HARRIS INTERACTIVE

Prepared by:Judith Ricker Joseph Porus Division President VP and Chief ArchitectMarketing Communications Research Technology Research

March 2007

Mobile Advertising and Marketing USA

Consumer AcceptanceUnderstanding Subscriber Receptivity

(A peek behind the curtain)

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Table of Contents

Introductions – Our Unique Perspective

Today’s Objectives

Methodology and Sampling

Putting the Findings in Context- Technology Trends- Advertising Fundamentals for Mobility

The Findings and Implications

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Who is Harris Interactive?

Full service global market research firm with 40+ years experience. Recognized as the pioneer in Internet-based research methods.

Serves hundreds of Fortune 500 companies via traditional and online research methods

Brand and Communications solutions delivered to B2B and B2C segments

Conducts more Research on Internet Research than any other company in the world, and is the leader in the science and technology of Internet-related market research.

Conducted over 67 million interviews around the world >12M in 2006

Invested over $70M in intellectual and technological capabilities to become the leader in using the Internet to conduct research

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Joseph Porus - Who is this guy?

The early years…• Engineer with “The wrong profile” (Dean of Students - Lehigh University)• AT&T / Bell Labs - Engineer / Designer, Data Specialist, Product Management -

Business Systems, Micro Electronics, Human Factors Design• Highlights: Pebble Beach, EPCOT, CIA, US. Navy, 1st Robotic Factory

Market Research based on Frustration…• Pricing Strategy, Product Line Optimization, Product Line Planning• Lucent Wireless - Price Elasticity, Segmentation, Product Design, Customer

Loyalty and Satisfaction, End User Research, Competitive Analysis

Research Architect…• Results driven based on Telecom DNA• A potent blend of industry expertise & researching skills with a ”client side”

orientation

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Judith Ricker - The Untold Story

The early years…• Degrees in music performance and education form the Eastman School of Music• Professional orchestral oboist and teacher

Back to School and the Road to Market Research at the Eastman Kodak Company…

• Digital product forecasting and market analysis• New product development, competitive positioning, adoption and loyalty research• Emerging markets and scenario analysis• Brand and Advertising research leading to Gold Effie Award

On to Innovation – Harris Interactive…• Founded Marketing Communications practice• Innovative Communications solutions• Pioneering validated “Consumer Connection” approach

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Study Objectives

● What’s the level of interest?● What incentives will work best?● What kind of ads are most desirable?● What about media and format…?● Privacy and Profiling issues…?● Will profile based advertising be accepted?

Examine consumer acceptance of mobile advertising…

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Background

Each quarter, Harris Interactive conducts research on hot topicsfacing the Technology industry

• Analysis of current industry trends and challenges• Questions from industry insiders on future research to ensure the topics are

relevant– What you don’t know could hurt you!

We interview ~1,000 consumers from our multi-million person online panelThe purpose is to bring value to our clients by dissecting data from every angle, enabling us to deliver not just information, but true, actionable insight

• Simply stated, our difference is what we discoverThis quarter, the focus was on

Consumer Sentiment to Mobile Advertising

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Methodology

Respondent Qualifications:• Reside in the US• Age 18+

N=903• Note: This study is with adults only. Youth market expected to be huge

for mobile advertising (these results could therefore be conservative).Weighting• The data were weighted to reflect the total U.S. adult population.

General Information• An Internet survey was administered to members of the Harris

Interactive Online Database in February 2007. – Data collection was conducted entirely online.

• All results are weighted; sample sizes unweighted

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Technology Trends(Putting mobile advertising trends in context)

The Perfect Storm (1977-2007)• PC - “the second screen”• Web - higher viewership than TV• Cellular – two times more phones than PC’s (the 3rd screen)

Mobiles – the most personal device in history• Reflection of who we are (the 24 month renewable self image)• Mobiles redefined after 9/11 (a phone on steroids)• The new remote control of our lives (Apple iphone and beyond)

The m- Society• Wireless only households and businesses on the rise…(13% today, 50% considering)*• Hottest m- trends (banking 39%, watching videos 26%, GPS services 25%)*

(fundamental behavior change) • 4G (“Everything, all the time”); What they want next (GPS Navigation 57%, Watch

exclusive Premium channels 41%, Ads based on location 41%)*

* Data from Harris Interactive Technology Webcast 12/2006

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Wireless: Changing our Social Fabric

41%

24%

20%

15%

15%

13%

8%

My cell phone is a sense of security for me

Cell phones are now my primary form ofcommunication

Cell phones are ultimately a more personal,direct form of communication as compared to

traditional phone service

Cell phones have created an invasion ofprivacy

Cell phones must evolve to be based ondifferent platforms

My cell phone is my business connection

My cell phone is a source of personalentertainment for me

Agreement Level - Top 2 Box

The prolonged 9/11 Effect

A societal change

A sneak peak at the future

Base: Current Mobile Phone User (n=857)

Q - Please indicate how much do you agree or disagree with the following statements. Please use a scale from 1 to 7, where 1 means “Not Agree at all” and 7 means “Completely agree”.

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So…. How can we continue to talk to consumers during this period of change?

The purpose of marketing communications is to build or strengthen the bond between the brand and the customerRegardless of media, we can never loose sight of that factEvery touch point must focus on enhancing the relationship between the consumer and the brand

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Integrated Communications

It is critical to understand how each medium and each creative treatment contribute to building that bond, and to ensure that the campaign strategy is tightly integrated across media

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Is the Strategy of the Mobile Campaign to…

Persuade? to an attitude or behavior

Brand?identification

Communicate?a brand message

ThreeElementsKey

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What are we trying to achieve with ourmobile campaign, and how does it fit into brand strategy?

Each element of the communication fabric can work across any or all three dimensions, therefore each execution

may have a different express purpose.

Branding?Communication?Persuasion?

Important to Remember…

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Connecting to Consumers is Key

Understanding how each mobile ad moves target consumers toward (or away) from the brand is critical.

In the end,the success of any communication is how well

it connects the customer to the brand.

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Finally….

Never forget

Good advertisingis

Good advertising

Regardless of media!

© 2007 Harris Interactive Inc.

Research Findings

What Consumers Are Thinking

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Interest in receiving ads

90%

4%

2%

1%

2%

Not at all interested

Somewhat interested

Interested

Very interested

Extremely interested

Base: Current Mobile phone user (n = 903)

Who’s Interested in Receiving Mobile Ads?

No surprise, about 90% said No Cigar

However 9% expressed interest!(Recall there are over 240 million

cell phones in the USA)

Interested group (Top 3 box) is more likely between 30 – 39 years of age and in the

$15,000 and 24,999 category. Q - How interested would you be to receive advertisements on your cell phone?

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Interest in receiving ads if incentive

64%

21%

8%

3%

3%

Not at all interested

Somewhat interested

Interested

Very interested

Extremely interested

Base: Current Mobile phone user (n = 903)

More about those interested…

Incentives entice younger generation. With incentives, interested people more likely to be age 18-39

Small group of 40-49 are also interested

People with incomes between $125k - $149,999k were not interested at all before; With incentives this % increases to 13% from 0%

Mobile broadband users are also likely to receive ads with incentives (top 3 box – 26%)

Incentive-Based Ads – The Plot Thickens

The 90% disinterested drops

to 64%

Q - How interested would you be to receive ads on your cell phone if some incentives were offered by the cell phone provider in return?

…which creates 2 segments to consider

21% “Potential Viewers14% “Targets”

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Base: Current Mobile Phone User (n=857)

Willingness to watch advertisements on mobile phone

10%

7%

9%

12%

6%

6%

51%

7 - Very willing

6

5

4

3

2

1 - Not at all willing

A Historical Perspective on Incentive Based Mobile Ads

38% will accept ads with “free applications” but…

More work needed on what the value needs to be...

Current data shows 35% willing – very consistent with these results from

several months ago

Q - How willing would you be to watch advertising on your cell phone if in return you were to receive free applications for your cell phone?

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Type of ad

53%

41%

39%

34%

22%

13%

Specific areas of interest (e.g., sports, entertainment,

travel)

Specific vendors or brands

Daily consumable products(e.g., soap, toothpaste) –

Discount coupons

Location specific

Time driven (e.g., receivedat lunch time)

Other

Base: At least somewhat interested to receive ads (n = 344)

Interest in Types of Ads Vary

There are multiple roads to success…

Understanding market segments is key!

Males are more likely to prefer Ads based on

specific areas of interest.

Q - What kind of advertisements would you like to receive on your cell phone? Please select all that apply.

The sleeper….

Not all consumers have thought this through … yet!

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Interest for special requests for ad content

24%

39%

29%

5%

3%

Not at all interested

Somewhat interested

Interested

Very interested

Extremely interested

Base: At least somewhat interested to receive ads (n = 344)

Special Requested Ads- In Demand

Relatively strong demand from 37%

Lukewarm another 39%

Q - How interested are you in a feature that would let you put special requests for ads (e.g., If looking to buy a new car, you can put in a request to receive hot deals on Honda in your zip code for a specific amount of time)?

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Incentives to overcome barriers

66%

56%

48%

43%

42%

40%

7%

2%

12%

Ability to opt out

Choose type of ads received

Choose number of ads received in given time period

Provide profile of areas of interest so only specific adsare sent

Different/discounted plan if ads included

Choose specific times when ads would be received

Receive ads only when out of home

Other

Nothing can lower the pain

Base: At least somewhat interested to receive ads (n = 344)

How Can your Target Audience be enlarged?

Several tactics may be effective

The bigger themes are consumer demand for: control, personalization

and customization

Q - Which, if any, of the following can lower the pain associated with watching ads on your cell phone? Please select all that apply.

The Minority Report-Science Fiction within reach?

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Best incentives to watch ads

78%

63%

40%

40%

29%

23%

16%

16%

3%

5%

Cash

Free minutes

Free entertainment downloads (e.g., ring tones, games)

Discount coupons

Free music downloads

Free information downloads (e.g., news, traffic, weather)

Free video downloads

Free Access to high end network features (e.g., GPSservices)

Other

None of these Base: At least somewhat interested to receive ads (n = 344)

What Type of Incentives May Work Best?

Cash is king but …

…there is plenty of maneuvering room

to be effective

Q - What do you perceive to be the best incentives for watching ads on your cell phone? Please select all that apply.

Recent activity:VISA and weather reports

AMEX and The Weather ChannelMicrosoft and Business customers

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Delivery Channel

56%

40%

24%

23%

22%

7%

Text message

Picture message

Video

Ads transferredautomatically to email

Voice message

Other

Base: At least somewhat interested to receive ads (n = 344)

Deeper Dive into Demographics:

Students prefer text message as the channel

Multiple person HHs prefer picture messages

Single person HHs would like ads to be transferred automatically to the email

Media of Choice: Some Surprises!

Text Messages top the list!

Picture ads have nearly twice the appeal as videos

Q - In which of the following ways would you like to receive an ad on your cell phone? Please select all that apply.

Coming soon to your mobile:DVR, projection screens,

custom platforms

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Interest in Receiving Promotional Text Messages to Cell Phone

1%

1%

5%

14%

78%

Extremelyinterested

Veryinterested

Interested

Somewhatinterested

Not at allinterested

A Historical Perspective on Promotional Text Messages

Base: Current Mobile Phone User (n=857)

The 21% Solution….

FACT: 18-39 years are most responsive to text message promotions

Some of our previous research revealed a 21%

level of interest in promotional Text

messages…higher than the 9% we found for all

promotional ads.

Q - Would you be interested in receiving promotional text messages to your cell phone (assuming relevant to you)?

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Willingness to provide personal information

Yes - but I chose who receives my information

19%

Yes-I'd be willing to provide information

9%No-I would not be willing to provide

profile information. 21%

Yes – but only for right incentive.

30 %

Yes – but only if I could turn it off at any time

20%

Privacy vs. Profiling – A Balancing Act

Base: At least somewhat interested to receive ads (n = 344)

Only 21% say NO

About 9% say YES-unconditionally

Wow! Nearly 70% give conditional “yes” to profiling!

Q - Would you be willing to provide profile information about yourself to your wireless provider so that ads could be custom tailored to your needs?

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In Summary…

The environment is ripe for the growth of mobile advertisingConsumers will accept mobile advertising if:● There is a pay-off / value proposition● The ads are relevant● They control what they get and how they

are profiledUnderstand the objective of the campaign and how it will work to build the brand integrated with the entire communications strategy

Good advertising is good advertising!