1 The Outlook for Data Driven Advertising current forecasts at 3.6% for the year, the 2H recovery mitigated the worst (-10%) Unemployment rate hit historic highs (14.7% April 2020) in a dramatic turn from 1Q20; losses continue, but as of Jan 6 th weekly claims were down 89% from peak Stock market divergence from the economy with the S technology and WFH related shares boomed, COVID-impacted sectors lagged The stories that we watched: The political story was election cycle madness with a big boost to political ad spend and denial The economic story was the downturn and a massive increase in ecommerce The media story was dominance of the tech platforms, streaming and privacy Online spend caught up to offline in 2020, not expected until 2023 Source: The Conference Board (2020), Congressional Research Service (2020), Barrons (2021)5 $360.6 $340.3 2018 2019 2020 U.S. Annual Advertising and Marketing Spend, 2018 2020 ($BB) Source: Winterberry Group Spend Estimates (2021) Reality 2020: The COVID Recession Resulted in a $39BB Decline vs. 2019 Advertising includes merchandising, in-store displays, sampling, retailer-specific coupons/offers and in-store events. Drop in 2019 spending projected by Cadent Consulting Group due to cuts in shopper marketing departments, the transformation of shopper agencies into digital agencies and price reliance. The category is expected to recover slightly in 2020, and then continue to decline forward Review 2020: Offline Media Spend $171.9BB, Down $51BB Experiential 1/2 of Decline; Addressable TV Was Up! Linear TV $56.1 Addressable TV $2.1 Radio $10.1 Newspaper $9.2 Magazine $8.8 Direct Mail $34.9 Traditional Outdoor $6.8 Experiential/Sponsorship $24.2 Shopper Marketing $19.8 U.S. Offline Media Spending, 2020 ($BB) Total: $171.9 +4.0% -28.9% -18.5% -12.8% -33.2% -17.2% -22.9% -27.2% -21.9% -49.47 Source: Winterberry Group Spend Estimates (2021), USPS Statistics 2020 Direct Mail: Volumes Significantly Impacted in 2Q, Though Steady Rebound off the Lows in 2H20 81,183,983 82,290,525 77,801,778 63,752,076 2017 2018 2019 2020 Direct Mail Volumes, CY2017 CY2020 -18.1% +1.4% -5.58 Source: Winterberry Group Spend Estimates (2021) Review 2020: Online Media Spending Gained $12.5BB as Budgets Accelerated Shift Towards Digital Channels Email/SMS $5.1 Display $41.0 Search $58.0 Digital Out-of-Home $2.6 Digital Audio (Radio/Podcasts) $4.5 Digital Video (OTT/Streaming) $8.1 Paid Social $41.4 Influencer $7.5 U.S. Online Media Spending, 2020 ($BB) Total: $168.4BB +15.4% +8.0% +14.5% +6.8% +5.9% +27.1% -0.2% -19.3% -13.49 Source: Winterberry Group Spend Estimates (2021) Note: Digital Media includes display, video and paid social; TV includes linear, addressable and OTT Review 2020: Spending for Data and Data Services Is Flat Overall TV Data, Analytics $2.6 Offline Data (Data, Database, Analytics, Hygiene) $8.1 Email Data, Database, Analytics, Hygiene $2.9 Digital Media (Data, Analytics, Data Technology) $8.5 U.S. Data and Data Services Spending, 2020 ($BB) Total: $22.1BB -0.7% +0.1% +9.5% -10.0% 0.010 Source: CG/Petsky Prunier (202) 2020 M 69% of consumers say customer service is very important when it comes to their loyalty to a brand Evidence More than half (55%) of shoppers state brand trust is their primary motivator when choosing who to shop with online Marketer Implications Brands are striving to achieve Amazon- levels of customer service; 76% of executives say improving customer experience is a high or critical priority Marketer Implications Brand response to the pandemic and social justice movement among the most impactful influencers of consumer behavior and customer loyalty in 2020 Source: Edelman (2020), Vision Critical (2020), Twilio (2020), Salesforce (2020) 88% of B2B and B2C customers said that a brands trustworthiness mattered more in 2020 than it did in 2019 Highly-engaged customers buy 90% more often, pay 60% more per transaction and are 5X more likely to stick to the same brand in the future14 The Shift to Streaming: Data-Driven Shift From Linear to Digital Evidence Proliferation of devices generating greater online TV and video viewership: mobile digital video viewers accounted for 61.1% of the U.S. population in 2020 and are expected to grow to 64.5% by 2024 Evidence Explosion of Connected TV: 80% of U.S. households have at least one CTV device, 81% increase YoY in CTV viewership in 2020; more than 50% of TV viewing time among adults is now devoted to streaming Marketer Implications Focused investment in digital formats and data to optimize consumer experiences on CTV Marketer Implications While advertisers are now buying CTV audiences at scale, they remain highly invested in Linear TV: Media buyers spent 85.2% more on Linear TV advertising compared to OTT/CTV channels in 2020 Source: Winterberry Group Spend Estimates (2021), NBCUniversal (2020), Nielsen (2020), Roku (2020), Mediapost (2021) In 2020, U.S. CTV ad spending will total $8.11 billion; by 2024 it is projected to reach $18.29 billion Disney+ beat Netflix 45.2m to 44.7m as the most downloaded entertainment app15 From DTC to Retail: Marketplace Growth Driven By The Shift to Online Shopping, Accelerated by COVID Evidence 13% of consumers tried a new marketplace after COVID-19 began; traffic to U.S.-based marketplaces increased 9.2% between January and April 2020 Evidence A majority (63%) of consumers are starting their online shopper journey on Amazon Marketer Implications Social commerce increases as across Instagram, Pinterest and TikTok; influencers increase their role beyond brand value and deeply into performance metrics Marketer Implications Media fragmentation continues with retail marketplaces capturing digital advertising dollars; brands focus spend where they have the products and buyers together Source: eMarketer (2020), Digital Commerce 360 (2020), NetComm Suisse eCommerce Association (2020) Gross merchandise value across the top 100 global online marketplaces reached $2 trillion in 2020, accounting for more than 95% of sales across marketplaces worldwide With an estimated 57 marketplaces now based in the U.S., marketplaces sales have grown by 15% since 201916 Performance Media: ROI Matters More Than Ever as Brands Shift Spend to Performance Channels Evidence With marketer shift in spend to performance, 50% of U.S. advertisers surveyed cite increasing ROI as the primary objective of their performance marketing efforts Evidence Performance captured greater share of spend vs. brand advertising in 2020; over 2/3 of marketers believe that their marketing budgets will continue the shift towards performance Marketer Implications Re-allocation of ad spend to performance agencies who support paid social, search, local CTV/TV and affiliate; holdcos add commerce agencies to capture shifting budgets Marketer Implications The rise of marketplaces is driving spend from offline promotions to online; combine that with enhanced data driven targeting (as evidenced by Amazon) and measurement improvements Source: Advertiser Perceptions (2020), Ascend2 (2020), Serpstat (2020), Deloitte (2020), Gartner (2020), UBS (2021) Ecommerce share of retail grew from 16.1% to 20.7% in 2020 and is expected to reach 23.2% in 2021 leading marketers to follow the money with their advertising dollars17 B2B Marketing Catching up: Digital Marketing Accelerated Among B2B Firms Evidence B2B digital spend grew from $6.6 BB to $8.1BB in 2020, forecasted to reach $9BB in 2021; at the same time, the U.S. trade show market is expected to drop to $5.6 billion this year and not recover until at least 2025 Evidence Heighted buyer expectations for B2C levels of personalization and services: 62% of B2B buyers are likely to switch vendors if a company does not personalize communications Marketer Implications Greater reliance on first-party data and increasing spend on identity solutions to fuel B2B martech platforms including CDPs and ABM platforms in 2021 and beyond Marketer Implications B2B marketers prioritizing digital marketing investments (e.g., programmatic, display, Advanced TV, ABM) to meet buyers on their preferred channels Source: Dun 82% of in-house teams report that their workloads increased significantly throughout 2020 Marketer Implications Cookie/IDFA deprecation, rise of marketplaces, large “gardens” add layers of complexity to digital mediaa pause on in-housing of planning and buying a likely outcome as the transition occurs Marketer Implications Demand expands for evolving hybrid models of outsourced (but embedded/in- housed); digital campaign execution, content creation/production and other creative and media services the focus Sources: The CMO Club (2020), The Drum (2020), WFA (2020) According to a 2020 survey, 57% of brands reported their company had an in- house agency19 Regulation and Legislation: From Privacy to Big Tech Breakups; Whats on the Horizon? Evidence Antitrust action has commenced in the U.S. to diminish Googles influence; Facebook and Amazon face similar government action, both in U.S. and EMEA Evidence Facebook under investigation due to concerns over anticompetitive tactics, especially around third-party advertising Marketer Implications With no early outcomes on regulation or legislation expected, privacy (outside of owned properties) open to browser interpretations; restriction of identifiers, cookie deprecation only sure outcomes Marketer Implications Dealing with what they can, marketers focus on CCPA compliance and consent management; shift of spend out of tech platforms is not anticipated Source: AdProfs (2020) Social Platformsare they too big to fail? Antitrust action against Big Tech is ongoing; most marketers surveyed believe that there will be policy changes or fines; less than 10% believe that actual breakups will occur20 Organizations Focus on Data Preparedness to Manage Regulatory Impact 14% 14% 19% 36% 21% 24% 42% 30% Brought data management in-house Outsourced data management to dedicated third-party service providers Centralized all customer/CRM/prospect data into one repository (or began efforts to do so) Implemented or began process of implementing new customer data platform (CDP) “How has your organization responded to recent privacy regulation passed in the U.S. or UK (e.g. GDPR, CCPA) and its impact on the ability to leverage data for marketing?” US UK Source: WG Collaborative Data Solutions Survey (202021 Spotlight on M economic recovery provides tailwind for growth forecasts Evidence PE fundraising will surpass $330 billion in 2021, setting an all-time high; equity markets rapid return from March lows have led investors to seek alternative returns Marketer Implications Supplier landscape consolidates among scaled providers, especially in fast-moving markets such as CTV; investment for innovation drives growth investments to capture share, not cost reduction Supplier Implications The strong financial markets fuel strategic interest in M volume and value expand Source: Pitchbook Private Equity Outlook (2021) “The healthy fundraising environment, adding to the existing $1 trillion in dry powder, will prompt GPs to write larger checks and encourage novel structures such as SPACs and GP stakes” Pitchbook PE Outlook22 Spotlight: Identity, Data Collaboration and Decisioning SolutionsSpotlight on Identity: Getting Ready for Transformation Regulation and browsers are finally forcing change in the identity market GDPR/CCPA/CPRA Cookie deprecation from Google expected by 2022 Increased demand to scale first-party data is driving enterprise market and publishers Increased adoption of first-party identity graphs The number of approaches in Europe and the U.S. for identity post-cookie is increasing Scaled platforms from social and retail marketplaces have their IDs Universal IDs and collaborative data solutions are coming to market The tech, data and media fragmentation across three ecosystems; personalization on owned properties, programmatic media and advanced TV (addressable, OTT and CTV) will lead to a blended approach to identity that mixes individual and household solutions 2324 56% 43% 42% 36% 35% 24% 16% Strengthened and/or clarified our consumer opt-in policies and disclaimers Revised policies governing how we use and share data internally Revised policies governing how we source data from third parties Extended our legal and/or data governance teams Developed (and/or revised) central data-use strategies Invested in new technology to support compliance requirements Reduced our spending/reliance on certain kinds of data “Which of the following actions has your company taken to address new/potential data privacy regulations?” Source: IAB-Winterberry Data Centric Org (2020) Despite Regulatory Anxiety, T o Date, Few Organizations Have Reduced Spending on Data25 The 2020-2021 Focus Will Be Building and Executing a First-Party Strategy 5% 12% 14% 38% 31% 3% 6% 36% 21% 33% We dont have a first-party data strategy We are early in development of a first-party data strategy Our first-party data strategy is developed, and we are in the process of implementing it We are expanding the implementation of our existing first-party data strategy across business units and channels We have a comprehensive first-party data strategy that we have implemented across business units and channels “How advanced would you estimate your first-party data strategy to be?” U.S. U.K. Source: WG Collaborative Data Solutions Survey (202026 Source: Chief MarTech (2020) Spotlight on MarTech: Proliferation Continues and COVID Slowed Neither Growth Nor Long-Term TransformationSpotlight on Collaborative Data Solutions: Making the Most of Permission in Advertising and Marketing In the post-cookie landscape, brands, media owners and technology solution providers are focused on providing permission-based collaboration solutions: Partnering by and between brands either directly or through trusted third parties Partnering between brands, data and technology providers and publishers to find audiences What are the solutions? What are they based upon? Data Cooperatives Data Exchanges and Marketplaces Technical Data Environments What are the use cases that these solutions will address? Partnering to create scalable PII-based IDs and enable targeting/activation for media buying Partnering to deepen insights, enable better planning, provide measurement and attribution Where are we on the adoption curve? Time is not on the side of those who waitIDFA changes are in progress, deprecation is due December 2021 and CPRA will go into effect in 2023 2728 As Collaboration Expands, Marketers Turn to 2 nd Party Relationships? But What is 2 nd Party Data? 41% 39% 39% 37% 29% 1% Another brands first-party data acquired through an intermediary service or platform Another brands first-party data acquired directly from that brand PII customer/prospect data shared between brands and publishers/media companies Data about customers/prospects that two organizations have in common Th