1 Coupon Strategies and Tactics: The Consumer Response Association of Coupon Professionals April 20, 2016 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Agenda Headlines Data Sources Achieving ROI Objectives Achieving Penetration/Trial Objectives Consumer Response to 4 key coupon tactics Key Conclusions and Implications 2 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Headlines 1.Coupons result in a high level of incremental purchases as a percentage of total redemption (75%) 2. In order to increase the chances of getting a strong ROI from a coupon, make the coupon good on a wide range of items in the brand, require multiple purchases and use a value that doesn’t exceed profit margins 3.In order to increase the chances of getting strong trial, offer an attractive value and minimize purchase requirements 4.Use the coupon database results reported in this presentation as guidance for executing value, fuse length, page size and purchase requirements in line with the brand’s objective 3 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Data Sources All research information is consumer packaged goods coupon focused GfK’s Coupon Performance Benchmark Database consists of over 3,300 individual coupon events across all coupon types. GfK leverages loyalty card data from tens of millions of shoppers to measure the impact of coupons; March, News America conducted a “meta” analysis of multiple client/brand FSI evaluations Representing over $500,000 of research investment to draw insights about best practices Related to two of the most common FSI objectives: ROI and penetration/trial; March, 2015 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/Draft

Brand Objective: ROI 5 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

We found that offers requiring multiple purchases had average ROIs of $1.15 compared to those with single purchase requirements, which averaged $0.82 Example of a Multiple-Purchase Requirements offer All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Multiple-Purchase Requirements 6 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

A coupon offer that is close to the item price, like the one shown, can drive very high redemption levels However, if the value is too high, it can erode profit and thus produce less ROI Example of coupon value All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Coupon Values and ROI 7 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Because ROIs tend to be higher on established brands ($1.16) vs. New brands ($0.74), including the established brand as part of the new-brand offer can improve ROI All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 New Products/SKUs and ROI Great space to deliver new product messaging ! 8 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Campaigns for brands that are relatively small or struggling should have offers that include the larger brand set to drive ROI All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Parts of Brands and ROI Offer on right provides a broader product set than offer on left 9 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

FSIs can deliver strong short term ($1.02) and long term ROI ($1.10) All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015; ROI calculation based on client provided profit basis for several clients and for one client a retail sales based ROI – the same ROI basis was used for both short and long term; long term ROI is based on a 2 purchase cycle post period, not exceeding 6 months and is only based on first repeat purchases Additional ROI Information 10 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 ROI Summary 11 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Brand Objective: Drive Trial 12 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Offers with values that are higher relative to the product price help overcome barriers to trial All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Perceived Coupon Value and Trial 13 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Driving trial on established brands can be tough because they already have high-household penetration All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 New and Established Brands, Trial and Household Penetration 14 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

2/3 of shoppers who had previously purchased the new brand tended to buy it again only when they were on deal or had a coupon All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Buyers to a New Brand 15 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Attracting competitive and lapsed users can add to brand base; for offers with this objective in mind, the creative should emphasize brand benefits All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Competitive and Lapsed Users 16 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

All takeaways are based on review of 28 FSI Redeemer Analyses conducted by for multiple News America Marketing clients as of July 2015 Drive Trial Summary 17 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

GfK Coupon Tactics Insights 18 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

75% of Coupon Redemption results in incremental purchases on average Only 4.4% of the coupons had less than 40% of the redemption volume as incremental The percent of redemption volume that was incremental was between 40% and 90% for 81% of the analyzed coupons Overall average % Redemption Incremental = 75% Source: GfK Coupon Performance Benchmark Database 2016 Incremental Coupon Volume 19 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Coupon Type: ROI Index ROI Index = % ROI / All Coupon GfK Norm Overall, the average ROI index for all coupons was set at 100; the indexes ranged from 2 to 459 The analyzed FSIs showed a higher ROI Index than the other types analyzed, followed by on-packs Direct-mail coupons showed the lowest ROI Index at 20 Source: GfK Coupon Performance Benchmark Database NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

For FSIs with a coupon requirement of 3 or less, the average buy rate is greater than the coupon requirement For FSIs with a coupon requirement of more than 3, the average buy rate falls below the coupon requirement Coupon Unit Requirement Average Buy Rate FSI Buy Rate by Coupon Requirement Purchase requirements up to 3 result in more units than required Source: GfK Coupon Performance Benchmark Database NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

The higher the coupon requirement, the more incremental packages per 1000 coupons are generated Coupon Unit Requirements Source: GfK Coupon Performance Benchmark Database NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

New Buyer starts to level at 3 requirements Incrementality similar for 1, 2, and 3 groups ROI Index builds up to 3 requirements Coupon Unit Requirements ROI Index = % ROI / All Coupon GfK Norm Source: GfK Coupon Performance Benchmark Database %.92%.79%1.14%.72% NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Fuse Length ROI Index = % ROI / All Coupon GfK Norm New Buyers stay the same no matter the fuse length Incrementality drops slightly as the fuse length gets longer Strongest ROI around 8 weeks Redemption rate peaked in the 9-11 week timeframe Source: GfK Coupon Performance Benchmark Database Redemption Rate.84%1.01%1.25%1.16%1.12% NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Page Size Larger FSIs generate more incremental packages per 1,000 coupons Source: GfK Coupon Performance Benchmark Database NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Page Size ROI Index = % ROI / All Coupon GfK Norm Higher incremental volume is not enough to offset higher costs of larger page sizes, resulting in a lower ROI Index Source: GfK Coupon Performance Benchmark Database NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

Face Value as a % of Retail Price ROI Index = % ROI / All Coupon GfK Norm 12-15% face value as % of retail price has both high ROI and new triers Least value to the consumer has the highest ROI Highest discount has the lowest ROI and largest redemption rate Source: GfK Coupon Performance Benchmark Database Redemption Rate 1.10%.79%.85%.77%.83%1.05%.97%1.12%1.19%1.09%1.12% NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL

News America Marketing Perspective: Coupon Objective and Executional Implications ObjectiveExecution Implications ROIConsider making the coupon good on a wide range items in the brand multiple purchase requirements coupon value lower than unit profit margin Trial/penetrationHigh Value, low purchase requirement offer Emphasize brand benefits in ad message Realize trial is harder to achieve on high penetration brands General best practicesUse GfK insights to guide execution depending brand and program objectives 28 NAM Proprietary and Confidential/For client use only/not to be reproduced without permission/M. Peiser/FINAL