Insights from a Conversant ExecutiveScott Eagle, CMO

7 DIGITAL MYTHS THAT SENIOR MARKETERS NEED TO STOP BELIEVING

INTRODUCTION

MYTH 1:Advanced digital marketing requires deep internal expertise and a large operational footprint

MYTH 2:It’s difficult to prove digital marketing drives significant brick & mortar retail sales

MYTH 3:“Vendor dating” is a better strategy than “vendor marriage”

MYTH 4:Digital is great at closing sales already in progress, but not at creating demand

MYTH 5:Vendor pitches are all so similar it’s nearly impossible to discern the differences

MYTH 6:Personalization is a powerful idea, but true one-to-one marketing isn’t possible

MYTH 7:Digital measurement is always imprecise

CONCLUSION

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Table of Contents

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Today, digital marketing tactics and strategies are changing at an accelerated pace - unlike anything the world has ever known. Digital capabilities and the “rules of engagement” are constantly evolving and expanding. And what was true yesterday - may no longer be true today.

For senior marketers with competing projects and priorities, it can be challenging to keep up with what is achievable or advisable in today’s digital marketing environment. Many digital capabilities that were once thought impossible, are not only possible, but they’ve become routine.

As part of Conversant’s mission to deliver insights to the industry, we work constantly to improve understanding of digital and its capabilities. Over the past several months, we’ve engaged in thousands of conversations with senior level marketers and have discovered some common myths that warrant further scrutiny and discussion.

Let’s debunk these myths – one by one.

INTRODUCTION

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Digital marketing is far more complex to plan and execute than more traditional tactics like network TV ads. It takes a great deal of expertise in the areas of technology, business intelligence, digital channels, social media and creative optimization to derive the most value from digital. The amount of input (e.g. marketing data, potential venues, creative formats) is enormous, and to utilize it to its fullest potential takes strategy, seamless execution and a continual focus on analysis and optimization. It can be daunting!

To tackle these challenges, some brands have built large teams and infrastructure to create and deliver their digital programs, while others have found it easier and more cost eff ective to outsource with proven providers.

While you will certainly benefit from an internal

team with a solid understanding of digital, you do not need to do it all yourself. In fact, there is growing evidence to suggest this approach is inadvisable since digital mastery is increasingly dependent on highly specialized knowledge and expertise. It can be extremely challenging to find and attract the “best and brightest” in all essential areas for your company.

In addition to reducing your staffi ng needs, bringing in strong partners with genuine expertise also ensures that your organization can focus on its core competencies while leaving tasks like data management, analytics and program execution to outside experts.

Some brands choose to entrust these types of tasks to agencies, who work to build competencies in all

of these critical areas. Others find it advantageous to identify a provider that has the staff and expertise to assume these labor-intensive tasks and can perform them with excellence. The key is finding the right partner that can deliver solutions across a broad range of channels and devices.

Making it easier for clients to derive maximum value from data is just one of the reasons why Conversant united all of its former businesses – Commission Junction, Dotomi, Greystripe, Mediaplex and ValueClick Media – into a single company with one powerful marketing platform. We’ve helped thousands of companies get better results through the use of unified data sets, collaborating experts and advanced data analytics.

Commission Junction

Dotomi Greystripe

Mediaplex

ValueClick Media The # 1 global leader in affiliate marketing forpublishers and advertisers.

The industry-leader in personalized one-to-one digital marketing at scale.

Industry-leader in brand-focused mobile (smartphones and tablets) advertising.

World-class, cross-channel advertising technology platform.

Industry-leader in delivering true cross-device targeting solutions across display, video and mobile.

ADVANCED DIGITAL MARKETING REQUIRES DEEP INTERNAL EXPERTISE AND A LARGE OPERATIONAL FOOTPRINTMYTH 1

Making it easier for clients to derive maximum value from data is just one of the reasons why Conversant united all of its former businesses – Commission Junction, Dotomi, Greystripe, Mediaplex and ValueClick Media – into a single company with one powerful marketing platform.

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Years ago, there was no accurate way to measure the impact of digital marketing efforts on brick and mortar sales. Solutions providers simply could not provide a comprehensive view into the relationship between digital marketing activity and the rest of a brand’s retail channels. In fact, many companies siloed their efforts and created distinct online and offline marketing groups to execute and measure programs – ultimately creating massive redundancy and inefficiency.

While some companies attempted to build their own platforms to fully understand the impact of digital marketing on all channels, many shelved the concept because of the potential costs and complexity. Even when an organization could unite its data, it was still very difficult to associate purchases and digital marketing activities to the same anonymized individual profile.

But times have changed. Now it’s possible to demonstrate the effects of digital marketing on offline sales. In fact, Conversant does it every day for more than 170 companies. We invested years developing a platform

that can ingest data from virtually any system - POS systems, email platforms, rewards clubs, etc. We take that data and combine it with online and offline transactions and other marketing data, and associate it with an anonymized individual profile. Using this robust information as the foundation, we can individually message people and measure the impact across all retail channels.

By associating the online, in-store, catalog, call center and other sales to the marketing programs that reached a particular individual, we can understand the true impact of digital marketing on the total enterprise.

We built this versatile data ingestion, management and analytics platform because understanding the

effects of offline sales is absolutely critical to complete measurement. In most

categories, 80% or more of sales come through channels other

than online, so without a complete picture of

those sales, marketers simply cannot accurately understand the ROI from a digital program.

IT’S DIFFICULT TO PROVE DIGITAL MARKETINGDRIVES SIGNIFICANT BRICK & MORTAR RETAIL SALESMYTH 2

Video ViewSite Visits

Product Search

Display Click Through

Network Web Match

First-Party Cookie Present

Third-Party Cookie Present

Mobile App Usage

LocationEcosystem IDs

Direct and Indirect Matching

Household ID Matching

Conversion Matching

Mobile Device ID

Site Login

DevicePurchase Data

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With literally thousands of digital marketing solutions providers to choose from, many companies opt to work with a broad and constantly changing array of vendors. The logic seems to be that making a minimal commitment to a vendor tends to keep a marketer’s future options open. However, there are three key flaws to this approach:

While testing and experimentation should play a role in your overall digital program, you’d be wise to conduct more due diligence with vendors up front to create more substantive partnerships with the best ones.

“TOWER OF BABEL” SYNDROME

Trying to integrate many different offerings and disparate platforms to maximize marketing effectiveness can be challenging. Each new vendor or change of vendor requires additional investment in integration to derive the benefits of a comprehensive marketing platform. Often, companies overlook the hidden costs of integration as they evaluate alternatives, and yet integration is arguably the most important – and most complex – part of building an effective infrastructure and solutions set.

OPTIMIZATION

The process of long-term optimization for your digital programs is what really drives an increase in performance. This is true whether your programs are optimized manually, automatically or through a combination of approaches. When you limit programs to “one-offs” with different vendors, you ultimately depress your results because you cannot capture all of the gains available through optimization.

DATA USAGE

Driving significant digital results is not only a function of using and deeply integrating more data, but using it in better ways. Only by partnering with a strategic solutions provider – thoroughly and over time - can you effectively utilize all of your data to drive true marketing effectiveness.

“VENDOR DATING” IS A BETTER STRATEGY THAN “VENDOR MARRIAGE”MYTH 3

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In the early years of the Internet, digital marketing quickly developed a reputation as a powerful direct-response or “DR” medium. There are a number of reasons why:

• Unprecedented opportunities for measurement and accountability

• Efficiency of digital marketing at closing sales

• Digital’s massive and growing role as a tool for consumers to explore alternatives

• Creative limitations in the early days of the Internet limited use of digital for branding

These days, brands are devoting additional resources to digital for their brand marketing efforts. With the ability to analyze and market to individual consumers, digital has become the ideal venue in which to identify and reach the highest potential audience. So, instead of delivering a broad-based message

to everyone, messages can be pinpointed specifically to someone’s exact stage in the buying process.

What’s critical is the ability to identify “look-alikes” with a precise level of accuracy. Engaging with a solutions provider that delivers individualized customer understanding is ideal for prospect marketing because they can better identify precise “look-alikes” with a high propensity to respond. Conversant’s Enterprise Solutions Group facilitates the ability to individually identify prospects and then uses proven direct response strategies and tactics to deliver the best possible results.

Another key reason brand dollars are shifting toward online marketing is the increase in the amount of time people spend among digital channels. According to eMarketer, the average person spends more time with digital media than with TV. See the chart in the right hand column.

DIGITAL IS GREAT AT CLOSING SALES ALREADY IN PROGRESS, BUT NOTAT CREATING DEMAND

MYTH 4 People now spend more time accessing digital media than they do watching TV.

Average Time Spent per Day with Major Media by US Adults, 2010-2013

Hrs:mins

Note: ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking; for example, 1 hour of multitasking online while watching TV is counted as 1 hour for TV and 1 hour for online; *includes all internet activities on desktop and laptop for computers; **offline reading only

Source: eMarketer, Dec 2013

Digital

• Online*

• Mobile (nonvoice)

• Other

TV

Radio

Print**

• Newspapers

• Magazines

Other

Total

3:11

2:22

0:24

0:26

4:24

1:36

0:50

0:30

0:20

0:45

10:46

3:49

2:33

0:48

0:28

4:34

1:34

0:44

0:26

0:18

0:37

11:18

4:33

2:27

1:35

0:31

4:38

1:32

0:38

0:22

0:16

0:28

11:49

5:16

2:19

2:21

0:36

4:31

1:26

0:32

0:18

0:14

0:20

12:05

2010 2011 2012 2013

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In today’s competitive landscape, marketers receive a barrage of messages from hundreds of well-funded start-ups and established companies. In addition, the constant use of digital buzzwords can be overwhelming and make the process of finding the right vendor very daunting. It’s as if the industry lives by the old adage, “If you can’t dazzle ‘em, then baffle ‘em.”

While many alternatives may look and sound the same, there are enormous differences between digital vendors. Asking the right questions can make finding the best partner much easier.

Try the six questions listed to the right to enrich your vendor due diligence process.

1. HOW LONG HAS THECOMPANY BEEN AROUND?

There are hundreds of options for where you can spend your marketing dollars, but be aware that many digital solutions providers don’t last long. Companies tend to come and go based upon their ability to secure clients and the overall effectiveness of their solutions. In this industry, longevity is a key indicator of great results.

4. HAS YOUR TECH TEAM REVIEWED ALTERNATIVE SOLUTIONS AND PROVIDERS?

With the increasingly data-centric and technology-driven nature of solutions providers, it can be difficult for a strategic generalist to evaluate the most viable vendor options. Partner with your tech team to gather a more substantive review of their capabilities.

2. DO THEY OFFERPROPRIETARY DATA?

Many digital companies utilize proprietary technology, but they apply it to the same sets of widely available and flawed third-party data. Better data – that is comprehensive, accurate, and exclusive – is the key to better results. Discover whether your potential partner offers proprietary data sets and ask them to identify the source of them before you sign on the dotted line.

5. ARE THE SOLUTIONS EFFECTIVE ACROSS THEIR CLIENT BASE?

The true test of an effective solution is the overall performance across clients. Consider the number of clients a provider serves relative to its competitors. In digital, larger companies usually have more data, expertise and better technology. So, look for a marquee list of clients with references and case studies.

3. ARE THEY CAPABLE OF STRATEGIC PROBLEM SOLVING?

Some vendors are far more interested in selling you their services than inquiring about what you really need. Is their pitch more of a monologue versus a structured discussion? Make sure they make an effort to understand what’s unique about your business challenges and opportunities before they try to sell you their services.

6. ARE THEY INNOVATIVE?

Any long-term digital solution for your business should constantly evolve and expand to reflect new channels, devices and industry platforms. Ask potential partners about their innovation plans so there is a sense of the potential long-term impact on your business.

Use these six questions to navigate your way through some of the smoke and mirrors.

VENDOR PITCHES ARE ALL SO SIMILAR IT’S NEARLY IMPOSSIBLE TO DISCERN THE DIFFERENCES

MYTH 5

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THE YEAR OFPERSONALIZATIONBoth agency and brand marketers agree that personalization is a key strategic imperative for 2014.

The key driver behind the personalization movement appears to be the consumer’s need for individualized brand experiences. Today, they demand communications that are relevant to their individual needs.

Brands can respond to this consumer demand with individually tailored messaging and media.

This trend is indicative of the industry-wide and decades-long progression away from mass marketing to a more focused approach featuring messaging that speaks to the needs of the individual.

77%

of marketers agree that individualized messages and offers will be more effective than mass messages/offers

73%

of marketers agree that personalized one-to-one marketing is the future

77+23 73+27Personalized marketing continues to gain traction as a key marketing strategy in the industry. For decades, marketers have wanted to find a way to speak to their consumers as individuals – to put their brands and benefits in the context of

an individual’s needs.

Conversant conducted a recent survey of digital leaders and discovered that 77% of senior marketers agree that individualized messages and offers will be more

effective than mass messages/offers, while 73% agree that personalization represents the future of marketing. Yet, when asked whether they felt their organization was in a position to deliver one-to-one marketing today, many said no.

PERSONALIZATION IS A POWERFUL IDEA, BUT TRUE ONE-TO-ONE MARKETING ISN’T POSSIBLE

MYTH 6

For decades, marketers have wanted to find a way to speak to their consumers as individuals.

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Personalization is no longer a dream – it’s a reality. Every day Conversant delivers hyperpersonalized one-to-one communications to millions of individuals for some of the world’s leading brands. This one-to-one messaging is not a small number of executions with just one or two elements changed to reflect individual characteristics. Rather, we individually calibrate virtually every aspect of an ad to drive greater relevance to the individual recipient. One person at a time, but at massive scale.

During a given month, we create hundreds of thousands – even millions – of distinct creative executions for each client. Variations include, but are not limited to, color combinations, formats, messages, imagery and offers that will deliver the most relevant message and drive the desired response. These ads may feature individual SKUs of interest to the individual, but we don’t barrage them with retargeting ads featuring hundreds of the same ads/SKUs. Rather, our solution takes an intelligent approach, learning and adjusting based upon the consumer’s actions.

BENEFITS OF A PERSONALIZED MEDIA PROGRAM

MYTH 6, CONTINUED

IMPROVED RESPONSE RATE 70% 700= 56% 560= INCREASED SALES 67% 670= 55% 550= STRONGER BRAND 63% 630=

PERCEPTIONS 56% 560=

INCREASED PRODUCT TRIAL/ 45% 450=

TRIAL RATES 46% 460=

INCREASED REPEAT 36% 360=

PURCHASES/REPEAT RATE 60% 600=

INCREASED AVERAGE 28% 280=

REVENUE PER USER (ARPU) 48% 480=

AGENCYMARKETER

In the same study, senior marketers and agencies reported they expect the following list of benefits from a personalized media campaign:

Personalization is no longer a dream — it’s a reality.

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FALL FASHION LAUNCH

FALL FASHION EVENT

FEATURED PRODUCTS

FALL PROMOTION

“NEXT BEST”OPPORTUNITY

Female/Age: 39

• Income: $130K• Oakbrook, IL• Married, Presence of

Children• Multichannel Shopper• Value Shopper• Outdoor Fitness/Yoga• Buying for Man• Purchased In-store Last

Month: Jeans, Tops• Recently Purchased Online:

Sweater, Blouse

Female/Age: 28

• Income: $85K• Oakbrook, IL• Single• Redeem Shopper Points

within last 3 months• Urban Style• Fashionista• Multichannel Shopper• Recently Purchased Online:

Gown, Couture Pants

The examples below illustrate how precisely calibrated an individual’s communications stream might be based on their interests, predicted needs or recent online or offline transactions.

The profiles for each individual drive the initial communications and as they take (or don’t take) action, their communications streams are updated to reflect that behavior.

In-market experience clearly demonstrates that personalized messages work better. On average, our clients see double-digit percentage lifts for consumers messaged with personalized media. In addition, consumers exposed to personalized media are, on average, 30% more likely to re-engage with a brand. While fundamentally focused on driving transactions, these communication streams respect and build brand value in addition to driving immediate sales.

One-to-one marketing is far superior to retargeting which simply puts the last item viewed into a banner ad.

PERSONALIZED ONLINE ADVERTISING CREATIVE JOURNEY BASED ON REAL-TIME RICH PROFILES

MYTH 6, CONTINUED

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It is true that a great deal of digital measurement is imprecise. But many companies have made great strides in measurement accuracy. Brands no longer need to accept broad approximations – instead they can focus on major improvements in accuracy that will lead to better strategic and tactical decisions.

Years ago, it was difficult or impossible to measure certain things, so the industry was forced to accept approximations or surrogate metrics. Think back to when companies focused on click through rates as a metric for program effectiveness, regardless of their business objectives.

While most of that is in the past, many digital marketing measurements are still too vague. Recently, there has been a great deal of attention paid to marketing attribution, or the assignment of credit for a conversion to a particular marketing tactic or tactics. But truthfully, attribution approaches can vary widely in sophistication and accuracy.

One of the most common measurement methodologies is “last click” attribution, in which credit for a conversion is assigned to the last marketing action that a consumer took.

Last click attribution can make sense for some marketing tactics like affiliate, but for complex omni-channel marketing programs it has limitations because it discounts the value of any marketing activity before the last click.

“Last click” attribution can lead companies to overspend on bottom-of-the-funnel marketing tactics. Research shows that for such companies, spending more money on higher-in-the-funnel tactics to create demand will result in greater total sales.

Measurement and attribution are certainly hot industry topics – and marketers are rapidly becoming more knowledgeable and sophisticated in their understanding of it. In fact, our research indicated a third of marketers are contemplating changes to their measurement approach in 2014.

More precise measurement is possible, but it requires a fundamental shift in focus – from allocating credit for conversions to scientifically determining what actually caused a conversion. It also requires a measurement approach that reflects all sales channels, not just online.

First, let’s address causality. In most digital measurement approaches, all sales that take place during a digital marketing period are credited to those marketing tactics, even though some sales would have occurred anyway. The sale might have occurred naturally, or as the result of in-store promotions, television ads, etc. – but the sale gets attributed to digital.

First, let’s address causality. In most digital measurement approaches, all sales that take place during a digital marketing period are credited to those marketing tactics, even though some sales would have occurred anyway. The sale might have occurred naturally, or as the result of in-store promotions, television ads, etc. – but the sale gets attributed to digital.

Percentage of leading marketers who say that they plan to change measurement approach in the next year.

Percent of Respondents

43%26%

32%

DIGITAL MEASUREMENT IS ALWAYS IMPRECISE

MYTH 7

YESNODON’T KNOW

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Second, if a brand measures only online sales eff ects, they likely understate their total sales impact – considerably. In most categories 80% or more of total sales take place in offl ine channels. So if you’re not capturing the holistic sales picture, your strategic and budget allocation decisions may be compromised.

Conversant pioneered an independently validated test and control methodology that compares total sales for a period for

two scientifically matched audience samples - people who were exposed versus who were not exposed to messages. The following illustration highlights how the model identifies incremental sales versus those that would have occurred without the marketing.

This method determines what sales would have occurred naturally without our digital programs and which sales were actually “caused” by our programs.

RIGOROUS MEASUREMENT - TEST VS. CONTROL

3.6%UNIQUE

CONVERSIONS

CRM DRIVES INCREMENTAL LIFT

CONTROL GROUP

Received a non-personalized ad

TEST GROUP

Received a personalized ad

CONTROL AD

17% LIFT

4.2% UNIQUE

CONVERSIONS

PRINT

STORE CALL CENTER ONLINE

RETAIL

EMAIL

AFFILIATE/SEARCH

PERSONALIZED AD

PRINT

RETAIL

EMAIL

AFFILIATE/SEARCH

A study of 25 leading retailers across several categories found that 67 to 90 percent of sales that correlated to digital marketing exposure were NOT actually caused by that exposure.

MYTH 7, CONTINUED

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CONCLUSION

There’s an old adage that states “myths die hard,” which is often the case. But eliminating some of these tall tales from your thinking will take you a long way toward improving digital marketing effectiveness for your business.

Digital marketing is evolving at such a rapid pace that things we thought were patently impossible yesterday may in fact be commonplace today. For example, our hyperpersonalized marketing solutions already drive extraordinary results across more the 170 leading companies. It’s worth noting that marketers who stay abreast of such digital marketing advances will surely be the industry leaders who are in charge of the companies that excel in this space.

I welcome your thoughts and comments on this paper. Please write to me at: ScottEagle@conversantmedia.com

ABOUT THE AUTHORScott Eagle leads Conversant’s global marketing function, including strategy and the integration of marketing programs across our solutions groups. An accomplished senior executive with a strong background in client-side digital marketing and consumer brand management, Mr. Eagle has over 25 years of experience as a marketing leader managing major Fortune 500 brands and building successful new companies. Mr. Eagle has served as CMO for Empowered Careers, eHarmony and Claria Corporation, and he has held management positions at Concentric Network Corporation, MFS Communications and P&G. Mr. Eagle holds a B.S. in economics from The Wharton School, University of Pennsylvania, and serves on the board of Akademos, Inc.

ABOUT CONVERSANTConversant, Inc. (NASDAQ: CNVR) is the leader in personalized digital marketing. Conversant helps the world’s biggest companies grow by creating personalized experiences that deliver higher returns for brands and greater satisfaction for people. We offer a fully integrated personalization platform, personalized media programs and the world’s largest affiliate marketing network – all fueled by a deep understanding of what motivates people to engage, connect and buy.

For more information, please visit www.conversantmedia.com.

Copyright 2014, Conversant, Inc. All rights reserved. Conversant is a trademark of Conversant, Inc. 14