w w w . c o m p e t e . c o m Confidential Information. Do not distribute.

Plush Search: Invitation Only Deals Sites And Impact of Search Marketing

March 23, 2011

Michael Perlman, Managing Director Online Media mperlman@compete.com

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Introduction to Compete

• Founded in 2000, joined WPP/Kantar in 2008

• Passionate about understanding consumers to inspire great marketing

• Fastest-growing operating company within Kantar in terms of revenue and new customer growth

• World-class advertiser, agency and media clients

• Strategic partnerships to enable marketing optimization and provide holistic view of consumers

• Leading the creation of a global, multi-screen, single-source consumer-panel with Lightspeed Research for WPP

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What is a “Flash Sale” Site?

• Membership only communities that provide daily sales on branded inventory

• Sales last 30 to 72 hours• Incentives offered ($10 to $25) to refer new members

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Flash Sale Sites Are Becoming Major Players in Online Retail…

• Increase in average unique visitors from 322K in Feb 2009 to 1.05M in Feb 2011 – 226% growth!!!!

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…And Consumers Are Hooked On These Sites

5

3

Average Monthly Visitation to Flash Sale Sites

Average Monthly Visitation to High End Retailer Sites

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Visitation to Flash Sale Sites And High End Retailer Sites Is Intertwined

14% of all visits to Flash Sale Sites Result in Consumer Visiting a High End Retailer Site in Same Session

4% of Visits to High End Retailer Sites Result in Consumer Visiting a Flash Sale Site in Same Session >200% growth over past two years

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Flash Sale Site Visitors – High Earning Women

28%24% 26% 26%

17%

60% 60% 62% 61%

50%

0%

10%

20%

30%

40%

50%

60%

70%

Gilt HauteLook ideeli Rue La La Internet Browser

Population

% Household income 100k+ % Female

Demographic Profile Of Site Visitors

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Significant Cross-Shop Activity In Category

Top Referring Sites To Ruelala.com

(February 2011)

Referring Site Share of Totalgoogle.com 14.60%yahoo.com 8.33%facebook.com 6.98%ideeli.com 3.39%paypal.com 3.24%hautelook.com 2.89%aol.com 2.61%gilt.com 1.97%beyondtherack.com 1.47%bing.com 1.14%

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How Do Flash Sale Sites Generate Traffic?

17% 13%18% 16%

7%

13%15%

10% 16% 30%

10%9% 11%

12%11%7%

8%12%

7%7%

0%

10%

20%

30%

40%

50%

60%

Gilt HauteLook ideeli Rue La La Apparel Industry

Email Portals & Search Direct Social

Top Referring Categories

(February 2011)

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Competitive Brand Terms Drive Search Traffic

4th largest referring site from term “gilt.com” and 9th largest referring site from term “ruelala”

15th largest referring site from term “hautelook”

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Flash Sale Providers Vary In Reliance On Paid Search As Traffic Acquisition Source

65%

52%

39%

20%

0%

10%

20%

30%

40%

50%

60%

70%

HauteLook Rue La La Gilt ideeli

Paid Search Referrals As % of Total Search Referrals

(February 2011)

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5.8%

3.6% 3.6%2.9% 2.6% 2.3% 2.2% 2.1% 2.0%

0%

1%

2%

3%

4%

5%

6%

7%

HauteLook Drives Traffic From High Value Generic Terms

Top Destination Sites For Search Term “Designer Jeans”

(% of Traffic From Term Dec-Feb 2011)

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Big Takeaway…

• Flash Sale sites are certainly using search marketing, but it does not appear to be as critical to their customer acquisition strategies as it is to other online apparel retailers

• Flash Sale sites can increasingly leverage search to grow overall user base, but might diminish “exclusivity” branding that has been core to growth