The Rise of the Platform Marketer: Connected CRM in a Digital World

3. © 2014 Merkle. All Rights Reserved. Confidential Marketers can again create long-term sustainable advantage by focusing on the customer 1950s+ Age of brand 1995+ Age of channel 2013+ Age of the customer Direct-to-consumer business model transformation Addressability At Scale Creation of national brands National media and mass marketing Internet and eCommerce Social networks & digital media Contenders we see 3

4. © 2014 Merkle. All Rights Reserved. Confidential Migration of the consumer from offline to online has hit an inflection point and is disrupting the entire consumer experience 2008 7.0—— 6.5— 6.0—— 5.5— 5.0—— 4.5— 4.0—— 3.5— 3.0—— 2.5— 2.0—— 1.5— 1.0—— 0.5— 2008-2013 Social media 0.1 to 1.1 Digital content 1.7 to 2.4 Consumer hours spent per day on non-digital channels are decreasing, while use of digital channels are steadily increasing Hours 2008-2013 TV3.8 to 3.1 Radio1.6 to 1.4 Print0.7 to 0.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 4

5. © 2014 Merkle. All Rights Reserved. Confidential Customer strategy is fundamentally built on a consumer experience Media Targeting Channel Personalization Omni-channel Integration Distribution Product Service Operating Model Change Minimal Significant Transformative Competitive Advantage Average Above Average Market Disrupting Utilization of data and analytics to drive efficiencies in targeting addressable media at the segment or individual level Utilization of data/analytics to personalize the media and channel experience for the consumer at the segment or individual level Delivery of not only targeted/personalized experiences at individual points in time but across a longitudinal, cross channel experience Introduction of new and innovative methods of distribution products/services either direct to consumers or through new forms of intermediaries Introduction of new/innovative products/services, features, or pricing that fundamentally change the consumer experience Introduction of new/innovative methods to deliver the product experience and service to customers through new technologies or channels Utilization of data and analytics to drive efficiencies in targeting addressable media at the segment or individual level Utilization of data/analytics to personalize the media and channel experience for the consumer at the segment or individual level Delivery of not only targeted/personalized experiences at individual points in time but across a longitudinal, cross channel experience Introduction of new and innovative methods of distribution products/services either direct to consumers or through new forms of intermediaries Introduction of new/innovative products/services, features, or pricing that fundamentally change the consumer experience Introduction of new/innovative methods to deliver the product experience and service to customers through new technologies or channels 5

7. © 2014 Merkle. All Rights Reserved. Confidential 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 ability to deliver targeted, personalized experiences to consumers. AAS 5.0 Person ID AAS 1.0 Name & Address AAS 2.0 Phone # AAS 3.0 Email Address AAS 4.0 Cookie & Device ID 1990 2014 The merchant opportunity lies in addressability and the enablement of data and analytics The digital audience platform marketplace that is now at massive scale 7

8. © 2014 Merkle. All Rights Reserved. Confidential Amidst all of this scale and automation, the addressability of channels and media is increasing every day The Addressability Spectrum Anonymous Partially Identified Identified Unknown Some Knowledge Well Known Knowledge: Identification: Addressability uses customer data (anonymous or identified) to increase the targetability and relevance of marketing impressions and experiences 8

10. © 2014 Merkle. All Rights Reserved. Confidential The core enabler of addressable marketing is the connected customer view • Consolidated view of the consumer across all touchpoints • Allows clients to analyze their programs in context of the whole picture • Valuable insights on consumer value, attitudes, and behaviors • Attribution – provides foundation for effective measurement • Multi-media, multi-channel optimization based on facts Social Print Direct Mail Display Search TV/Video Mobile Site Product LTV Segment Demographics Life Events Call center Meetings Email 10

11. © 2014 Merkle. All Rights Reserved. Confidential Addressable Platforms The marketing database is a critical asset in driving relevant and personalized experience An Audience Platform is a digital technology that enables automated, targeted, personalized experiences to individuals (known and anonymous) at scale utilizing first and/or third party data Customers 1stParty Data 3rdParty Data CRM Database

13. © 2014 Merkle. All Rights Reserved. Confidential The addressability battle will be fought in the Mid Funnel Awareness Consideration Engagement Conversion Commerce Experience Unqualified leads & waste Upper Funnel Mid Funnel Lower Funnel Media Focused Channel Focused CRM Focused Unknown High-value customer Low-value customer Unknown High-value customer Low-value customer 13

14. © 2014 Merkle. All Rights Reserved. Confidential Customer Remarketing Audience 1 Audience 2 Audience 3 Addressability is fundamentally changing the role of how 1stparty data is used in media targeting. And effecting the ability to create a personalized and optimized channel experience. Awareness Consideration Engagement Conversion Commerce Experience With that in mind we need to rethink the boundaries of the Mid Funnel Expanding the mid level opportunity CRM Channel Optimization Unknown High-value customer Low-value customer Unknown High-value customer Low-value customer Performance Media Brand Media 14

15. © 2014 Merkle. All Rights Reserved. Confidential Business Impact Available Addressable Impressions +400% Addressable Media Spend: +300% Cost Per Lead: -30-40% Targetable Re-Marketing Pool +500% Cost-Per-Conversion: -40% Average LTV per Customer: +60% % Personalized Interactions +300% Taking advantage of addressability is about “widening the pipe” and driving greater scale and efficiency Unknown High-value customer Low-value customer Unknown High-value customer Low-value customer The funnel is widening and elongating Customer Remarketing Audience 1 Audience 2 Audience 3 CRM Channel Performance Media Brand Media CRM Channel Optimization Performance Media Brand Media 15

17. © 2014 Merkle. All Rights Reserved. Confidential The Addressable Experience requires the 3C’s CONTEXT Our applied knowledge of the consumer Every asset we have to put in front of the consumer CONTENT CONNECTIVITY When we bringthe two togetherin media and channels 17

18. © 2014 Merkle. All Rights Reserved. Confidential Allowing us to deliver Addressable Customer Experiences Timing / frequency Platform Device / format Segment A Segment C Segment D Segment Lifecycle Awareness Product Consideration Request a Quote Start Application Process CONTEXT Message Offer CONTENT Treatment Brand Consideration Segment B Brand Consideration 4X Google Mobile A 1 Life CONNECTIVITY 18

20. © 2014 Merkle. All Rights Reserved. Confidential Connected CRM is the framework through which we aid our clients in the organizational transformation required to exploit Addressability The Connected CRM Framework (CCF) Enterprise segmentation, which includes value and lifecycle dimensions, forms the foundation of CCF Experience Delivery Financial Management Customer Strategy Financial management informs customer strategy and experience delivery decisions as a closed loop process These strategies are then translated into actionable media and channel plans that result in highly personalized, targeted experiences Portfolio Strategy Segment Strategy Program Strategy Experience delivery performance is continuously attributed across media and channels which, in turn, drives optimized budget allocation Media Planning Channel Planning Targeting & Personalization Measurement & Attribution Budget Allocation Infrastructure & Business Process Leadership & Organization What data, processes, systems, tools and technology will be necessary? What outcomes are we trying to create and how do we organize to enable them? 20

21. © 2014 Merkle. All Rights Reserved. Confidential The Platform Marketer™ embodies the collective competencies needed to successfully exploit addressability at scale Marketers must evaluate their own competency level and decide how best to fill gaps internally and with external expertise In the highly digitized world of AAS, a new set of competencies must be attained by the marketer We call the personification of those collective skills The Platform Marketer While new processes, data, and technologies must be implemented (what we call Connected CRM), these digital platform competencies must first be addressed j Identity Management Audience Management Consumer Privacy& Compliance Media Optimization Platforms Utilization Channel Optimization Experience Design & Creation Measurement and attribution Marketing Technology 21

23. © 2014 Merkle. All Rights Reserved. Confidential The landscape has gotten very complex Platform marketers has strong expertise in state of the art and emerging marketing technology and how it drives business value 23 23

24. © 2014 Merkle. All Rights Reserved. Confidential Therefore, we must rationalize the tech stack to support an addressable customer experience Audience Platforms Workflow Channel Execution Media Execution Marketing Database Identity Management Application Integration DSP Search Ad Serving Site SFA/Contact Center Business Rules Engine Personalization Engine DecisioningAlgorithms Audience Management Real-Time Data Transfer Syndication Connected Attribution Forecasting/Simulation Business Intelligence Onboarding CDI/DDI Event Management Customer 360° Preference Center Event Stream Campaign Management Content Management MRM Messaging Mobile Web Services APIs Tag Management Analytic Management Platform Data Management Platform Decision Management Platform 24

26. © 2014 Merkle. All Rights Reserved. Confidential Evolving the capability and operating model together as a key driver of success Operating Model Infrastructure focus, basic capabilities Single campaign, simple data, little offer and customer customization Basic multi-channel, model integration, and campaign automation Contact Optimization, multi- touch campaigns, integrated measurement platform Customer Value Optimization fully integrated programs & campaigns Capability Maturity Ideal investment zone [Key decision maker] Level 1 Level 3 Level 4 Level 5 Level 2 Over-invested (poor return on capital) Under-invested (poor return on management bandwidth) Bottom-up path builds infrastructure and seeks to leverage incremental gains to expand effort and drive organizational change (requires permission) Top-down path compels Organizational change and rapidly enables infrastructure for efficiency and effectiveness (requires sponsorship) 26

27. © 2014 Merkle. All Rights Reserved. Confidential But generally a phased approach will create the best outcome •Streamlined campaigns •Recommender system enables 1-to-1 •Name/address hygiene •All addressable media •Web data integration •Two way interaction •Real-time integration •Real-time Two way interaction •Store & POS integration •Call center integration •Media & Marketing Mix •Segmentation alignment •Addressable TV Offline Channel Integration Digital Channels Integration Mass Media Integration Digital Media Integration Email and DM Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Fully Integrated Experience Connected CRM Platform 27

29. © 2014 Merkle. All Rights Reserved. Confidential For most organizations, the impact of effective cCRMcan be quite rewarding to both margin and growth $39MM $104MM $201MM $452MM NPV of Revenue Impact Year 1 Year 2 Year 3 Years 4+ Acquisition of new customers Reduction in churn Improvement in NPS Scores over Baseline* $15MM $43MM $93MM $256MM $24MM $61MM $109MM $196MM +5 +25 +10 +5 • Use Connected data to understand/predict/model NPS results across subscriber base and target subscribers for Promoter maintenance or Detractor intervention strategies • Roughly 1bp (~31k subs) reduction in Voluntary Churn YoYover next 5 years •Combine Customer service, Billing contacts with customer data to improve churn rates • 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 29

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