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ADDRESSABILITY APPLIED - A USE CASE

The emerging opportunity in Addressability At Scale (AAS) is the

key driver of competitive advantage in the Age of the Customer.

Addressability At Scale (AAS) is defined as the opportunity to create competitive advantage through the delivery of targeted, personalized

experiences to consumers.

AAS is enabled through the application of data and analytics to the massively expanding digital audience platforms.

Addressability at Scale

AAS

AAS is leveraging your greatest asset and your competitive advantage:

Your Customer Data.

To define & target high-value segments in the digital media landscape that will:

Improve Media Efficiency

Expand Funnel & Take Share

Grow More Profitable Customers

AAS The Opportunity

© 2014 Merkle. All Rights Reserved. Confidential 4

AAS & Your Business Model

EFFICIENCY: LOWER FUNNEL OPTIMIZATION

Take existing digital media to next level of performance

through improved targeting, relevance and measurement.

Drive down cost per sale metrics and eliminate wasted spend.

GROWTH: FUNNEL EXPANSION

PROFIT: CUSTOMER RETENTION & ENGAGEMENT New customer programs that leverage all of customer data in all media to proactively

retain and grow the profit from of the customer portfolio.

Pivot from media measurement to customer segment measurement.

1 2

3

Reallocate media savings to enable growth from new addressable individuals.

Through attribution, have the confidence to see their progression through the funnel and increase predictable return/value.


The Addressability Spectrum

Anonymous Partially Identified Identified IDENTIFICATION

Unknown Some Knowledge Well Known

CHANNELS & MEDIA

KNOWLEDGE

Mass Segmented Personalized EXPERIENCES

The entire spectrum of data is leveraged with AAS.


Addressability At Scale (AAS)

© 2014 Merkle. All Rights Reserved. Confidential

SPECIALTY RETAIL & CPG | STRONG BRAND | CROWDED LUXURY MARKET

Addressability Applied Use Case: Kiehl’s


Addressability At Scale (AAS)

American Cosmetics Brand Retailer

Founded in 1851 in NYC

Bought by L’Oreal in 2000

Over 250 Stores Worldwide

Distinguished for their Edgy Marketing & Simple Packaging

Loyal Customer Base & Strong Online Presence

Over 1,000 Points of Sale in Department Stores, Airports, etc.

© 2014 Merkle. All Rights Reserved. Confidential


The AAS Customer Experience

CHRISTINA

33 Years Old

Lives in Miami

Social Butterfly

Until May 2013 not widely aware of Kiehl’s

Today: She is a happy Club Member

Keeps Her Life Online: Commerce & Social

Christina & her friends are a core Kiehl’s Segment: CHIC & TRENDY • Single/Married No Children • Urban/Suburban Lifestyle • Incomes $50-75k + • Mostly White Collar Professionals

8 © 2014 Merkle. All Rights Reserved. Confidential



SEGMENT INSIGHTS & PURCHASING BEHAVIOR

Uses the Internet as primary vehicle for research and purchasing of a wide variety of goods (clothes, home goods, electronics, etc.)

While they like to shop with friends, they use their favorite store apps to browse products and do not buy anything without researching the price and asking their friends on Facebook and Twitter.

NEEDS A cosmetic line that’s got them covered in both skincare and make up. Their lives are busy, so once they commit to a quality brand they won’t continue shopping around.

SEGMENT: CHIC & TRENDY




WE DO NOT KNOW Christine

Her Friends

How to speak to her 1:1 with personalized offers

SEGMENT: CHIC & TRENDY

WE DO KNOW How to target People like Christina

How to target Friends of Christina

The segment’s average value, media preferences & behavior




11 © 2014 Merkle. All Rights Reserved. Confidential 11 © 2014 Merkle. All Rights Reserved. Confidential

Addressability Applied

Christina’s Experience

FROM ANONYMOUS

TO IDENTIFIED


Addressability Applied: Christina’s Experience

Targeted Display Paid Search

Paid Search PLAs Mobile Site Email

Online Conversion

Website

2 3

5 6 7 4

9 10 8

1 Social Display Remarketing

Store Visit GEO Mobile



2 3

5 6 7 4

9 10 8

While browsing her favorite website, Christina is served a Display ad through lookalike modeling.



Online Conversion

Website

Social Display Remarketing




3

5 6 7 4

9 10 8



Online Conversion

Website

SEGMENT IDENTIFIED

Brand recognition kicks in. Curious, she searches on Google for “Kiehl’s” and clicks on the ad.






5 6 7 4

9 10 8

Christina browses through the website and gets familiar with the products.




Online Conversion

Website

SEGMENT IDENTIFIED






5 6 7

9 10 8

Her interest growing, she consults Google Shopping for information about competitive products.




Online Conversion

Website

SEGMENT IDENTIFIED







6 7

9 10 8





Online Conversion

Website

SEGMENT IDENTIFIED


While she is on Facebook later, she is retargeted with an ad for the same products she browsed the day prior. She clicks.






7

9 10 8



Already on her phone, Christina clicks the ad and is taken directly to the product’s page on the Kiehl’s mobile-optimized website.



Online Conversion

Website

SEGMENT IDENTIFIED








9 10 8




She is pressed for time, but sees the option to sign up for email alerts. She submits her address.



Online Conversion

Website

SEGMENT IDENTIFIED

ADDRESS IDENTIFIED








9 10







Online Conversion

Website

SEGMENT IDENTIFIED

ADDRESS IDENTIFIED


While she running errands the next day, a push notification on her phone indicates that she has an personalized free sample offer from her local store advisor.







10







Online Conversion

Website

SEGMENT IDENTIFIED

ADDRESS IDENTIFIED


Christina goes to the store to meet the advisor, grab the samples and try the products herself.








SEGMENT IDENTIFIED



Armed with a redemption code and a few more online reviews, she makes her first purchase. A relationship with Kiehl’s is born.

INDIVIDUAL IDENTIFIED





Store Visit Online Conversion

Website

ADDRESS IDENTIFIED



GEO Mobile




Christina goes to the store to meet the advisor, grab the samples and try the products herself.


The Purchase Funnel Areas of Impact



AAS Applied: The Purchase Funnel

EFFICIENCIES: LOWER FUNNEL OPTIMIZATION

Data driven targeting across all media.

Retargeting 2.0 - using customer data to rank and target most responsive and profitable segments vs. just site visits.

Using behavior data including tags, history, types of ads clicked to score cookies based on previous interactions that fire more relevant cookie pools.

Match display to search cookies and prioritize those exposed to both.

Drive down cost per sale metrics and eliminate wasted spend.

The savings drive/enable upper funnel expansion and growth.

1



GROWTH: UPPER FUNNEL EXPANSION

Expand market share by targeting the right prospects using your customer data-informed segments.

Linking online addressable platforms to offline conversion activity we can map the value of the conversion to the media buy so we can replicate the scenario in subsequent and expansive media plans.

Build attribution models to predict funnel progression and illuminate our path to expand the funnel through more aggressive & diverse media.

2



PROFIT: CUSTOMER RETENTION & VALUE

Pulling more addressable/known targets of higher value through the funnel via improved targeting/modeling increases the value of your customer portfolio.

Existing CRM program performance improved to increase frequency, AOV and proactively reduce churn/lapse rates.

Now all media can be used for customer marketing (not just email) to onboard new and increase existing customer engagement/purchase.

INTEGRATED CUSTOMER PROGRAMS SEARCH | DISPLAY | SOCIAL | MOBILE | EMAIL

3


Your Business Model



Addressability Applied: Timing

Define Technology

Develop Segmentation

Develop Attribution

Create Media Test Plan

Q1 - BUILD Q2 – TEST/REFINE

Online/Offline Data Targeting

Segmentation Validation

Attribution Refinement

Read/Refine Test Results


Addressability Applied: Pro-forma Build

We Build the Business Case w/ You


Addressability Applied: Pro-forma Build

We Build the Business Case w/ You

And Summarize It!


• 1%-3% increase in customer acquisition over 5 years • Increased response/conversion from digital media efficiency by

connecting Anonymous Data to CRM data for better targeting, measurement and segmentation

• Increased effectiveness of remarketing and personalization (offer/package) in Search, Display, Site and Email

$15MM $43MM $73MM $206MM

Addressability Applied: ROI Summary/Exec Summary

$39MM $104MM $170MM $382MM NPV of Revenue Impact

• Roughly 1bp (~31k subs) reduction in Voluntary Churn YoY over next 5 years

• Combine Customer service, Billing contacts with customer data to improve churn rates

$24MM $61MM $97MM $176MM

YEAR 1 YEAR 2 YEAR 3 YEARS 4+5

AAS Acquisition

AAS Customer Remarketing

Like So…


Phase 1 Build

Phase 1 Return

Phase 2 Expansion

Phase 2 Return

Lower Funnel Optimization Upper Funnel Expansion Customer Value Optimization

Addressability Applied: Roadmap

Phase 3 Return

Phase 3 CRM Programs

Efficiencies Fund Expansion to

Take Share with Profit


Addressability Spectrum Consumer Experience

Purchase Funnel Impact Your Business

Addressability Applied RECAP


Q&A Discussion



Discussion Questions

Is the AAS opportunity real to you?

Do you and your organization have the ability to address this opportunity?

If not – why?

If so – what would you do differently?

What is clear vs. what is unclear?


Ken Geis VP - Retail & Consumer Goods

Merkle Inc. [email protected]

610-529-4599

Thank You!

mailto:[email protected]�

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