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THE AMERICAN ADVERTISING FEDERATION MEDIA INVESTMENT SURVEY 2007

THE AMERICAN ADVERTISING FEDERATION MEDIA INVESTMENT SURVEY 2007. SURVEY OVERVIEW. During a time of unprecedented change, how are marketers navigating the tumultuous media landscape?

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THE AMERICAN ADVERTISING FEDERATION MEDIA INVESTMENT SURVEY 2007

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  1. THE AMERICAN ADVERTISING FEDERATION MEDIA INVESTMENT SURVEY 2007

  2. SURVEY OVERVIEW During a time of unprecedented change, how are marketers navigating the tumultuous media landscape? To find out, the AAF Media Investment Survey 2007 polled nearly 1,000 advertising industry leaders across agency, media, client and other sectors. The study revealed that the increasing rate of change is resulting in a commitment to innovation and dedication to a media mix with the proper balance of traditional and emerging media.

  3. SURVEY HIGHLIGHTS • Three-quarters said that up to 20 percent of their budget is reserved for experimentation and launch vehicles. In addition, 1 in 8 of respondents list 21-40 percent of their budget as reserved for these items. • When asked about media planning in 2007, respondents ranked “I am open to new • ways to use traditional media” highest (78%), with “The right media mix almost • always includes a balance of traditional and non-traditional media” (75.5%), and • “The search for new properties to grow my brand never stops” (57.7%) right behind. • Newspapers (51.4%) and Network TV (34.5%) are the media categories with the • most opportunity for reinvention. • In the magazine sector, the business category (46%) is seen as “most in need of • a newcomer to shake things up.” Source: AAF Media Investment Survey 2007

  4. LOOKING BACK: A TUMULTUOUS MEDIA ENVIRONMENT • Compared to the pace of change in 2005, would you say that the pace of change in the media landscape happened… More slowly in 2006 2% At about the same pace 18% Even faster in 2006 80% Source: AAF Media Investment Survey 2007

  5. TALE OF TWO WORLDS When asked to rate their own performance at managing, adapting to, and getting out in front of significant changes in 2006, 1/3 of marketers give themselves high marks while 1 in 5 admit they have much room for improvement. 19% adapt poorly to changes 33% adapt well to changes 1 2 3 4 5 VERY WELL VERY POORLY Source: AAF Media Investment Survey 2007

  6. 2006: A YEAR OF WIDESPREAD INNOVATION 23% 77% The Rush to Second Life 39% 61% The Rise of YouTube 49% 51% Popularization of “Mash-ups” 50% 50% “SAW IT COMING” “TOOK ME BY SURPRISE” Newspapers Moving to Tabloid Format 52% 48% Issue-Specific Print Audience Measures 53% 47% TV Commercial Rating System 54% 46% Growth of Free Daily Newspapers 58% 42% Restructuring of Traditional Media 65% 35% Explosion of Consumer Content 75% 25% Emergence of Podcasting 77% 23% Social Media in Communication Plans 80% 20% Mass Adoption of Text Messaging 86% 14% TV Programs on the Internet Source: AAF Media Investment Survey 2007

  7. LOOKING FORWARD HOW MUCH FASTER CAN IT GET? • Looking forward to 2007, do you expect significant changes in the media landscape to happen… More slowly than in 2006 3% At about the same pace 39% Even faster than in 2006 58% Source: AAF Media Investment Survey 2007

  8. EMBRACING CHANGE IN 2007 52% say… “I am more likely to anticipate, prepare for, and get out in front of changes in the media landscape in 2007.” 46% Source: AAF Media Investment Survey 2007

  9. CHANGE CHAMPION = INNOVATION INVESTOR The degree to which an individual embraces change has a significant effect on their innovation investment strategy. • Change Champions reserve 18% of their media budget for experimentation, while Change Acceptors only set aside 12%. • Not surprisingly, Change Champions are also more aggressive with their investment strategy, with 1 in 4 budgeting over 20% for new opportunities. • Conversely, only 6% of Change Avoiders reserve that level of investment for experimentation. Average % of budget reserved for innovation Source: AAF Media Investment Survey 2007

  10. MAKING A FINANCIAL COMMITMENT TO INNOVATION And of the overall respondent base, 73% say… “Up to 20 percent of my budget is reserved for experimentation and new properties.” On average, respondents will devote 15% of their overall media spending to innovation. Source: AAF Media Investment Survey 2007

  11. NEW YEAR, FRESH APPROACHES When asked about their approaches to media planning in 2007… • 4 in 5 say “I am open to new ways to use traditional media.” • 4 in 5 say “The right mix almost always includes a balance of traditional and non-traditional media.” • 3 in 5 say “The search for new properties to grow my brand never stops.” • The majority say that staid media categories are in need of innovation if they are to remain competitive…. Source: AAF Media Investment Survey 2007

  12. BUSINESS PUBLICATIONS ARE MOST IN NEED OF INNOVATION WITHIN MAGAZINE SECTOR Q. Which magazine categories are most in need of a newcomer to shake things up? 46% 26% 23% 19% 17% 13% 9% WOMEN’S SERVICE EPICUREAN SHELTER MEN’S FASHION/ BEAUTY NONE BUSINESS Source: AAF Media Investment Survey 2007

  13. NEWSPAPERS WOULD BENEFIT FROM REINVENTION Q. Other than magazines, which of the following media categories are most in need of a newcomer to shake things up? 51% 35% 34% 30% 24% 18% 4% NETWORKTELEVISION OTHER CABLE TELEVISION OUTDOOR DIRECT MAIL RADIO NEWSPAPERS Source: AAF Media Investment Survey 2007

  14. APPENDIX

  15. RESPONDENT INDUSTRIES Q. Please indicate the industry sector in which you work.

  16. RESPONDENT TITLES Q. What is your title? Director Owner Manager Other President Vice President Account Exec/Coordinator Managing Director/Partner

  17. DECISION-MAKERS Q. Which of the following statements best describes your role in your company's/client's decision-making process for media investment? I am part of a team that makes the final media investment decision I am part of a team that makes media investment recommendations I make media investment recommendations I make the final media investment decision myself None of the above

  18. EXPECTED MEDIA INNOVATION Q. As you plan for 2007, please take a moment to reflect on where you were at this point last year, preparing for 2006. At that time, which of the following innovations in the media landscape did you see coming? The availability of television programs on the Internet The mass adoption of text messaging in the U.S. The importance of social media/networking as part of the communications plan The emergence of podcasting The explosion of consumer-generated and consumer-distributed content The restructuring of traditional media The growth of free daily newspapers in many markets The introduction of a television commercial rating system The advent of issue-specific print audience measurement systems The movement of traditional newspapers to the tabloid format The popularization of 'mash-ups' or Web applications with more than one source The rise of YouTube The rush to Second Life Source: AAF Media Investment Survey 2007

  19. SURPRISES IN MEDIA INNOVATION Q. As you plan for 2007, please take a moment to reflect on where you were at this point last year, preparing for 2006. At that time, which of the following innovations in the media landscape took you by surprise? The rush to Second Life The rise of YouTube The popularization of 'mash-ups' or Web applications that have more than one source The movement of traditional newspapers to the tabloid format The advent of issue-specific print audience measurement systems The introduction of a television commercial rating system The growth of free daily newspapers in many markets The restructuring of traditional media The explosion of consumer-generated and consumer-distributed content The emergence of podcasting The importance of social media/networking… The mass adoption of text messaging in the U.S. Television programs on the Internet Source: AAF Media Investment Survey 2007

  20. 2006 PACE OF CHANGE Q. Compared to the pace of change in 2005, would you say that the pace of change in the media landscape happened… Source: AAF Media Investment Survey 2007

  21. 2007 EXPECTED PACE OF CHANGE Q. Looking forward to 2007, do you expect significant changes in the media landscape to happen... Source: AAF Media Investment Survey 2007

  22. 2007 EXPECTED PACE OF CHANGE Q. On a scale of 1 to 5 with 1 meaning 'very poorly' and 5 meaning 'very well,' please rate your own performance at managing, adapting to, and getting out in front of significant changes in 2006. 5 4 3 2 1 Source: AAF Media Investment Survey 2007

  23. MANAGING MEDIA CHANGES IN 2007 Q. Given your experience with managing the pace of change in 2006, are you more or less likely to anticipate, prepare for, and get out in front of changes in the media landscape in 2007? Source: AAF Media Investment Survey 2007

  24. 2007 APPROACH TO MEDIA PLANNING Q. Given the current media climate and your expectations for 2007, please indicate which of the following describe your approach to media planning in the coming year. The rush to Second Life I am always open to new ways to use traditional media The right media mix almost always includes a balance of traditional and non-traditional media The search for new media properties to grow my brand never stops Partnering with innovative media brands is an important way to convey the image of my brand as fresh and innovative Partnering with new media launches is an important way to convey the image of my brand as influential and ahead of the curve Partnering with a new media launch that has a significant +buzz+ factor mitigates some of the risk associated with new media launches I am willing to spend more and/or assume more risk to reach word-of-mouth generators The tumultuous nature of the media climate requires the assumption of more risk in order to reap the big rewards and avoid +missing the boat I am willing to spend more and/or assume more risk to reach early adopters * Source: AAF Media Investment Survey 2007; *None of the above

  25. 2007 APPROACH TO MEDIA PLANNING Q. Here’s a list of terms that may or may not guide your approach to media investment in 2007. Please check the two that best apply. Solution-oriented Creative Innovative Interactive Influencer-focused Traditional Break-through Conservative High profile * Source: AAF Media Investment Survey 2007; *None of the above

  26. BUDGET ALLOCATIONS Q. What percentage of your budget is reserved for experimentation and new media properties? Source: AAF Media Investment Survey 2007

  27. MAGAZINE CATEGORY MOST IN NEED Q. As is often the case, the arrival of a novel approach to a traditionally staid media category can have a major effect on every player. Which of the following do you think are most in need of a newcomer to come and shake things up? Business magazines Women's service magazines None of the above Fashion and beauty magazines Men's magazines Shelter magazines Epicurean magazines Source: AAF Media Investment Survey 2007

  28. MEDIA MOST IN NEED Q. Beyond magazines, which of the following media categories do you think are most in need of a newcomer to come and shake things up? Newspapers Network television Radio Direct mail Outdoor Cable television Other Source: AAF Media Investment Survey 2007

  29. MEDIA INNOVATION AND CREATIVITY Q. Advertising is known as a hyper-creative business. Do you feel the pace and scope of innovation in the media landscape inspire or stifle your creativity?

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