1.Return on Influence From Buzz to Buy Ed KellerRachel Swanson CEO Associate Director Keller Fay GroupConsumer InsightsCond Nast

2. Background Marketers are increasingly turning to word of mouth marketing as a strategy to grow brands The meteoric rise of social media has propelled an interest that was already strong With rising interest in word of mouth comes new questions WOM matters, but is there a proven link to sales? What is the role of media in stimulating word of mouth? Traditional media as well as social media What is the role of, and the true value of, influencers? 3. Two Starting Points for Our Investigation 1. The Role of Advertising in Word of Mouth About 20% of word of mouth is stimulated by advertising About 700 million ad-influenced word of mouthimpressions for brands each day in America The effectiveness of word of mouth is substantially increased when stimulated, encouraged, and/or supported by advertising The presence of advertising in word of mouthconversation increases the probability by ~ 20% that aconsumer will make a strong recommendation to buy ortry a product Source: Keller Fay article in Journal of Advertising Research (June 09): 4. Two Starting Points for Our Investigation 2. The Value of Influencers The reach effect Their word of mouth is 2x 8x vs. the average Makes marketing more efficient, effective The acceleration effect They accelerate product adoption, thereby improving profitability The amplification effect Advertising messages go further via word of mouth Certain media have advantages in reaching influencersSource: Keller Fays TalkTrack 5. Cond Nast Wanted Answers to the Following Questions How and how much does WOM inform consumer choice? What role does media play in stimulating WOM? What is the true value of WOM? Can it be calculated? 6. Investment Return On Influence 7. Methodology: Multiple Data Sources Online survey of women magazine readers N=1,026 women 25-49, HHI $50,000+ Screened for readership of at least one of 19 magazines (see next page) Unique methodology to interview 230 peers of magazine readers Friends/family/colleagues with whom members of primary sample had recent word ofmouth conversations Email addresses provided by respondents and automatically contacted via email byKeller Fay for online interview Closes the word of mouth circle re WOM impact (including sales) Nationally representative sample of women ages 25-49, HHI $50k+ N=4,640 Drawn from Keller Fays TalkTrack, serves as benchmark group Academic consultant: Dr. Barak Libai Specializes in economic valuation of consumer social interactions Associate Professor of Marketing, Tel Aviv University 8. Methodology National Primary Sample (Magazine Readers) 9. Female Magazine Readers More Up-to-Date on New Trends % of Magazine Readers vs. Total Women Who Closely Follow Each Category for Whats New*Total Women Magazine ReadersPts. Difference60% Household Products 39%2160%Personal Care & Beauty 43%17 49% The Home 34%15 49% Shopping, Retail & Apparel 42% 756% Food & Dining51%5 43%Children's Products 38% 5 Base: Respondents from TalkTrack, July 2008 June 2009, Total Public Females ages 25-49 withHHI $50K +, n=4,640; Total Panel Sample (Womens Magazine Readers), n=1,026*Magazine readers and total public all female aged 25-49 with household income of $50K+ 10. Female Magazine Readers: Give More WOM Advice % of Magazine Readers vs. Total Women Who Give Advice in Each Category*Total Women Magazine ReadersPts. Difference49% Household Products 30%1949%Personal Care & Beauty32% 17 34% The Home23% 1141% Shopping, Retail & Apparel32%953% Food & Dining 47% 6 38%Children's Products32%6 Base: Respondents from TalkTrack, July 2008 June 2009, Total Public Females ages 25-49 withHHI $50K +, n=4,640; Total Panel Sample (Womens Magazine Readers), n=1,026*Magazine readers and total public all female aged 25-49 with household income of $50K+ 11. Magazines Inform WOM and Are Important Part of Brand ConversationInformationMentioned inSourcesConversationsTV ads25% 9%Magazine ads 22%6%Online ads 16%6%Newspaper ads12%5%Social Media9%3%Direct mail 7%3%Direct email/text 6%2%Radio ads 4%1%Base: Total Panel Sample (Womens Magazine Readers), n=1,026 *Magazine readers and total public all female aged 25-49 with household income of $50K+ 12. Magazine Readers Have Larger Social Networks Number of People Communicate with Fairly Often251/323.8 more people18.3 9.6 20156.7 6.04.8 10AquaintancesClose Friends 8.2 5 6.8 Family 0 Total Women Magazine ReadersBase: Respondents from TalkTrack, July 2008 June 2009, Total Public Females ages 25-49 with HHI $50K +, n=4,640; Total Panel Sample (Womens Magazine Readers), n=1,026 *Magazine readers and total public all female aged 25-49 with household income of $50K+ 13. Magazines Are an Influencer-RichInfluencers Are Key to WOMAudienceENGAGEDDiverse interestsInfluencers TRENDSETTING Early adopters Yet they account comprise onlyfor 25% of all 10% of the U.S.CONNECTED Large social networksWOM populationIMPACTFUL Trusted source of information Source: TalkTrack, July 2008 June 2009, Total US Population 13-69 14. Influencers: Frequent Magazine Readers Influencers are more frequent readers of magazines of all types.Total Public Influencers60% 53%50% 40%40% 25% 38% 31%31%30% 27% 18%19%26% 25% 25% 2-4 Days 12%13%a Week19%20%14%12% 10%14%28% 9% 5- 7 Days10%18% 20% 21% 19%a Week 13%14% 15%10% 11% 0% News/Business/Womens Lifestyles Sports MensPolitics Interests& CelebrityInterests Base: Respondents (Total, n=1,920; Influencers, n=323) Source: TalkTrack, October 30th to November 19th 15. Womens Magazines Deliver 50% More Influential Consumers than the Norm % Qualifying as Influencers20% 15%18% 10% 5% 12% 0% Total WomenWomen's Magazine Readers(Females 25-49 HHI $50K+)(Females 25-49 HHI $50K+) Base: TalkTrack, July 2008 June 2009, Total Public Females ages 25-49 with HHI $50K+, n=4,640; Custom Study, Total Panel Sample (Womens Magazine Readers), n=1,026 16. Influential Readers Talk More50% more conversations about products every week than the average magazine reader 17. With Far More PeopleDiscussed productsDiscussed productswith 22 Peoplewith 33 PeopleAll Magazine Readers Influential Magazine Readers 18. Influencers Are First to Buy62% more likely than the average magazine reader to be the first to buy new products and services 19. How Much Does this Influential Magazine Reader Impact the Bottom Line? 2009 Keller Fay Group 20. Calculating the Economic Value of WOM Economic value of influencers stems from the following A. Probability of person to be affected by magazines(Reliance on Magazines) B. Number of conversations they have about products(Volume of Conversation) C. Persuasiveness of readers word of mouth (Credibility & Persuasiveness) D. Expected profitability of their friends (Profitability)Reliance onVolume of Credibility &ProfitabilityMagazines ConversationPersuasiveness 21. Influential Magazine Readers Deliver More $$s to the Bottom LineReliance on Volume ofCredibility & Profitability MagazinesConversation Persuasiveness3.8X more value to marketers vs. all magazine readers 22. How Does That Translate to the Bottom Line?Average Magazine Reader InfluentialMagazine Reader 23. What Drives the Increased WOM Value? Interviews of peers was key to providing first-ever measures of persuasiveness and peer profits.3.9Conversations about 1.81.31.4 1.2Consumer TechnologyWOM Value 4.1 2.4 1.61.10.9 Personal Care & Beauty WOM Value 3.2 1.81.3 1.31.1Apparel & Accessories WOM Value 24. Conclusions Word of mouth matters Peers report making purchases that are largely tied to the persuasiveness and credibility of WOM information Magazines reach the influencers who drive WOM Magazines that have the most influencers deliver the most social value to advertisers Magazines are a key source of the information shared in WOM The value of WOM is measureable, and substantial A marketing strategy that targets influencers will yield ROI 25. Thank You! Ed Keller ekeller@kellerfay.comRachel Swanson Rachel_Swanson@condenast.com