Measuring Audiences in a Digital World: A new Look at Media “Currencies” Horst Stipp SVP, Strategic Insights & Innovation NBC Universal, New York MRC October 17, 2008

The measurement is the product Media and Metrics Marketing metrics at the center of media business and changes in media business Unique role of metrics The measurement is the product If you can’t measure it, you can’t sell it Revenue of advertising supported media based on “currency” metrics that establish advertising exposure 2

Traditional TV Currency Measures Measures of exposure to TV “Opportunity to see commercials” Based on data provided by Nielsen company Ratings for in home TV usage Nielsen ratings primarily to establish advertising rates (“currency”) Concept rooted in ARF model 3

Traditional TV Currency Measures ARF Model (2003)

Traditional TV Currency Measures ARF Model (2003)

Traditional TV Currency Measures: Summary For decades, currency was exposure measures supplied by Nielsen company Modifications in methods of data collection Evolution in US marketplace brought more focus on “demos” – specific audiences various advertisers want to reach Overall, little change in measurement concept Advertisers and broadcasters starting to re-think measurement and currency during last 5 years 6

From this: 1958 7

To This: 2008 8

New media technologies Changing consumer behavior patterns Changes New media technologies Changing consumer behavior patterns Increased competition among media Changing marketplace and advertiser expectations New measurement technologies 9

Changes in Media Technology Portable Devices Internet Digital Satellite 1990’s DVD PPV email 1980’s Digital Cable Streaming Video VOD 1950’s 1960’s 1970’s 2000-2008 Broadband EPGs HDTV Satellite HDDVD Blu-ray disc Sling box 10 Iphone

Media Technology Ownership Growth 4% 11% Growth 2006-2007 (%) 85 *84 -4% 80 1% 6% 75 72 13% 54 2% 43 59% 13% 21% 22% 28% *35 34 34 33 8% 32 17% 28 38% 27 22 42% 17 300% *4 VoD DVR Video Capable Phones HDTV Subscribing Video-Enabled Cell Phone Service * % of population Sources: CEA, eMarketer, Forrester, IDC, Jupiterresearch, Kagan, m:metrics, Magna Global, NBC Internal Estimates 4Q07, Nielsen, SNL Kagan, Veronis; all penetration numbers = end of year 11

No Replacement of “Old” Medium through New Medium Average Monthly Uniques Total Internet (000) TV Usage (Live PUT + DVR Playback) 1995 2000 2006 2007 Source: Nielsen Media Research, Live +7 Days; Calendar Years; 2006 & 2007 include Live PUT rating plus DVR playback; ComScore, 2006

35 Million High Definition TVs 13

Online Video is becoming Important 14

Significant Growth in Online Video Use Total Streams (billions) Unique Streamers (millions) 73% of Internet users have streamed in a given month 15 Source: comScore Video Metrix report, Flash video not available until July 2006

Daytime “Video Snacking” on YouTube TV 16 Source: comScore, Nov 2006 (Youtube); Nielsen Television Index (TV).

Increased Online Viewing of Full TV Episodes (Heroes) TOTAL 15,910,872 Viiv 2,165 iTunes Downloads 59,717 Streaming Video 2,135,990 Sci-Fi Network 744,000 NBC TV Network 12,969,000 Source: NBC Research 4/23/07, exposure measures; Note: No out-of-home TV measurement 17

706 Channels Competition: TV Networks in the US 706 Channels includes Basic, Sports, Pay Per View and Pay Cable (as of 10/4/06) 18

Small “Cable” Networks Primetime Market Share Trend Major Networks Small “Cable” Networks MARKET LEADER 11% Source: September-May Seasons updated through 5/23/07; 07/08-10/11 PROJECTED; 18-49 19

DVR Penetration Percent of US Households with DVRs Projections 20 Source: eMarketer, July 2007; Jupiter research, Dec. 2007; Magna Global, Dec. 2007; Nielsen, Jan. 2008; Veronis, Aug. 2007

Growth of Time-Shifted Viewing The Office Grey’s Anatomy CSI 2 1/2 Men Source: Nielsen A18-49 21

DVR Impact on Commercial Viewing Commercial Viewing Index (CVI) in DVR Homes Broadcast Prime (18-49) Source: Nielsen N-Power Broadcast Prime ABC, CBS, CW, FOX & NBC. CVI = Commercial AA%/Program AA%. 9/24/07-2/10/08. No exclusions. 22

Trends in Advertising Spending Billion $ Source: tns media intelligence, March 2007. For Internet: Interactive Advertising Bureau March 2007; NBC Research 2008 23

Changes New media technologies change consumer behavior TV consumption stable, but increased use of internet; video online emerging Digital TV leads to audience fragmentation and increased competition among TV content providers Nielsen has increased sample size to provide more reliable measures of exposure 90% of all programs reach less than 1% of audience Internet providers aggressively develop new tools to measure web use and impact of web advertising Growth of DVRs raises fears about future of TV as advertising medium 24

Changes Changes affect marketplace and TV business Advertisers’ options increase TV networks need to expand sales activity – go beyond negotiations for price International agencies complain that Nielsen system provides less detailed information than European system - demand “commercial ratings” DVR ad skipping strengthens demand for changes in TV measurement Don’t want to pay for ads watched in fast speed Technological advances allow Nielsen to generate more detailed, minute-by minute data 25

Metrics Innovation: Commercial Ratings First major shift in TV currency 2007/2008 season As in most European countries, currency becomes exposure to commercial pods, not to the average minute of the entire program Decrease in ratings generally 5-10% Nielsen data show most people do not change channel during commercials! To account for DVR use, commercials watched time-shifted in real time (not fast-forward) within three days of airing included in measure “C3” measure TV currency is still measure of exposure 26

New Measures Competition in the marketplace and availability of new data sources leads to increased use of new measures to support sales New trend: make deals with measurement that goes beyond exposure Examples Engagement measures New technologies (Set-top box data, cell phones, eye tracking) 27

New Measures Program engagement Measure by IAG (now owned by Nielsen) has been used for guarantees Use of new technologies Eye tracking to measure attention to advertising seen in fast forward mode Set-top box data as source of exposure data Used by Google as currency Cell phone user sample to measure cross media exposure and ad effectiveness 28

TV Ads work better with Product Integration IAG measures show viewer acceptance and superior brand recall for commercials paired with Product Integrations Fear Factor Sponsorship Analysis 45% 51% 50% 35% 26% 38% 30% 0% 10% 20% 40% 60% 70% Jeep Mazda NetZero Brand Recall Fear Factor WITH Integration Fear Factor WITHOUT Integration Other Programming Source:Source: IAG Ad Data, 9/22/03 – 4/13/04 29

Eye tracking shows Viewers watch Fast-Forward Ads Mercedes-Benz Citi Bank Source: Innerscope Research, NBCU Research, 2007 30

New Measures: iMMi Measuring 21st Century Media and Consumer Behavior with 21st Century Tools

New Measures: iMMi One day in the life of a Houston panel member. NOTE: info HEAVILY redacted from original Panelist 10372

An Olympic Enthusiast’s 3 Screen Use Monday 8/11/08 Tuesday 8/12/08 Watched Olympics on USA Network for 35 minutes. 21 minutes into watching TV, visited nbcolympics.com while viewing. Stayed on site 46 minutes. Watched Olympics on NBC for 2 hours; 31 minutes. Visited web site 3 times while viewing, for 1 hours; 18 minutes. Visited site on cell phone for 16 minutes while watched on TV. Watched for 2 hours; 56 minutes on NBC. Visited nbcolympics.com from 8:42P-9:10P for 27 minutes while watching on NBC, mostly for non-video content. ONLINE Visited nbcolympics.com for 15 minutes before work. Spent 2 minutes watching Olympics on USA Network while online. Visited nbcolympics.com from home for 39 minutes, including 29 minute video. Turned on NBC at 8PM. Stayed on website for additional 45 minutes while watching TV. ONLINE Visited website from cell phone, 5:38P. Visited nbcolympics.com at home at 7:47P for 3 minutes. 3 Hrs MOBILE 2 visits to nbcolympics.com. 2 visits on cell phone (once at 5:41PM) 2 Hrs Lunch Break: Visited nbcolympics.com for 4 minutes. Visited nbcolympics for 25 minutes at work. Watched 6 min. video Online 1 Hr Quick visit to nbcolympics.com on cell phone. ONLINE TV Source: NBC Research 8-19-08. Data from IMMI Olympic panel.

Traditional measurement currencies Overview Traditional measurement currencies Changes in measurement and current issues Outlook: Future of media metrics 34

Predicting Future Trends 2018! 35

Trends in Media Use and Measurement More access to media technologies and greater variety of media offerings lead to new patterns of usage, expansion of consumer choices Internet is becoming a video medium, more time-shifting, more mobile New technologies will provide new, better measures and marketplace will demand them Top issue: measure 3-screen use and impact Ideal: Single-source measure of media exposure and purchase behavior Limit: consumers’ willingness to provide data More competition for ad $ will increase push towards new currency concepts, going beyond exposure 36

ARF Model and new TV Currencies

Trends in Media Measurement and Currencies ?

Thank you for your Attention Questions? Comments?