A CASE STUDY

1. A CASE STUDY MARK PENDOLINO INTERACTIVE MEDIA MARKETING A Look at the new Commercial Movement

2. Interactive Media Marketing A CASE STUDY MARK PENDOLINO AGENDA • Introduction / Background • Definitions • Online Advertising Resurgence • Burger King’s New Creative • Interactive Media Effectiveness • McLuhan & Marketing • What to Expect

3. Interactive Media • Huge potential for growth and adaptation • Seen as new “tool” by commerce • Engage the customer in one-on-one conversation • Create a sense of loyalty, connection and intrigue, • Track consumers’ behaviors • Interactivity generates new “branding” opportunities • Enables greater awareness through ubiquity • Word of mouth factor • Creates “relationship” between business and consumer • Can exist outside the Web • Tivo teaming with advertisers Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

4. Interactive Media • Responsibility and possibilities belong to advertisers • Interactivity in advertising more about effect of experience than content • Marketers are communicators • Need to study effects and effectiveness of new tool • Media can obstruct as well as enable communication • Need to understand the medium and its social impacts • Media powerfully reshapes social cultures Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

5. Marketing Definitions • “Interactive Marketing” • A dynamic collaborative process of creating, purchasing, and improving products and services that builds close relationships between a business and its customers, using a variety of services • “Integrated Marketing” • an approach based on the consistent and systematic strategic creation and delivery of marketing messages and materials • “Viral Marketing” • Marketing phenomenon that facilitates and encourages people to pass along a marketing message • “Rich Media” • New media that offers an enhanced experience relative to older, mainstream formats Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

6. " As broadband begins to reach critical mass in the home we think the number of traditional consumer brand advertisers will further increase as it provides a better platform for more compelling media ads and video formats – Tom Hyland, Partner, PricewaterhouseCoopers LLP " Online Advertising Statistics • Internet advertising on the rise (again) • $2.37 billion in online ad sales revenues for the 2nd quarter of 2004 • 7th consecutive quarterly revenue increase since the fourth quarter of 2002 • 3rd consecutive record-setting quarter of growth. Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

7. Online Advertising Statistics • Ad Sales Revenues: Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Source: Interactive Advertising Bureau (IAB) Internet Advertising Revenue Report, 2nd Qtr 2004 Conducted by Price Waterhouse Coopers

8. Online Advertising Statistics • Ad Sales Revenues: Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Source: Interactive Advertising Bureau (IAB) Internet Advertising Revenue Report, 2nd Qtr 2004 Conducted by Price Waterhouse Coopers

9. Online Advertising Statistics • Spending Split: Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Source: Interactive Advertising Bureau (IAB) Internet Advertising Revenue Report, 2nd Qtr 2004 Conducted by Price Waterhouse Coopers

10. “Rich Media” Usage • Comprises 43% of all ads served • Up 12% from 2003; 26% from 2002 • Click-through rates five times higher than non-rich media (non-rich media defined as GIF/JPGs, banner ads, etc.) • Stable after heavy decline in past year • Ad spending up nearly 37% in 2004; growth rates of 25% projected for next three years Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

11. “Rich Media” Statistics • Total ads served: Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Source: Ad Serving Trend Report DoubleClick Q3 2004; November 2004 Conducted by doubleclick.com

12. “Rich Media” Statistics • Click-through rates: Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Source: Ad Serving Trend Report DoubleClick Q3 2004; November 2004 Conducted by doubleclick.com

13. Burger King’s Advertising Changes • Steady decline of sales led to change of ad agency partner • Fired: Young & Rubicam • Hired: Crispin, Porter & Bogusky • Wanted to move back to “have it your way” theme • Create greater brand awareness and image • Focus efforts on target group: elusive 18-34 year-old males • Difficulty reaching people over web prompted desire for innovation in advertising Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

14. Innovative Campaigns • Edgy, innovative campaigns: • All embody efforts to fully use interactivity, integration and viral marketing Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

15. Innovative Campaigns subserviantchicken.com angusdiet.com Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect haveityourway.com chickenfight.com

16. Campaign Effects • Positive and negative – but gaining attention • Uniqueness, edginess draws attention from industry world • 10 days after subservientchicken went live: • Google provided 700 links to sites discussing • Site received over 20 million hits • Company reports 9-month same-store sales growth (October, 2004 up 6.9%) Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect It even spurred mock satire

17. Campaign Interactivity & Objectives • Chickenfight.com • Interactivity • Encouraged people to play games, post high scores, email friends, etc. • Over 5 million users cast votes for favorite chicken • Integration • Tied in with Television (DirecTV), email, streaming media • Branding • Generate branding image and viral marketing (buzz) Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

18. " This is a target audience that requires high entertainment value in the way you connect with them. – Russ Klein, Burger King Chief Marketing Officer " " " Mass customization is what’s in right now. – Rob Doughty, Burger King Spokesman " It is advertising, albeit the first of its kind…It may be a little silly and little questionable in taste…(but) we give them credit for it. – Bob Marsocci, DirecTV Spokesman " " We’re trying to give people something to talk about. – Jeff Benjamin, Crispin, Porter & Bogusky Interactive Creative Director " Campaign Interactivity & Objectives Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

19. Rich Media vs. Non-Rich Media • Studies reflect lasting impressions • Consumer study: • Rich media provides message association lift of 44% (non-rich media at 21%) • Advertiser survey: • Interactive ads increased message association 37% • Post-impression activities 60% higher • Flash ad impressions reached 4.8 billion in Feb. 2004 Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

20. IAB Findings • Interactive Advertising Bureau study results Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect *Sources: Microsoft/MSN Usability Research, 2004 Dynamic Logic, 2003 & 2004

21. " (Content) of the medium is like the juicy piece of meat carried by the burglar to distract the watchdog of the mind. – Herbert Marshall McLuhan, 1964 " McLuhan & Marketing • McLuhan’s Communication theories apply • Media conventions (not information) is what’s important • They affect habits of perception and thinking, not just deliver content • Important to understand total effect of the message (not just the content) Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect Medium is the Message

22. McLuhan & Marketing • Considered advertising as one of the great art forms of the age • Argued that advertisers knew instinctively that their job was not to convey an idea, but to achieve aneffect • Understood power of the consumer: • The best way to oppose something was to understand it, “then you know where to turn off the buttons” • Contended that marketers must think more deeply about what they are doing • Believed marketers need to develop more participatory communication systems than persuasive promotional messages Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

23. What to Expect • Interactive Media marketing will increase • Analyst studies of ad technology: • By 2007, rich media will gain 22% of market share over conventional ads • By 2008, 39% of all online ad revenue will come from rich media • More consumers will favor Internet over TV • Consumer study: choose only two media outlets: • 45.6% chose the Internet; 34.6% TV • Trend to continue: among 18-24 year-olds, 50.5% chose Internet • Consumer study: which medium used for entertainment? • 74% indicate Internet; approaching TV levels (86%) Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

24. Conclusion • Interactive Media effective and innovative in marketing & advertising • Empowers consumer • Generates message retention • Innovative in charge for new marketing integration (Burger King) • Marketers must be cautious and responsible about effects and impacts of new media tool • Control to audience increases in the future Introduction / Background Definitions Online Advertising Resurgence Burger King’s New Creative Interactive Media Effectiveness McLuhan & Marketing What to Expect

25. A CASE STUDY MARK PENDOLINO INTERACTIVE MEDIA MARKETING