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Proven Online Activities

to Drive Success During Peak 2008

Author: Fiona Dias, EVP Partner Strategy and Marketing, November 9, 2008

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Background: US Retail in 2008

• Consumers: aren’t spending readily as their woes pile up from depressed home prices, reduced credit access, declining retirement portfolios, inflation and unemployment

• Retailers: bleak and declining performance for the past several months, with the exception of value-oriented retailers like Wal-Mart

• Calendar: only 26 days between Thanksgiving and Xmas (compared to 32 days in 2007). The last time the holiday season was so short was 2002 which so far, was the worst holiday season of the decade

• E-Commerce: is still growing despite the economy. Projections for online retail growth range from 8-12% for peak 2008, and executives need to put immediate focus on leveraging and driving this growth engine

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GSI has Identified Successful Tactics that Work Well Online

• GSI has the opportunity to watch the performance of our entire site network and the industry, and observe successes and failures

• There are four tactics in particular that have experienced recent significant success and companies need to give immediate and rapid consideration to including these in 2008 plans

• Credible multichannel retailers and brands have identified and optimized these four tactics over time including Neiman Marcus, ToysRUs, Ralph Lauren, Best Buy, Lowes, Wal-Mart and others

• Principles that apply to these four tactics:

— Consumers respond to extraordinary value (eg. large discount % off, across the site)

— Offer is available only for a limited time to drive immediate purchase

— Massive distribution of the offer through all elements of online marketing, including GSI’s proven viral marketing booster

— A theme is helpful to signal that the sale is extraordinary and unusual (birthday sale, election day sale, Thanksgiving day sale)

— Free shipping offers will be pervasive this season as consumers look to conserve gas money, and must be included to reduce a critical barrier to purchase online

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Four Tactics to Focus on Now

1. Limited Time Sales, Especially One Day Only Sales

2. Friends and Family and “Private/Exclusive” Sales

3. Clearance Sales and Messaging

4. Extend Thanksgiving Week: Multiple Events over a Week

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1. Limited Time Sales Work Online and Drive Urgency in a Compressed Holiday Period

• Many flavors of limited time sales: one day sales, lunch-time specials, after hour sales, weekend sales

• The “one day only, act now!” event is working exceptionally well in 2008:

— Marc Ecko’s shopecko.com “40% off one day only birthday sale and free shipping” on November 7, 2008, sold 30 times more sales than a typical day online. Even more impressive, the website’s sales exceeded sales of all their 96 retail stores combined!

— On November 4, 2008, a brand partner’s “Presidential election one day only sale and free shipping” drove 35 times more sales than a typical day online

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Continued… Limited Time Sales – Details Matter

• Limit the sale to one day. Consumers need to feel urgency to act now

• Offer an extraordinary attention-capturing discount to entice consumers to shop – 40% discount on branded apparel as one example

• Execute the sale on top selling days (Monday, Tuesday, Wednesday, Thursday). Run the sale the entire day, leveraging all time zones. Start early on the east coast, and end at midnight Pacific time

• Support the sale with all elements of marketing, including:

— Leverage GSI’s viral marketing booster to distribute to our vast client and vendor list, and make it available throughout the Internet (see appendix B)

— Alert your agencies to use all tactics at their disposal from affiliate marketing to PR

— Distribute to your entire email list (active and inactive subscribers)

— Alert your employees and vendors and ask them to “pass it on” to everyone they can

— Distribute the sale information the night before the sale, or early the day of the sale

— Do a reminder email late in the evening to subscribers with “4 hours left messaging”

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2. Friends & Family and Private Sales Events

• For many years, luxury apparel retailers like Ralph Lauren, Nordstrom’s, and Neiman Marcus have used “private” sales to drive significant incremental growth

• There can be extra discounts for employees

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Continued… Friends & Family and Private Sales Events

• Friends and Family or Private Sales events entice consumers to purchase. Consumers want to feel that they are getting a special deal not available to the general public.

• The reality is that these offers get distributed widely anyway

• Critical elements:

— Wide distribution of the offer to every conceivable “friend and family”.

— Leverage your employee and vendor base, and GSI’s proven viral marketing booster (see appendix B)

— Offer extraordinary and unusual offer to showcase value

— Limit duration (3-4 days)

— Send reminder emails during the event (“one day left”, “only a few hours left”)

— For more information, request the GSI’s “friends and family” how-to guide

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3. Early Clearance Sales are Working Well in this Economy

• Consumers are seeking value, and are looking for clearance sales now

• So far in 2008:

— A retailer partner’s online “Clearance Sale” in October 08 drove 500%+ sales comps

— Many retailers are experiencing disproportionate clearance merchandise sales in stores

• Run clearance sales early in November and December on select merchandise, and kick-off site-wide post-holiday clearance on Xmas day through New Year’s Day

• Message “clearance” on even regular sales. Make it feel to consumers that you’ve overbought and are prepared to offer a price-break to clear inventory

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4. Extended “Thanksgiving” Sales

• Consumers have been trained to start shopping early during Thanksgiving week through Cyber-Monday. From 2007, there are dozens of record-breaking stories of one day only themed sales:

— One day Thanksgiving web only sale starting Wednesday midnight: Aeropostale

— Black Friday specials available online as well as stores: ToysRUs

— Cyber-Monday “rare” one day only sale: Adidas

• Retailers now routinely leverage the viral power of the Internet and distribute their one day offers as early as feasible to Black Friday web sites like BlackFriday.info or BFAds.net which send daily updates to their subscriber base

• This year, Lowes has taken it to the next level by providing a “sneak peek” of their Black Friday ad on their site in early November

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Continued… Extended Thanksgiving Sales – Daily Highlights

• As the official start of the season, it’s critical to have compelling promotions and a compelling site-wide free shipping promotion during Thanksgiving week

• Some retailers will kick off the week on Monday, November 24, 2008 with lunch-time or after-hour specials on Monday through Wednesday

• One-day Web Only Thanksgiving sale on November 27, 2008:

— Most multichannel retailers shut their stores on Thanksgiving day so it’s a great day to promote online as there’s reduced channel conflict

— Sale kicks off at midnight PT on Wednesday (themed “midnight madness”) and runs throughout Thanksgiving Day

— “Black Friday” websites drive a frenzy online, and consumers stay up eagerly anticipating the midnight kick-off

• Black Friday one day only sale on November 28, 2008: Web sites mimic Black Friday excitement in stores and match door-busters with limited inventory and other attention-grabbing offers

• Cyber Monday one day only sale on December 1, 2008: Web retailers have embraced this online shopping holiday. Major press activity will hype this day and consumers will be looking for online offers across the web.

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GSI’s Recommendations to Drive Your Sales Now

To increase sales now, we recommend that clients adapt their plans now to include these tactics:

1. Limited Time Sales, Especially One Day Only Sales

• Conduct 3-4 one day only sales

• Start now to capture sales before the height of the season

• In December, schedule these on the “Golden Mondays” which are big selling days on the web

2. Friends and Family and “Private/Exclusive” Sales

• Conduct two during the season, one in November and one in December

3. Clearance Sales

• Offer and message a sub-set of the assortment on clearance every week during the season

• Commence site-wide clearance sale on December 25 through New Year’s Day

4. Multiple Events over Thanksgiving Week

• Execute discrete activities on Thanksgiving Day, Black Friday, and Cyber-Monday

Finally, understand that consumers will expect free shipping offers during the season as they look to conserve their gas money. We can help you with any of these strategies, as well as other “must-do” tactics listed in appendix A.

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APPENDIX A: “Must-Do” Tactics for Peak 2008

The following tactics are all proven winners to drive sales. We can discuss the details of any of them with you:

1. Limited Time Sales Work and Drive Urgency in a Compressed Holiday Period

2. Friends & Family and Private Sale Events Entice Customers to Purchase Now

3. Clearance Sales and Messaging are Working in this Economy

4. Make Thanksgiving a Week Long Event, Especially Thanksgiving and Black Friday

5. Persistent Shipping Offers are Critical This Season

6. Be Especially focused on the “Golden Mondays” of December

7. Encourage Consumers to Come Back Daily with “Daily Deals”

8. Display Gift Cards Prominently Throughout the Site

9. Make it Easy for your Call Center Reps to Sell

10. Optimize your Site Daily to Improve Conversion

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APPENDIX B: GSI’s Proven Viral Marketing Booster

GSI has created a “viral marketing booster” program that when deployed by GSI and partners can result in significant incremental sales both online and in stores:

1. Leverage GSI’s vast employee, vendor, and client network. Send your offer to GSI for deployment and we will “pass it on” to everyone we know.

2. Provide your offer to all your employees (paper handouts for stores) and ask vendors to “pass it on”. Expand your company’s ‘friends and family’ network by leveraging vendors’ employees and other business colleague networks.

3. Send to your entire email database. Provide specific messaging to active subscribers (‘private sale’) and inactive subscribers (‘customer appreciation sale’).

4. Deploy reminder emails (“ last day” or “only a few hours remain”)

5. Notify deal sites in advance like BFads.net, blackfriday.info, dealnews.com, fatwallet.com, gottadeal.com, daddyodeals.com, slickdeals.com

6. Add offer to GSI’s ‘deal aggregator’ blog: http://savvyshopaholic.wordpress.com/

7. Promote via your affiliate network. Leverage banner ads to support messaging/imaging on certain categories.

8. Update paid search text copy. Highlight urgency with ‘limited time’ messaging and link to specific landing page with matching copy.

9. Send to social bookmark sites like Digg, reddit, and twitter for additional reach and exposure of your offer.

10. Promote in social network sites like Facebook and MySpace. Post on your brand’s page or leverage your employees’ networks to post an ‘event’, add a ‘note’ or list in ‘status update’.

11. Promote within relevant online forums. Search big-boards.net, forumvirus.com for relevant or niche discussion threads to promote your offer.

12. Add to corporate blogs. Call out your promotion in advance and/or make sure RSS feed is set up. Include in your agency’s blog/newsletters or other vendor blogs to expand reach.

Last, but not least, give GSI, your agencies, and your employees as much advance notice as possible so we can mobilize to increase your sales this season!