Nielsen Economic AdvisorNielsen Economic AdvisorWhat You Need To KnowWhat You Need To Know

September 10, 2009 September 10, 2009

Scott L BrownScott L Brown

SVP, Strategy & Digital PlatformsSVP, Strategy & Digital Platforms

The Economy - Numbers & VisualsThe Economy - Numbers & Visuals

Real Story - People, Patterns, and ProclivityReal Story - People, Patterns, and Proclivity

Adversity Inspires Coping And Adjustment

Adjustment - Coming to Terms with Adjustment - Coming to Terms with the New Economythe New Economy

Tough but moderating conditions:Free fall is

over

Acceptance Acceptance

UncertaintyUncertainty

DenialDenial

$ Food$ Food

$ Fuel$ Fuel

FearFear

UnemploymentUnemployment

Restraint is the new mantra

Savings?

Discretionary Spending?

Savings?

Discretionary Spending?

22 00 0077

20092009

221100

00

2200

0088

Equity markets

Commodities

Consumer sentiment

Housing

Unemployment claims

Manufacturing

China

Massive Stimulus

2010 GDP Revisions

ISI: +3.5%

UBS: +2.2%

Merrill Lynch: +1.7%

Consumer Attitudes

Nielsen Insights

Near vs. long term

Online recession buzz drops -27% (Mar to Aug)

Planning return to discretionary spending

Consumer Actions

Trip dynamics slowing

Focused on essentials

Value is the winning proposition

Knowing When To Act..…

THE

Driver of Behavior

Source: Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government

-652K

-504K

-345K

-443K

-247K

-681K

41,000

-597K

-380K

-321K

-175K-128K

-161K-137K-160K

-122K-144K

-72K

-741K-681K

-775,000

-675,000

-575,000

-475,000

-375,000

-275,000

-175,000

-75,000

25,000

125,000

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Job Losses – The Rate is SlowingStill A Long Way to go!

TheBottom

TheBottom

How Are Consumers Reacting?

Do you think your country is in economic recession at the moment?

75% to 100%50% to 75%25% to 50%0% to 25%

July 2009, Global Recession In Plateau

Consumer Response - Discretionary Change

Trip GeneratorsTrip Generators Trip AvoidersTrip Avoiders

Excludes gas only tripsSource: Homescan, a service of The Nielsen Company; 52 weeks ending 03/28/09 (versus prior year)

Percent Change vs. Year Ago

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8O

n-Li

ne

Sup

ercn

trs

Clu

b

Dol

lar

Liqu

or

Pet

Sto

res

Gro

cery

Ele

ctro

nic

Ttl

Out

lets

Dru

g

App

arel

Con

v/G

as

DIY

Off

ice

Sup

Mas

s

Dep

t

Toy

Annual Shopping TripsEssentials Needs Thrift

Essentials Needs Thrift

Avoidable

Avoidable

Same Store Sales Reflect Consumer ShiftSame Store Sales Reflect Consumer Shift

-15 -10 -5 0 5 10 15

Sams

BJ's

Kroger

Dollar General

Dollar Tree

Family Dollar

Walmart

Walgreens

CVS

Rite Aid

NordstromNordstrom

JCPenneyJCPenney

Home DepotHome Depot

KohlsKohls

Stock Up & SaveStock Up & Save

Discretionary SpendingDiscretionary Spending

Value & ConvenienceValue & Convenience

Source: Company press releases; June ‘09 results (excl fuel) for all but Sam’s Club, Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Walmart, Dollar Tree, CVS, Whole Foods, Home Depot, Lowe’s – latest quarterly report

Same Store Sales GrowthSame Store Sales Growth

SuperValuSuperValu

MacysMacys

Whole FoodsWhole Foods

SafewaySafeway

CostcoCostco

Lowe’sLowe’s

TargetTarget

KmartKmart

Top 15 Categories: % Unit Growth (FDM w/WM)

1.9

2.1

2.3

2.5

2.5

2.9

3.4

3.7

4.2

4.3

5.2

5.9

6.1

7.9

14.6

Flour

Condiments, Gravies & Sauces

Cheese

Baking Supplies

Yogurt

Ref Juices & Drinks

Fzn Novelties

Baking Mixes

Vitamins

Pasta

Dry Mix Prepared Foods

Fresh Meat

Wine

Seasonal GM

Canning & Freezing Supp

““If You Can’t Eat It, You Don’t Need It”:If You Can’t Eat It, You Don’t Need It”:

Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 06/13/09 (versus prior year) – minimum $100 million in sales

Back To The Basics

Back To The Basics

Store Brands

Avg Unit Sales Growth: 5.8%

Driver of growth: Consumables*

Departments: Fresh Produce, Fresh Meat, Packaged Meat, Dairy, Dry Grocery, Frozen, Deli

Store Brands

Avg Unit Sales Growth: 5.8%

Driver of growth: Consumables*

Departments: Fresh Produce, Fresh Meat, Packaged Meat, Dairy, Dry Grocery, Frozen, Deli

Consumers Turn to Consumers Turn to StoreStore Brands In A Down Brands In A Down EconomyEconomy

4.9

6.4

3.9

8.6

5.3 5.6

-4.7 -4.3

-7.2

2.2

-1 -1.1

Store BrandsStore

Brands

BrandedBranded

Source: Nielsen Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 06/13/09 (versus prior year)

Branded

Avg Unit Sales Growth: -2.7%

Driver of growth: Discretionary plus*

Departments: General Merchandise, Non-Foods, Health & Beauty, Dry Grocery

Branded

Avg Unit Sales Growth: -2.7%

Driver of growth: Discretionary plus*

Departments: General Merchandise, Non-Foods, Health & Beauty, Dry Grocery

% Unit Sales Growth for last 6 (4-week) periods

* Latest Quarter

* Latest Quarter

Coupons Back in Vogue

2.6 Billion

4.6 Billion

Q1 Q2 Q3 Q42008 -15% -8% -3% +10%2009 +17% ? ? ?

Source: Inmar CMS Promotions Services; excludes retailer coupons

An All-Time High for The Food Network Viewership More than 1 MM Viewers Tuning in During Primetime

Nielsen Measured PrimeTime Audience (000)

1003865

787771748682639584425

293

2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD2009

Source: Nielsen National People Meter Panel – Average TV viewership in the U.S.

Economy Taking Toll on Health & Wellness

Source: Scantrack & LabelTrends, services of The Nielsen Company; (FDM ex-Walmart) % Change in 4-Week Dollar Sales vs. YAGO end 06/13/19

Monthly sales growth of organics below 4% in last six periods

+0%

+5%

+10%

+15%

+20%

+25%

+30%

+35%

4 W

/E 0

2/25/0

6

4 W

/E 0

4/22/0

6

4 W

/E 0

6/17/0

6

4 W

/E 0

8/12/0

6

4 W

/E 1

0/07/0

6

4 W

/E 1

2/02/0

6

4 W

/E 0

1/27/0

7

4 W

/E 0

3/24/0

7

4 W

/E 0

5/19/0

7

4 W

/E 0

7/14/0

7

4 W

/E 0

9/08/0

7

4 W

/E 1

1/03/0

7

4 W

/E 1

2/29/0

7

4 W

/E 0

2/23/0

8

4 W

/E 0

4/19/0

8

4 W

/E 0

6/14/0

8

4 W

/E 0

8/09/0

8

4 W

/E 1

0/04/0

8

4 W

/E 1

1/29/0

8

4 W

/E 0

1/24/0

9

4 W

/E 0

3/21/0

9

4 W

/E 0

5/16/0

9

UPC-Coded Organics

More At-Home Meal Preferences

20

24

24

32

23

29

37

20

24

24

32

23

28

37

16

20

22

26

20

24

31

Choose a Less Expensive RestaurantMuch More Often

Bring Prepared Meal or Home DeliveryMuch Less Often

Eat Fast Food Much Less Often

Eat Dinner at Restaurant Much Less Often

Bring Lunch to Work/Pack Lunch MuchMore Often

Eat Breakfast at Home Much More Often

Eat Dinner at Home Much More often

% U.S. Households Claiming

Apr '08

Oct '08

Apr '09

Source: Homescan®, a service of The Nielsen Company – PanelViews Economic Impact Survey

Media Shifting:Decline in Ad Spending Widening

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Q1 2009 versus Year Ago

Local Sunday Supplement

Local News-

paperB2B

Magazines

Nat’l News-

paper

Nat’l Maga-zine

InternetFSI

CouponOut- door

Spot Radio

Local Maga-zine

Network TV

Network Radio

Hisp TV

Nat’l Sunday

Supp.

Syndi- cated

TV

Spot TV top DMAs

Total Ad Spending

Cable TV

Hisp Cable

TV

Spot TV

bottom DMAs

Source: Nielsen Monitor-Plus - Internet advertising expenditures account for CPM-based, image-based advertising.Source: Nielsen Monitor-Plus - Internet advertising expenditures account for CPM-based, image-based advertising.

Another Shift: CPG Fighting BackAnother Shift: CPG Fighting Back

SOPHISTICATEDSOPHISTICATED

SOPHISTICATEDSOPHISTICATED

Value and DiscountsValue and Discounts Value and ReachingTo The Consumer

Value and ReachingTo The Consumer

Cause MarketingSpecial Offers

Cause MarketingSpecial Offers

Listening To NewConsumer NeedsListening To NewConsumer Needs

•What To Watch

% Thinking they will be out of a recession in 12 months?

Global Avg: 26%Global Avg: 26%0% to 15%15% to 30%30% to 45%45% to 60%

July 2009Optimism Becoming More Widespread

Personal Savings Rates Historically Rise During a Recession:

Rate of increase not seen since ’73-’75 Recession

As a percentage of disposable income

U.S. Personal Savings RateMay 6.90

-4

-2

0

2

4

6

8

10

12

14

16

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Value Driven Excursions

Similarity inGlobal Behavior

Consumables

driving

growth

Prepping &

StoringHealth &Wellness

Slowing

Wine & Spirits

Stand Tall

Store

brands

resonating

Viewing & Reading

reflecting behavior

Food websites

generating

more traffic

Internet

time

increasing

Buzzing about

savings

Investing in at

home entertainment

Sales of

Blu-Ray

surging

Box office sales

up but slowingGamers going

strong

Areas of StrengthAreas of Strength

Putting The Pieces Together…

Consumer Trends Shaping The Future

• Fundamental shift in consumer spending as savings rates remain at elevated levels

• Value retailers attain preferred status for many

• Store brand success continues with risk for mid-tier brands

• A new “norm” is evolving and the days of over-leveraged households are gone

• Evidence supports movement back to discretionary consumption….at moderate levels

The Consumer: Value Measured By How The Brand Improves Life• “In a highly competitive landscape, only the strong

adaptive survive”

• Messaging and identifying the brand with value is key

• Positioning as green, a “friendly”, and an efficient provider

• Spelling out the benefit to the consumer/viewer –”how your product, and my engagement, helps me”

• Relevancy at all stages in the messaging, the brand, the benefit, the call to action

• The solutions are the same The solutions are the same

– Right product - right price - right placeRight product - right price - right place

– The difference now is we need to communicate with The difference now is we need to communicate with the right consumerthe right consumer

– It is increasingly about segmenting consumers to It is increasingly about segmenting consumers to understand and deliver on their unique needs understand and deliver on their unique needs

– Targeting applications and GPS enabled devices are Targeting applications and GPS enabled devices are enablers for new methods of reaching and delivering enablers for new methods of reaching and delivering

Keys to SuccessKeys to Success

Leading Indicators Support Bottom Has Been Hit, with Evidence of Emerging Recovery

•The•Outlook

A New Norm

Tough but moderating economic conditions

Restraint will be the new mantra

Economic ExpectationsStill Not Out Of The Woods

• Labor market pressures continue

• Housing woes to continue … commercial too

• More bank failures & bailouts

• Consumers under great financial stress

• Consumers pull back on spending continues

• Conservative recalibration of expectation and behavior toward value

• And what of television medium that reaches us all?

Reaching Across The Three Screens

TV

Internet

Mobile

Anytime/Anywhere Consumer Reach

Messaging and connectivity options multiplying

ConsumerConsumer ViewerViewer

NewlyEmpowered

NewlyEmpowered

TechnologyTechnology

WebsavvyWeb

savvy

Text MessagingText Messaging

18%18%

InternetInternet

34%34%

DownloadsDownloads

18%18%

VideoVideo

36%36%

Shift To Mobile Audiences Via Technology Shift To Mobile Audiences Via Technology Percent Increase in U.S. Mobile Subscribers

(Q1 2008– Q1 2009)Percent Increase in U.S. Mobile Subscribers

(Q1 2008– Q1 2009)

Multi Media MessagingMulti Media Messaging

32%32%

18%18%

Kraft

RecipesRecipes IngredientsIngredients

Store referrals & GPS Map

Store referrals & GPS Map

Brands must travel with the consumerBrands must travel with the consumer

Location Aware/Always OnLocation Aware/Always On

Page 36

New Paradigm: Anytime Anywhere Media Consumption & Measurement (A2/M2)

For the Media Industry…

• New ways to deliver content

Usage is independent of time

For Consumers…

Expanded access to content on “the best screen available”

For Marketers…

•Expanded opportunities to communicate with their customers

Usage is independent of location

+ +

New Research Questions

Page 37

Viewers use the “best screen available”

+ +153:27

hrs

3:37* hrs

3:00hrs

Usage is independent of time

Usage is independent of location

Monthly Time Spent Viewing Video in Hours: Minutes Per User 2+, Q1 2009

Source: The Nielsen Company Q1 2009; TV in the home includes live viewing plus playback within 7 days. Internet includes home and work who used internet to watch online video. *Mobile video audience consist of 13 or older mobile phone users who access video through any means.

Page 38

Media Growth ‘08 to ‘09 - All Time High

53.2%

Monthly Time Spent in Hours: Minutes Per User 2+, Q1 2009

1Q09 1Q08 % Diff Absolute Diff

Watching TV in the home * 153:27 150:38 1.9% 2:49

Watching Timeshifted TV* 8:13 5:52 40.1% 2:21

Using the Internet** 29:15 27:57 4.6% 1:17

Watching Video on Internet**

3:00 1:57 1:02

Mobile Subscribers Watching Video on a

Mobile Phone^

3:37* n/a n/a n/a

Source: The Nielsen Company Q1 2009; TV in the home includes live viewing plus playback within 7 days. Internet includes home and work who used internet to watch online video. *Mobile video audience consist of 13 or older mobile phone users who access video through any means.

Page 39

Apple iPhone U.S. Users (in millions)

Jan 2008 - Apr 2009

iPhone - small but growing a glimpse of mobile video consumption to come

6%

20%

13%15%

37%

AllSubscribers

AllSmartphone

Blackberry WindowsMobile

iPhone

Media Usage by Phone TypeVideo/Mobile TV

Q1 2009

Nielsen iPhone Executive Overview, Q1 2009

Page 40

Younger Demos Use A Diverse Set Of Platforms And Web Is Big

Source: CRE Study, 2009

New Economy – New TV ParadigmLeveraging Knowledge With New Norms

EconomyEconomy

Mobile TVMobile TV

TargetingTargeting Internet TVInternet TV

InteractivityInteractivity

TimeTime

ValueValue

Blue BloodsBlue Bloods

Blue CollarBlue Collar

MulticastMulticast

OpportunityOpportunity

Seg

men

tation

Seg

men

tation

GPSGPS

“We are all faced with a series of great opportunities brilliantly disguised as insolvable problems”