 135%

39,002

43,982

41,264

38,640

34000

36000

38000

40000

42000

44000

46000

90%100%110%120%130%140%150%160%

Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4

Total

Polic

ies

% Bu

dget

to 20

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Budget Comparison

Budget New Customers

Scenario Scenario Budget Brand TV

Print Display Paid Search

Online Lead Gen

Baseline 2011 budget 100% 100% 100% 100% 100% 100%Scenario 1 2012 budget 135% 151% 151% 109% 122% 136%Scenario 2 2012 Maximize

Portfolio Value 135% 86% 26% 270% 236% 125%

Segment 1 215% 95% 18% 450% 280% 138%Segment 2 154% 92% 20% 395% 210% 153%Segment 3 136% 60% 40% 280% 315% 127%Segment 4 88% 66% 25% 120% 180% 114%Segment 5 75% 70% 24% 120% 115% 116%

Strategic Planning Value Proposition Program Planning Addressable Media

Media budget allocation by segment to maximize return based on Media Mix Optimization

© 2013 Merkle Inc. All Rights Reserved. Confidential 22

Market Understanding

Strategic Planning Value Proposition Program Planning Addressable Media

Segment strategy built around the segment value proposition; detailed media mix, product differentiators, brand attributes, low price vs. value, channel objectives

© 2013 Merkle Inc. All Rights Reserved. Confidential 27

Website Personalization

Strategic Planning Value Proposition Program Planning Addressable Media

Channel (website) personalization by predicting segment based on online characteristics

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

© 2013 Merkle Inc. All Rights Reserved. Confidential 28

Direct Marketing Testing

Seg Initial Recommendations

1

Position: Company has a great selection, you can find whatever you want!Highly likely to reactivate naturally

Test Trigger Program with Shortened Inactive Window (e.g. 20-weeks) v. no contact controlTest reactivation model v. no contact control Test recognition based program

2

Position: Company has something for you!Highly influenced to purchase items shown on air.

Test “Upcoming Shows” communications, highlight popular showsTest Reactivation Model Depth of file to maximize ROI.Communicate based on product affinities

3

Position: It’s about convenience. Shop when you want!. High penetration of Internet and Multi-Channel customers.

Test penetration into model with lower cost e-campaigns.Test multi-touch campaignsTest personalized URL’s to get click through activity

Audience Segment Creative Cell Contact NotesTop Model Segment 1 V1 1 Emailable: Multi Multi cell includes 2 emails + 1

DM2 Emailable: EM 2 EM only3 Emailable: Holdout No contact4 DM Only 1 DM only5 DM Holdout No contact

Segment 2 V2 6 Emailable: Multi Optional7 Emailable: EM Optional8 Emailable: Holdout Optional9 DM Only

10 DM HoldoutV3 11 Emailable: Multi

12 Emailable: EM13 DM Only

Strategic Planning Value Proposition Program Planning Addressable Media

Direct mail and email testing by segment

Enterprise Segmentation Should Be

Strategic Planning Value Proposition Program Planning Addressable Media

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