Enhancing Trading Demographics in Advertising Industry to Optimize Marketing Strategy

1. Trading Demographics Background for Advertising Agencies November 2005

2. Introduction … • The FTA broadcasters have been working with industry media experts, via CAANZ and the Media Independents to develop a more defined set of trading demographics for the market. • The industry is currently working with a vast number of demographics which is bringing into question the integrity of the market’s utilisation of the trading currency. • A demographic list has been developed which provides a common trading base for free television broadcasters with the exception of a small number of targets that enable individual Broadcasters to continue to address individual market needs.

3. The requirement for increasing audience granularity is subjecting the Peoplemeter panel to undue pressure. • To illustrate the relative robustness of New Zealand’s Peoplemeter panel, NZ has a ratio of one Peoplemeter to every 8,200 people, compared with the UK ratio at 1:11,500 • NZ is out of step with international Best Practice. • The UK trades on approximately 20 audiences with a population of just under 60 million • Global Guidelines for TAM recommends that minimum10-year age breaks should prevail for analysis • There is no intention to restrict the ability to analyse and report on any combination of audiences, as is current practice.

4. Margins of Error for a Rating of 10 This graph illustrates the margin of error that applies to a single observation at various sample sizes. For example, at a sample of 50 if a specific spot on a schedule rated 10 TARPs, the relative margin of error could see that spot reported anywhere between 2 and 18 TARPs. As sample reduces, MOE increases. Dividing our robust total sample of around 1200 people into relatively narrow demographic groups brings with it increased volatility in performance.

5. Variability of ratings delivery decreases with increases in number of spots and/or sample size There is a marked reduction in volatility as multiple observations are made. For example, in the first campaign show above, at a spot level the average MOE is 66% on a spot but falls to 14% when the campaign considered. As the number of observations (no. of spots) increases, the relative MOE decreases.

6. How were the audience groups determined? The Trading Demographics list has been defined collaboratively between the FTA Broadcasters, along with industry experts from AGB Nielsen Media Research, CAANZ and the Media Independents. A final sense check was undertaken with MediaSeNZ, the media auditor utilised by a large number of key advertisers. Four key criteria: • Consideration of the demos that the market currently trades against. • Sufficiently robust sample sizes (Minimum 100 Sample) • A list which is strategically sound and provides sufficient coverage. • Sense check

7. COMMON TO ALL FTA’s: 5-14 (n=207) 10-19 (n-160) 15-29 (n=187) 18-39 (n=321) 18-49 (n=511) 25-54 (n=494) Females 15-34 (n=138) Females 18-39 (n=177) Females 18-49 (n=271) Females 25-54 (n=268) Males 15-34 (n=131) Males 18-39 (n=144) Industry Agreed Consolidated Trading Demographics list… • Males 18-49 (n=234) • Males 25-54 (n=226) • HHS 20-44 (n=190) • HHS 25-54 (n=264) • HHS w/Kids 0-14 (n=160) • 25-54 Soc 1-3 (n=234) • 25-54 HHI $60K+ (n=246) • Homeowners 25-54 (n=322) TVNZ/PRIME: *(DISCRETIONARY CANWEST) • 25+ (n=789) • 40+ (n=542) • 55+ (n=297) • Females 40+ (n=291) • Males 40+ (n=257) TVNZ ONLY: *(DISCRETIONARYCANWEST/PRIME) • Maori & Pacific Island(n=170) * Broadcaster may choose to trade against dependent on situation/advertiser

8. COMMON TO ALL FTA’s: 18-39 (n=113) 18-49 (n=180) 25-54 (n=176) Females 25-54 (n=100) Industry Agreed Consolidated Auckland Trading Demographics List Sample Sizes in Auckland constrain the available Auckland Trading Demographic list. All other Trading Demographics will require ‘Promote to National’ to analyse regional buys. • 25-54 HHI $60K+ (n=101) • Homeowners 25-54(n=100) TVNZ/PRIME: (DISCRETIONARY CANWEST) • 25+ (n=275) • 40+ (n=189)

9. A Working Example: MediaSeNZ Audience Mapping This example maps targets in the media sense audit pool onto the Trading Demographics. The analysis undertaken clearly demonstrated that performances indexed within the generally accepted 10% margin of error, with the vast majority falling within a 5% differential.

10. MediaSeNZ Audience Mapping

11. Implementation Plan … • In order to make the adoption and movement to trading audiences as smooth as possible, a phased implementation plan has been proposed. • For those with Terms of Trade or VID agreements, a natural junction would be as those agreements mature. • For non-TOT/VID clients, a transition from early 2006 (eg: Feb) is planned. • Full Implementation by 31 December 2006 is expected, however it is anticipated that most business will transition to new trading demographics by 30 June 2006. • The specific trading demographics will be reviewed from time to time in consultation with the Industry subject to market conditions. Initially a two year review period has been agreed.

12. In Summary … • The FTA Broadcasters and media and research experts across the industry have agreed that it is in the best interests of the market to move towards Global Best Practice. • Such a move will ensure this critical currency is utilised with integrity to the benefit of all stakeholders, eg: auditing benchmarks will be more robust and results more measurable. • CAANZ and the vast majority of the Media Independents are poised to work with advertisers on the transition, commencing with calendar year TOT/VID agreements.