1. 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

2. 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

3. 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

4. Traditional TV Currency Measures
ARF Model (2003)

5. Traditional TV Currency Measures
ARF Model (2003)

6. 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

7. From this: 1958 7

8. To This: 2008 8

9. 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

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

11. Media Technology Ownership Growth4%
11%
Growth (%) 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

12. 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

13. 35 Million High Definition TVs13

14. Online Video is becoming Important14

15. 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

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

17. 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

18. 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

19. 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

20. 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

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

22. 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

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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

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

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

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

33. 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 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 Data from IMMI Olympic panel.

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

35. Predicting Future Trends
2018! 35

36. 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

37. ARF Model and new TV Currencies

38. Trends in Media Measurement and Currencies?

39. Thank you for your Attention
Questions? Comments?