MEASURE OR DIE

Metrics that Drive Insights Are the New Client Imperative

The days of Willie Loman are over. The era of schmoozing clients à la Mad Men lives on only in TV shows.
The big idea alone is not enough to win new clients any more. In the future, to not only thrive but survive,
marketing services agencies must provide clients with results. That means clear metrics and actionable
insights that drive repeatable results. Measurement is the new reality.

We are hearing this over and over from marketers. And, it was a key finding in our survey of senior level
marketing executives, outlined later in this report. Virtually all of the respondents expect agencies to provide
measurement capabilities: 96% of respondents say they will expect detailed results and analysis from their
marketing services agencies in the future.

It is clear that 2009 will become a major watershed year for the marketing industry. North America is in a
recession and marketers worldwide are experiencing unprecedented pressures to reduce costs and improve
the return on their entire marketing spend. It is our view that no segment will go unscathed in this
bloodletting, including categories in the below-the-line sector that have traditionally performed better during
recession periods.

On top of this, a new generation of marketing managers is coming to power. These managers have grown up
in the digital age and expect instant feedback and analysis. This, combined with the increasing importance of
results-oriented purchasing managers, means there is no escaping the measurement imperative.

Our advice to agencies is to invest in increasing

Inside this Report
What Measurement Means
What Clients Really Want
The Game Plan for Agencies
MROI – The Messiah in Waiting
Budget Trends: Flat Is the New Up
Seven Tips for Surviving the Downturn
Protecting Your Human Capital
M&A in 2009
Measurement Case Studies
What to Expect from your Banker
measurement capabilities. This will become the price of
entry. If you can’t measure your client marketing activities,
2 your budget will be eliminated. If you can’t provide clients
3 with consumer, trade or sector insights that provide business
building opportunities, clients will replace you with an
5 agency that can.
6
Unfortunately, measurement is not as easy as adding it to
7 your pitch or buying some software. The world of
8 measurement is a complex one that requires a new set of
skills and measurement and analysis technologies. But there
9
are many ways to make this capability a reality.
10
Marketing strategist Jack Trout proclaimed “Differentiate or
12 Die” almost a decade ago. Today the new marketing
18 paradigm is “Measure or die!”

February 2009
This report has been sponsored by RBC Royal Bank
February 2009 Measure or Die

What Measurement Means

Measurement is not a passing fad; it is how we believe the smart marketing services agency will become an
indispensible resource to their clients.

Measurement Goes Beyond the Numbers

Measurement is not just about presenting a pie chart; it’s about providing actionable insights. Yes, it’s about
keeping score, financially and otherwise. But measurement is really so much more. With the right metrics
and analytical savvy, measurement gives you the opportunity to provide your clients with critical insights
about their customers, prospects, product offering, brand and marketplace. The ultimate goal is to increase
sales, market share and profitability, but the proper metrics plan will provide insights that will repeat these
results each quarter.

Measurement Doesn’t Have to Be Complex

Of course, everything can be measured, but some marketing activities are easier (and cheaper) to measure
than others. Measurement also doesn’t always need a complex multi-variant regression analysis. Most
reports find that in today’s marketing world marketers will benefit from basic feedback and analysis on
individual marketing campaigns.

Take digital marketing for example. While digital tactics are blessed with a plethora of metrics,
understanding how to use the metrics is proving to be a challenge for many marketers. In 2008, McKinsey
conducted a survey of senior marketing executives around digital advertising. They found that even though
the metrics are available, only a minority of advertisers use quantitative analytical technologies to optimize
online marketing. Furthermore, only half use even the most basic of metrics – the click-through rate – to
evaluate the impact of direct response advertising.

Measurement Seeds the Dashboard

The hard part is distilling down the millions of data points available into the most useful and actionable
indicators. The typical best-practice dashboard includes elements of:

ƒ Business/financial performance: changes in sales,

share, margins
ƒ Customer specific measures: lifetime value of a
customer and other predictive measures
ƒ Brand attributes: brand awareness, brand likability,
purchase intent
ƒ Marketing message engagement: recognition, recall
ƒ Media-specific performance: reach, frequency,
efficiency, response rates, click-through rate
“The focus of an effective marketing dashboard
is more on where the next $5 million should
go, not where the last $5 million went.”
Patrick LaPointe, managing partner
MarketingNPV and author of Marketing
By the Dashboard Light: How to get more
insight, foresight and accountability from
your marketing investments

Measurement Avoids Garbage

The adage – garbage in, garbage out – applies here. Without good data, there’s no need to analyze. And, in
order to have good data, you need to start with a conversation with your client’s customers. After all, the
goal is to begin, build and reward those customer relationships.

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Measure or Die February 2009

What Clients Really Want

Beringer conducted a survey of senior marketers in Canada and the U.S. late last year. The survey confirms
that clients are putting increased importance on measurement of marketing communications activities.
Eighty-two percent of respondents said that
measurement will become more important in
2009 and beyond. What Marketers Measure
100%
The survey gave insights into what marketers are
currently measuring. It is interesting to note that 80%
the most common measurements – Brand
Attributes and Business/Financial Performance 60%
– don’t involve agencies or include measurement
of specific agency activities. Brand Attributes 40%

measurements are most often led by third-party

20%
market research companies to monitor brand
awareness and attributes. Business/Financial
0%
Performance measures, such as sales growth and
Brand Business/ Media- Engagement Customer-
profitability margins, are high profile business
Attributes Financial Specific Specific
metrics and driven by the CFO to measure the
Performance
efficiency of marketing spend. Not surprisingly,
customer-specific measurements, such as lifetime
customer value, which can be the most difficult to capture, are the least measured.

Having data is one thing, but understanding it is another. Most marketers (57%) have not been able to
properly analyze and act on the marcom data they have.

Even though marketers are measuring some results, only 55% have developed their own marcom
dashboard. This demonstrates the difficulty marketers
face in using data to create a holistic overview and What's Essential to Clients
analysis of their marketing activities. But clearly, with
100%
the growing importance of measurement, more
marketers will be developing dashboards. Of the 80%
marketers who don’t currently have a dashboard, 40% 60%
say they will be developing one soon.
40%
Agencies’ Role 20%
Agencies play an important role in measurement. A 0%
whopping 96% of respondents agree that they will
Measure results Provide insight Provide insight
expect detailed results and analysis of performance of agency's and analysis of and analysis of
from their agencies in the future. The current activities results of results of ALL
consensus seems to be that agencies are, at best, agency's marketing
providing an adequate level of results and analysis of activities activities
their own activities. Not one marketer felt that their
agencies were providing an excellent level of results and analysis.

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February 2009 Measure or Die

What’s essential to clients is that agencies measure and then provide insights and analysis of all of the
agency-led activities. The chart at right demonstrates that 88% of marketers think it is essential that agencies
measure the results of their activities. One marketer noted, “I’d like to have all of the above, but we’re not in
a position to pay for it (apart from media impressions data) so it’s hard to demand it.”

One of the most surprising results was that 86% of clients share some or all of their measurement results or
dashboard information with their agencies. This is a surprise after all the times we’ve heard from agencies
that clients won’t give them access to this data. Our survey tells a different story. Clients are clearly willing to
share dashboard data with agencies; if they are not sharing everything, agencies should ask to be in the data
loop. Either way, agencies should use this opening to be sure they are helping clients improve and fine-tune
their marcom dashboards. The advantages of being the first and most trusted advisor on dashboards are
enormous. Most tellingly, one survey respondent said, “If they want to be treated as partners, they need to
earn it.”

What Clients Want to Measure

As you would expect, clients rate interactive marketing tactics such as e-mail, websites and online advertising
as very important to measure – these activities are ingrained with measurement data. TV is another tactic
that is very important to measure, probably because pricing is based on GRPs. Telemarketing metrics now
are less important than a few years ago due to the difficulty to implement these programs because of Do No
Call List rules.

Marketers' Response: Very Important to Measure

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In an April 2006 survey by MNA for the Association of National Advertisers, just 23% of the
U.S. marketers said they were satisfied with their company’s ability to measure marketing ROI.
The survey also showed that 25% of the marketers felt confident that they could forecast
marketing’s impact on sales.
By contrast, a mere 7% of CFOs were found to be satisfied with their company’s ability to
measure marketing ROI in a similar MNA survey of 150 senior financial executives done with
Financial Executives International later that year. Only a slightly higher 10% of CFOs said they
thought marketing departments could accurately forecast the impact of marketing on sales.

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Measure or Die February 2009

The Game Plan for Agencies

What’s an agency to do about this new measurement imperative? How can you help your clients?

Bake Measurement into Every Activity

You need to build relevant measurements into all of your communication and marketing offerings, no
matter what the activity. But start with simple, low cost measurements – you don’t want to burn the
budget from the outset, and you’ve got to walk before you can run. It is essential that you are measuring
what is important to the client. For that reason, you need to work collaboratively with clients to come to
a common understanding of their measurement needs; what should be measured, and how those metrics
should be used.

Get Some Expertise

Agencies need dedicated resources who can understand the data to find those nuggets of insight and
opportunity that can inform the next break-through marketing program. But we’re not just talking
measurement geeks here. You want articulate, business savvy people who can explain and advocate for the
insights they find in simple lay language, not only to your team but also to your clients.

Get the right people on your team to drive measurement and metrics capabilities. You may not, for instance,
need to buy or set up elaborate technologies or systems to meet your needs. Your clients may already have
them or be willing to pay for their own systems. Or, it may make much more sense to use third-party
suppliers or analytics tools and services. But it is essential that you have the key people who can operate in
the space, and not only get the most out of client and third-party data, but also educate and coach your own
team on the uses and opportunities within that information.

Seed the Dashboard

If your client has a dashboard of marcom measurements, you need to be sure relevant data from the
campaigns you lead is included. If your clients don’t have a dashboard, you should absolutely be helping
them build one (talk about a chance to become the indispensable resource!).

Develop Benchmarks
Because agencies generally have experience and insight with a broad and diverse range of client companies
and industries, you are positioned to be an important strategic councilor to your clients. Agencies should be
able to advise clients on how to interpret the data, how to develop benchmarks and make recommendations
on how to improve results.

The End Result

The best strategy for agency success is to become the undisputed expert on your client’s customers and how
they react to not just the communications offerings, but to all aspects of the relationship. And, really, being
the essential value-add marketing resource to your clients has always been the foundation of a strong agency.
It’s just that the game has gotten more complex.

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February 2009 Measure or Die

MROI – The Messiah in Waiting

By Ken Wong

In a world of economic downturn, where most every survey shows between 35%-40%
of firms plan to cut marketing budgets, the need for marketing return on investment
(MROI) is greater than ever. Indeed, given that marketing rarely has representation at the
“big table,” the need for solid metrics that make the case for marketing expenditures to
CFO’s, investors and non-marketers cannot be overstated.
And yet, surveys of business practice consistently find that 80%-90% of firms believe they are not as good at
measuring MROI as they could be. Worse yet, between 30%-40% make no effort to measure MROI at all.
Am I missing something here? Shouldn’t this be a “no brainer”? How can it be that so few have recognized
a potential that is so great?

No Free Lunches
Part of the problem is that MROI seems relatively simple … at least until you delve into the science required
to do it well. Because the linkage between marketing expenditures and profitability is not direct, one has to
specify or model the sequence of activities and outcomes that connect marketing spend to performance.
Add to this the enormous number of contextual factors (e.g. market growth rate, competitive spending) that
can impact on the strength of those relationships, and the statistical challenge of estimating those
relationships can become overwhelming.
All of which means money and time. Money and time to build infrastructure, to acquire and analyze data
and to develop a methodology or protocol for transforming those data into meaningful operating
information. Indeed, it is the absence of sufficient time, money and attention that over half of all businesses
cite as the largest barrier to measuring MROI.

Where There’s No Will, There’s No Way

But while resources may seem the issue, they are only symptomatic. Every study I have seen suggests that
organizational, not financial, barriers are the real problem because they are the real source of the financial
shortfall. These barriers include a lack of management commitment, a lack of knowledge about how
marketing works and, most critically, a preponderance of marketing malpractice that is committed everyday
in businesses big and small.
Lack of management commitment is one part budgetary and one part resistance to change. It seems to take
about three years before MROI systems start paying off in meaningful ways. That’s three years of redirecting
marketing spend from the field to “less productive” projects: something that is hard to do when share-of-
voice/feet-on-the-street and market share seem directly linked.
But even in firms that spend the money, practitioners talk of the need to wean management off traditional
marketing measures: measures they have experience at effecting. In this sense, how can managers not worry
that shifting to a new measurement paradigm wouldn’t impact on the job performance, compensation and
career prospects?
And marketers are not without their own share of the blame. A failure to develop meaningful segmentation
bases has generated unvalued value propositions that have left far too much to depend on creative voodoo,

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Measure or Die February 2009

personal relationships and, failing that, price cutting to generate sales. How can you quantitatively model a
sales process if you haven’t done it qualitatively first?

A Road Less Traveled

There are firms that have overcome these obstacles. Firms that took the time to really understand their
customers and consumers. Firms that understood marketing well enough to see how and where different
marketing elements contributed to sales and profitability. Firms that weren’t afraid of measurement because
it actually provided them with a means of getting rewarded for what they were already doing. These are the
real marketing messiahs.
Ken Wong is Associate Professor, Business and Marketing Strategy at the Queen’s University School of Business in
Kingston, Ontario.

Budget Trends: Flat Is the New Up

No question, it’s going to be ugly out there for some time to come. Consider this: The New York Times
pointed out that the last time the U.S. experienced two years of decreasing media spending was, oh, 1932-33
– the darkest early days of the Great Depression.

In the annual wave of year-end prognostications, most forecasters predicted, at best, flat or miniscule ad
spend growth for 2008, declines for 2009, with only cautious optimism for a rebound in 2010. The most
pessimistic was investment bankers UBS, who are forecasting a whopping 8.7% decline in the U.S. ad
market in 2009.

But there is a silver lining. Paid media advertising represents a far smaller proportion of over-all marketing
communication spending than
even 10 or 15 years ago, let alone Advertising and Marketing Spending: 2008-2010
60 or 70 years ago. In fact, below- $
2008
Growth $
2009
Growth $
2010
Growth
the-line spending, including direct Advertising
Television 69,889 -3.1% 68,127 -2.5% 66,503 -2.4%
response, promotions and Newspapers 38,441 -16.0% 32,675 -15.0% 30,061 -8.0%
interactive, now amounts to 70% Magazines
Radio
21,571
19,939
-8.9%
-4.8%
19,122 -11.4%
17,606 -11.7%
17,813
16,271
-6.8%
-7.6%
or more of all marcom spending. Online (Display, Search, Video & Other) 23,986 10.8% 25,304 5.5% 27,443 8.5%
And we aren’t alone in predicting Custom Publishing
Other
22,128 6.0%
32,809 12.2%
20,358
30,186
-8.0%
-8.0%
19,035
31,399
-6.5%
4.0%
that the shift of marketer spending Total Advertising 228,763 -2.3% 213,378 -6.7% 208,525 -2.3%
2.0% 164,973 -4.0% 159,199 -3.5%
into these far more tactically Direct Mail/Marketing
Trade Promotions/Slotting Allowances
171,847
167,265 -3.0% 163,919 -2.0% 154,084 -6.0%
nimble – and, most importantly, Consumer Sales Promotions/Incentives 139,564 2.0% 139,564 0.0% 141,658 1.5%
Event Marketing 18,702 10.0% 18,702 0.0% 20,104 7.5%
clearly measurable – practices and Public Relations 4,412 3.0% 4,544 3.0% 4,817 6.0%
tools will accelerate dramatically in Other
Total Advertising & Marketing
18,213 -20.0%
748,766
12,749 -30.0%
-1.0% 717,829
10,837 -15.0%
-4.1% 699,224 -2.6%
the current tough climate. Source: www.MyersReport.com - Jack Myers Media Business Report

One forecaster that tracks all marketing communications spending, not just paid media, is Jack Myers Media.
It is also predicting a rare drop in total U.S. marcom spending this year – down 4.1%, with ad spending
down 6.7% – and only slightly better conditions in 2010. In fact, Myers predicts that the ad economy is
unlikely to recover until 2011, and possibly 2012.

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February 2009 Measure or Die

Even so, Myers believes – as we do – the over-all downcast picture belies the steady, and in some cases
spectacular, growth in emerging, and more measurable, media platforms. For instance, Myers predicts total
online spending for 2008 will have increased 10.8%. He expects modest growth in 2009 at 5.5%, which is
spectacular compared to the double digit declines foreseen for newspapers (-15%), magazines (-11.4%) and
radio (-11.7%).

Below-the-line spending will likely not fare as well proportionately as in the past few recessions, but it will
still do far better than most traditional paid media. Myers projects sales promotion and event-marketing
spending will be flat in 2009, but rise 1.5% and 7.5% respectively in 2010.

Total direct marketing spending will also face pressures. Myers is predicting a 4% decline in total U.S. DM
spends in 2009 and a 3.5% drop in 2010 – although much of that can be attributed to the dramatic
reductions in telemarketing activities in the face of tougher do-not-call rules in the U.S. and now in Canada.

At a time when “flat is the new up,” those tools and channels that can prove effectiveness are definitely the
new black.

Seven Tips for Surviving the Downturn

1. Manage your overhead – This sounds obvious but many agencies are not proactive and wait until
it is too late. Monitor your labor expenses and cut non-essential overhead costs to maintain
profitability and generate positive cash flow.

2. Get closer to your clients – Now is the time to strengthen your client relationships. Clients often
reduce or eliminate suppliers during a downturn to cut costs. With a weak client relationship, your
agency could be on the chopping block. Be proactive and help your clients find cost savings and
don’t nickel-and-dime them. This can be a great time to increase your revenue by helping clients
consolidate projects and brands.

3. Deliver results to your clients – In a downturn, marketing managers will be under greater scrutiny
from senior management to justify spending. You can help your clients by providing measurable
results and a strong ROI for your marketing activities.

4. Strengthen your banking relationships – Keep your bank up-to-date and treat them as a partner.
The more visibility they have into your financial results and business strategy, the more likely they
are to help you when times do get tough. Monitor your bank covenants and cash flow.

5. Build your pipeline – While your competitors have retreated in fear, now is the time to network,
share success stories and build a pipeline for the other side of the recession.

6. Expand your talent – A downturn can be a great time to recruit new talent from competitors.
Talent that is in tight supply during boom years is now available (and at a fair price).

7. Partner with suppliers – Suppliers may be willing to strengthen their relationship with you during
downturns by providing volume discounts, direct billing or extending credit terms.

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Measure or Die February 2009

Protecting Your
Human Capital
By Ed Tazzia
The products you have to sell are the creative ideas of your people. There once was a day when you could
stockpile talent and throw a large number of resources against any given client problem in order to deliver.
Those days are done. In this economic environment, the challenge is to determine just which people you
need to deliver the great ideas to your clients while maintaining profitability.
Agencies across the board have been making cuts in response to the economic conditions. But have they
made the right cuts? The challenge comes in three areas: 1) How do you know where to cut? 2) How do
you retain the great talent? 3) What do you do when you get a chance to bring on a new star?
Knowing where and who to cut is not as simple as it might seem. It’s not about time in grade (last in first
out) or about cost savings (highest compensated go first). It has to grow out of the agency’s strategy and
there should be some discipline involved in the process.
Start by determining what it is the agency is providing to its best clients: Great creative? Great planning?
Great account service? Great execution? Who are the best people in the shop to deliver on this promise to
your clients? You must start with some rules of engagement before you make your cuts. It will not only help
you make your selections, it will help you explain those selections to the people being let go, the people
being retained and the clients. And, it will help build back your team in the future.
The strategy will also help you retain your best talent, the ones you need most. Selections based on
performance and skills are the best way to show your top performers how much they are valued, and in this
environment being valued is the best buffer you have to fend off poachers.
Basic rules of downsizing still apply. Make your decisions and cut once. If you try to hang on and let a
few people go this month hoping for the best, then have to let a few more go next month hoping for the
best, your entire team starts looking over their shoulders. And the best talent could take this uncertainty as a
reason to consider their options. You don’t want them taking that first recruiter call.
If you can, take your best people into your confidence because you want them to feel valued in the firm and
confident in their own situation.
Even in the downturn it’s important to add new talent. We strongly encourage our agency clients to
proactively look to add star talent each year to keep the agency fresh, to add new perspectives and to re-
energize the entire team. Make sure your strategy identifies opportunities and includes contingency for new
talent. This is a great time to recruit talent that was not available before.
Overly simplistic? Perhaps. Good plans are often simple but are always based on strategy. The hardest step
is to decide what you want your agency to be and what skills you need to be able to deliver.

Ed Tazzia is Managing Partner and Operating Officer of Gundersen Partners (www.gpllc.com ), a global management
consulting and executive search firm specializing in marketing. It is headquartered in New York with offices in London,
Detroit, San Francisco, Chicago and Atlanta.

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February 2009 Measure or Die

M&A in 2009: Should Be Interesting

In 2009, while the number of deals and valuations will decline, we think there will be strong opportunities
for strategic mergers and acquisitions that will create a lot of value when the economy recovers.

Valuations started to decline in the second quarter of 2008, and by the end of 2008, most deal activity was
put on hold by both buyers and sellers. The hold should come off in 2009 but deals will be done at lower
valuations. The decline is being led by two factors: declining earnings and fewer buyers. There are a few
exceptions: in the North American market, digital and analytics companies are still in high demand and
valuations will not decline as steeply as in other sectors.

For the past couple of years, private equity firms have been willing to pay more than strategic buyers,
sometimes by as much as 20%-40%. This is because private equity firms have used leverage more
aggressively in acquisitions than strategic buyers. However, the reduction in availability of debt has forced
private equity buyers to offer lower prices, put acquisitions on hold or accept lower returns on their
investments.

Strategic buyers are now seeing this period as their time to buy. Recently John Wren, Omnicom President
and Chief Executive, said that because economic conditions have lowered valuations, they are able to pursue
acquisitions “more aggressively than we have had in the past.”

The following is an overview of North American deals in 2008.

Holding Companies
The holding companies evaluated a lot of acquisition opportunities in 2008 but closed fewer deals than
previous years. With the exception of WPP’s acquisition of market research firm Taylor Nelson Sofre and
Dentsu’s acquisition of McGarry Bowen, most acquisitions were smaller.

ƒ WPP spent months chasing market research firm Taylor Nelson Sofre and finally won. In addition,
they acquired Designkitchen (digital) and Yankelovich (market research) and made several minority
investments in software and technology firms.
ƒ Publicis acquired Performics’ Search Marketing business from Google, PBJS (interactive marketing
and events) and Kekst and Company (Public Relations).
ƒ Omnicom acquired The Kern Organization (direct marketing), Sterling Brands (design) and
Barefoot (advertising).
ƒ Aegis acquired Clownfish (digital specialist focused on “sustainability”), Range Online (search
engine marketing) and Oncology Inc. (market research). Aegis has announced it is exploring
strategic options including, reportedly, a sale of Synovate or an alliance with Havas.
ƒ While Interpublic continues to freeze their M&A activity, they invested in HUGE (interactive) and
in Translation Consulting + Brand Imaging (multicultural).
ƒ Havas did not make an acquisition in North America but sold McKinney to management.
ƒ Dentsu acquired McGarry Bowen in New York and sold its majority stake in New York-based
guerilla and digital firm Renegade back to its founder.

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Measure or Die February 2009

Private Equity
Private equity buyers have focused on both large transactions (for recurring cash flows) and buy-and-build
strategies (to drive growth and higher returns). Here’s a sample of a few transactions:

ƒ Engauge (seeded by Halyard Capital) acquired Spunlogic (interactive).

ƒ Veronis Suhler Stevenson acquired Brand Connections (out of home).
ƒ Tailwind Capital Partners acquired the trade marketing division of Archway Marketing Services
(marketing execution).
ƒ ZM Capital acquired the internet survey solutions business of Greenfield Online (Microsoft
acquired
the rest of the business).
ƒ Goldman Sachs and Oak Investment Partners invested $62M in iCrossing, a rising independent
digital agency. iCrossing itself has been buying specialist agencies.

Other Buyers
ƒ Transcontinental was very active in 2008 acquiring Rastar (direct mail and execution), Redwood
Custom Communications (custom publishing) and ThinData (e-mail marketing).
ƒ Meredith acquired Big Communications (digital).
ƒ Forrester acquired Jupiter Research (market research).
ƒ George P. Johnson acquired JUXT Interactive (digital) and MobilePromote (mobile).

Deals Will Get Done

The bottom line for 2009: valuations will be down and fewer deals will close. Strategic buyers are still
looking for acquisitions that will increase their growth and provide desired capabilities such as interactive or
analytics. Private equity buyers are still looking for companies with solid fundamentals and growth
opportunities – but at a lower valuation.
How to increase your valuation
Should you sell? That depends … companies in
industries such as digital and database analytics are Companies with the following characteristics
still commanding healthy valuations but there are will receive a higher valuation multiple:
fewer bidding wars.
ƒ Stable revenue
Should you buy? This is a great time to acquire IF you ƒ “Blue chip” client base
have a well thought out strategy, conduct thorough ƒ Do not rely on any single client
due diligence, implement a comprehensive integration ƒ Strong operating margins (> 20%)
plan and, of course, have the capital to complete the
ƒ Double digit growth
transaction.
ƒ Strong management team
There are still sources for capital for acquisitions or ƒ Track record of delivering creativity
growth through minority investors, mezzanine lenders and innovation to clients
and senior lenders such as RBC Royal Bank, but ƒ Sector expertise (e.g., promotions,
pricing is higher and covenants are tighter. digital or direct)
ƒ Critical mass (size does matter)

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February 2009 Measure or Die

Case Study
Building Patient Compliance
By Michael Pavan

A major pharmaceutical company challenged Budco. Change the behavior of patients suffering from
gastroesophageal reflux disease (GERD). The goal: increase long-term patient compliance with their
prescription medicine used to control GERD.

Budco responded with a dynamic, multi-phase customer relationship marketing (CRM) program −
leveraging a powerful combination of direct mail, personalized e-mail messages and rebates. With this
customized program, patients/consumers can:

ƒ Request a patient education guide that includes a savings card

ƒ Use their savings card to obtain discounts at local pharmacies
ƒ Opt to receive ongoing communication regarding their medication

The pharmacuetical company can:

ƒ Measure patient prescription compliance by tracking savings card use
ƒ Send personalized prescription renewal reminders via e-mail to those who stop using cards
ƒ Build loyal relationships while encouraging patients to use their prescription drugs

Budco’s brand management platform, In2itiveCRM, drove this successful campaign. It is a web-based data
mart that manages and tracks all consumer touch points and transactions within a given brand marketing
campaign. Therefore, it produces rich individual profiles. In2itiveCRM also compares the impact of media
across multiple channels; compiles real-time
feedback; and increases the quantity and Savings Card Activations and Repeat Redemption
quality of leads. This data fuels rapid,
responsive changes in strategies and tactics % of Fulfillment Recipients Who
52%
Activated Savings Card
to maximize relationships and results. Budco
analytics is exploring insights and trends to % Activated/Used •1st Redemption 47%
help create an even more sophisticated,
multi-faceted campaign to launch the next- % Activated/Used •2nd Redemption 78%
generation GERD medication in 2009.
% Activated/Used •3rd Redemption 64%
Results:
ƒ Annually delivering 500,000 patient % Activated/Used • 4th Redemption 62%
education guides with savings cards
ƒ Built a database of 2.5 million names 0% 20% 40% 60% 80% 100%

ƒ 52% of savings cards activated

ƒ Increased compliance by deploying personalized refill reminder e-mails and customer-specific
messages

Michael Pavan is VP with Budco (www.budco.com), a leading fulfillment and direct marketing company located in
Highland Park, Michigan.

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Measure or Die February 2009

Case Study
BRP Can-Am Spyder
Demo Tour
By Jason Wozny and Howard Rubin

You’ve just had an amazing event. Now what? Well, if you developed a strong plan for data capture then the
answer is easy. The problem is most companies just don’t know what great events really are. The days of
delivering an event recap to the client highlighting the number of samples, customer interactions and smiles
are over. Today’s events still deliver a great brand experience, but more importantly they capture rich,
relevant data that allows the brand to create conversations and sales that reach far beyond the day’s
activities.

The demo tour Action Marketing Group (AMG) recently developed for Bombardier Recreational Product’s
(BRP) new three-wheeled on-road powersports vehicle, the Can-Am Spyder Roadster, is a prime example of
the power of smart event marketing measurement.

Unique to most product launches, the program needed to introduce the product and create an entirely new
category for that product simultaneously.

“Riding is believing” was the premise for the Can-Am Spyder launch demo tour. With such a unique design,
consumers generally had a quick one, two reaction: “What is it and how does it handle?” We answered those
questions by letting them try the Spyder at events coast to coast. The tour focused on finding the right mix
of powersports junkies and open-road enthusiasts by targeting events at BRP’s existing dealerships and
major powersports events.

The AMG demo events went well beyond the traditional

“test drive” model. No one had ever been on a three-
wheeled vehicle before, so we had to start from the very
beginning with every consumer.

The launch presented a great opportunity to capture the

enthusiasm and engage trial participants on multiple levels
throughout the program. Through a partnership with a
consumer research firm, we developed a comprehensive data
capture system that began building consumer profiles and
gathering data from the first time they hit the website to
register for an event.

Registration Survey: Either at home online or onsite at one of our touch screen PC tablets, we gathered
basic customer information, awareness data and began building a powersports owner profile that allowed us
to categorize participants so the prospects most likely to purchase would get priority placement.

Post-Ride Survey: Upon completion of the 30 minute demo ride, customers used touch screen survey
stations where they were asked specific questions about the Spyder handling, comfort, power, braking, etc.

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February 2009 Measure or Die

Photo Capture and At-Home Survey: During the demo, customers were also photographed on the
Spyder. Each participant received a photo retrieval card that directed them to the Can-Am Spyder website to
retrieve their photo and share it, and take one more survey to gauge how time affected their opinion.

In reviewing the data, we were able to immediately implement changes to marketing efforts. Demo
participants, for instance, were very active in sharing their experience and enthusiasm for the event (online
photo retrieval and sharing rates exceeded 62%). We also found that traditional promotional activities
(direct mail, web advertising and public relations) were not as effective. From these findings, we developed
an aggressive invite-a-friend recruiting program and increased traditional awareness efforts for further
testing. The result: demo ride fill percent increased 35% from the beginning of the tour to the end.

Also, as a result of the consumer insights drawn from the

Spyder feedback data, BRP was able to institute over
50 vehicle design changes from the prototypes we demoed in
the spring of 2007 to the production units delivered
in fall 2008.

The ultimate measure in event marketing is ROI, and the

Spyder demo program delivered key statistics on actual ROI, as
well as intent. Specific to intent, we also surveyed timing to
purchase and likelihood to recommend the Spyder to a friend.

Based on the key measurements and instituting the educated changes along the process, the most notable
result was the improvement in actual conversion ratio of the tour. At the start of the tour, the conversion
ratio was 3.4%, but by implementing proactive tour adjustments we moved it up to 4.6%.

In addition to conversion ratio, the demo purchase data resulted in:

ƒ 60% would like to be contacted by a dealer
ƒ 28% were definitely or very likely to purchase the Spyder
ƒ 29% plan to purchase within 12 months

At the end of each event day, customers who indicated they would like to be contacted by a dealer were
downloaded onto a USB key that was given directly to the sponsor dealer. The real-time lead management
system provided dealers with tools to offer additional trials and, in turn, close sales.

The Spyder demo tour provided key insights into the potential consumers and allowed BRP to react in real-
time to program learnings. Through detailed data capture and program analysis, we were able to improve
event satisfaction, institute product design changes and increase sales.

Integrated measurement tools are key to the new experiential marketing paradigm as they provide a clear
definition of success for clients. For event marketing, the message is loud and clear: “Measure, or the party
(event) is over.”

Jason Wozny is supervisor and Howard Rubin is VP with Action Marketing Group (www.actionmarketing.com), an event
marketing and promotions company headquartered in Boulder, Colorado.

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Measure or Die February 2009

Case Study
Sears Canada’s Electronics Recharge
By Bruce Neve

The Goal: Sears Canada challenged Mediaedge:cia to develop a program to build awareness, generate
excitement and drive traffic to Sears’ newly enhanced electronics departments in department stores and
Home Stores nationally. The catch: there was limited budget given for the project.

The Target: The program primarily had to engage consumers who were not
considering Sears for their home electronics purchases and additionally, needed to
build incremental traffic to Sears’ revamped electronics departments.

Insight and Strategy: Sears has multiple media assets, which are inherent in having
hundreds of stores with hundreds of thousands of shoppers each day. Additionally, it
distributes millions of multi-page flyers each week and enjoys heavy traffic to the
Sears.ca website. MEC recommended these assets be leveraged to secure media in an
“asset exchange” with a major media owner.

We proposed a 360° partnership with Canada’s largest media corporation, Canwest Media, to promote the
breadth of product available at Sears in a mutually beneficial integrated multi-channel campaign. Together
with Sears, key vendors were also invited to participate and to co-fund the program.

The Plan: Canwest was given exclusive access to Sears’ shoppers and involvement in Sears’ media assets to
promote Global TV’s new fall schedule with the message: “The best way to experience Global’s Fall Shows
is on an HDTV from Sears Home Electronics.”

A full range of Sears’ “media” were “exchanged” with Canwest. This included
premium positions within Sears.ca, in-store signage, and new Global
shows/personalities were featured in millions of flyers. A 30 minute HD reel of
Global’s new Fall programming ran on the array of TVs in Sears Electronic
Departments, and special “viewing zones” with comfortable chairs and large HD
screens were set up in high traffic areas.

In return, Canwest created and delivered broadcast inventory in top-rated shows, newspaper inserts, and
branded street teams distributing inserts. Sears also secured exclusive sponsorship of a custom 30 minute
prime time fall TV preview special and contest created by Entertainment Tonight Canada
promoted across all Canwest platforms, including Canada.com and Global TV.

The Result: Over 90% of the English Canadian public was engaged by the messaging.
Over 98,000 people entered the contest and a database of over 3,000 names of people
who “would like to receive more information from Sears about Home Electronics” were collected.
The Global TV signage, innovative escalator ads and TV viewing zones all combined to add energy and
excitement to the in-store customer experience.
Bottom line: Sears Electronics sales enjoyed double-digit increases driven by a multi-channel, integrated
campaign for minimum cash exchange.
Bruce Neve is president of the Toronto office of Mediaedge:cia, a division of WPP’s media planning and buying unit GroupM.
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February 2009 Measure or Die

Case Study
Unilever Canada’s Becel
“The Heart Truth” Program
By Tony Chapman

Attention is the oxygen of brand building, and for the past fifty years getting the consumer’s attention
boiled down to five words: “he who shouts loudest wins.” A convergence of forces has rendered this simple
formula for success obsolete. The middle ground, where many marketers built their business, is disappearing
as consumers actively trade down to whatever national or private label brand is screaming price that day, or
trade up if they believe that the brand offering is meaningful, an enabler to their life.

Becel, Canada’s leading margarine, is one of those brands that has connected with consumers in a
meaningful way. The brand was founded on being heart healthy. It is one thing to scream this benefit; it’s
another, however, to have our target pay attention, and to value its importance to a level where it alters
purchase decisions.

Here is what we did, and more importantly, what the metrics told us how we did.

In 2008, the Heart & Stroke Foundation of Canada decided to launch a program called The Heart Truth,
whose goal it was to help address the stunning lack of awareness that heart disease kills more women than
any other disease in Canada. The red dress is the national symbol of The Heart Truth. Becel became the
founding sponsor of The Heart Truth.

Currently, one in three Canadian women dies from heart disease. In fact, heart disease kills more Canadian
women than the next six leading causes of death combined. The Becel team, under the leadership of Jon
Affleck, Marketing Director – Spreads, Dressings, & Slim Fast, believed that these statistics weren’t enough
for women to take action; that women often place themselves last on the priority list. So instead of asking
women to save their own life, Becel asked them to help save the life of a woman they love.

Becel’s brand communication platform was to ask women to “Love Your Heart.” To accomplish this, the
Becel team followed a model that was comprised of three pillars:

ƒ Inspire: introduce The Heart Truth to Canadian women – make them aware that heart disease is
their #1 killer, but it CAN be prevented
ƒ Educate: show them the things they can do to prevent heart disease through materials on-pack,
in-store, online, at offices of health care professionals, etc.
ƒ Reward: show the red dress as a symbol of efforts to prevent heart disease, not just awareness of the
risks to women

“…look around at the women you love…” “…imagine if you could help save even one…”

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Measure or Die February 2009

We used TV and print to bring the creative idea to life by having multiple women ”speak as one” by passing
a message about heart disease prevention from woman to woman. We then partnered with print media and
developed an advertorial strategy that combined heartfelt messages with a Becel offer. We leveraged our
media into excellent support from all retailers for the campaign. This allowed for further amplification
through bunker programs, in-store displays and
flyer support. A PR campaign kicked off the
campaign during a press conference by the Heart &
Stroke Foundation. Becel was presented as the
Founding Sponsor so that the brand was featured
side to side with all Heart & Stroke Foundation
messaging. Finally, the websites, loveyourheart.ca
and aimetoncoeur.ca, featured The Heart Age tool,
an online resource that calculates the “age” of your
heart compared to your chronological age based on
scientific research into heart disease risk factors.

By every measure, Becel’s sponsorship of The Heart

Truth was a tremendous success. In Q1 2008, Becel
consumption grew 6%, outperforming all its
competitors and outpacing the category. Results were particularly strong when compared against Q1 results
from previous years and almost double internal expectations. Market share grew by 60 basis points over the
previous year.

Beyond value and share growth, another key goal of the campaign was to enhance Becel’s image as “Heart
Health Experts” and “Good for your Heart.” The results were excellent, surpassing the targets set for these
image gains.

The undeniable success of the campaign has resulted in its being considered for exportation to other
Unilever markets around the world. Comparable sponsorships are currently being investigated.

Research shows a distinct cause and effect of the advertising as a key contributor to the business results.
Branded recognition for the TV ad was nearly twice as high as the average for all other TV ad tracking. Key
TV ad diagnostics of engagement, communication and persuasion were all significantly above norm.
Persuasion was the highest score on any Becel equity spot over the past five years. Likewise, print, in-store
ads and packages scored well above usual norms.

As this case shows, there are many ways to measure marcom performance. Space doesn’t allow us to touch
on all of them. But one last metric the Becel team is particularly proud of is the fact that in three short
months, the campaign helped to nearly double awareness that heart disease is the number one killer of
Canadian women. Post analysis from the Heart & Stroke Foundation shows it went from 13% at the end of
2007 to 23% following the campaign.

Tony Chapman is President of Capital C Communications (www.capitalc.ca), a full-service communications agency

headquartered in Toronto.

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February 2009 Measure or Die

What to Expect from your Banker

While all of Canada’s major banks have relationships with the largest major agency
networks and holding companies, as far as Beringer is aware at the time of writing, only
RBC Royal Bank has a practice dedicated to the specific unique financing needs of small
and mid-size independent advertising and marketing companies. Barry Mutis, Senior
Manager, Business and Professional Services Group with RBC in
Toronto, does about a third of his business with agencies. He spoke to us in December
about what banks look for when deciding to finance an agency, what agencies need to do to
stay competitive in the future and, of course, what the current economic climate all means.

Q: Have lending practices changed dramatically in the wake of the market machinations last fall
and the economic slow down?

Mutis: RBC has not changed its lending policies and practices. We’re still using the same tested fundamentals
that we’ve used for decades. In fact, our methodology has always had a long-term view recognizing the
peaks and valleys of the economic cycle. This allows us to support our clients in good times and through
more difficult periods. We believe that our job is to help you create confidence in the future through good
advice and access to financing.

Q: What are the key things you look for in an agency you are considering making loans to?

Mutis: Here are a few things we focus on:

ƒ Strategy and marketing – We are interested in understanding the business and supporting marketing
strategies of the agency. This helps the bank to identify creative companies that stand out.
ƒ Financial history – Finding credit is like finding a job: you can’t substitute for history. So we look at
a firm’s financial track record, such as their ability to generate cash-flow and profit, and whether
they are growing their earnings. It’s important to see stable earnings growth because that’s really
what we’re lending on – the capability of management to continue to generate cash, as opposed to
the value of specific assets. The firms that grow solely on debt are more vulnerable, especially in this
soft economy.
ƒ Equity positions – What stake do the key partners and shareholders have in the business?
ƒ Business plan – Is there a solid business plan in place? Does it clearly describe the company’s core
function and competencies? Are business objectives realistic and achievable? Does it outline an
effective strategy to meet objectives? Does it delineate how the company differentiates itself from
competitors? Many business plans contain great looking charts and pictures, replete with inspiring
motherhood statements. But a really good plan is concise, unequivocal and has substance – here’s
what we do, here’s how we do it differently, this is what we want to achieve, and here’s why our
clients value us over our competitors.
ƒ Competition – Who is your competition? How do you compare? What differentiates your services?
ƒ Clients – How long have they been with you? How much and what kinds of work are you doing
for them now? The depth of the relationship is also important, as loyal customers are more likely
to do repeat business and recommend your firm to others. It’s very easy for clients to change
agencies when all you’re providing them with is creative. When you’re also doing R&D analysis

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Measure or Die February 2009

and you’re providing data to the company that they can’t obtain on their own, they come to rely
on your services and expertise as a key component of their strategy development.

Q: Does the growing focus on data and “accountability” require a new kind of agency leader?

Mutis: The same breed of energetic, creative people is still driving business in this industry. The quality of
ideas still affects success. However, the people who look strategically two or three steps ahead will be the
real winners. Many of the successful agencies that we deal with knew ten years ago that accountability was
critical and it’s proving itself now. Digital media is all the rage these days, but many of our forward-thinking
agency clients were either developing digital talent in-house or acquiring digital shops long ago. These firms
are in a great position now to take advantage of these developments.

Q: Is there anything else agencies should think about regarding their relationship with banks?

Mutis: It’s important to know that even if you don’t have immediate borrowing needs, we still value your
business and can provide financial advice and products to help you with other aspects of your business and
operations. In fact, RBC has industry-specific specialists who know the marketplace and the unique challenges
that advertising and marketing firms face. That means they can provide tailored and relevant advice and
customized banking solutions that reflect the specific structure, character and requirements of each
individual firm.

Broadly speaking, these days especially, banks are concentrating on their deposit business. Many agencies
self-finance through advance payments, and these can be very significant and are valued by banks. Use this
leverage to ask for interest. There are many options available to you. You might also want to ask your bank
about cash management services, used to help collect, disburse and monitor your funds.

While we continue to experience unprecedented market turmoil and grim economic news, it’s actually a
good time to look at your banking arrangements. If you’re not getting what you need; if you’re not getting
any advice; if you’re not having a meaningful dialogue with your bank; now is a good time to change.

Barry Mutis can be reached at 416-974-3854 or barry.mutis@rbc.com.

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February 2009 Measure or Die

About Beringer Capital

Beringer Capital is an independent merchant bank located in Toronto that focuses on the marketing
services, advertising and specialty media industry. We have a long history of partnering with marketing and
communications companies to help maximize their potential.

Beringer provides advisory services to lead acquisition initiatives, develop growth strategies and set the
strategic direction, obtain equity or debt financing and sell companies to strategic or financial buyers.
Beringer has extensive experience helping agencies to re-engineer during difficult times. Our combination of
skills and industry expertise allows us to understand the challenges advertising and marketing companies
face and to quickly develop and execute value creation and growth strategies.

In addition to our advisory services, Beringer makes direct investments in entrepreneurial companies to
fund acquisitions, growth plans, recapitalizations and buy-outs of partners. We have invested in a number of
marketing and communications companies in North America who we’ve helped to grow revenue, build or
acquire new capabilities and increase profitability.

Here is an overview of some the advisory projects we have been working on:

ƒ A fast growing digital agency has hired Beringer to explore its strategic options.
ƒ Beringer has been engaged by an independent advertising agency to lead their acquisition strategy in
Europe and North America.
ƒ A unique experiential marketing company has hired Beringer to find a strategic investor.
ƒ A niche research and advisory firm hired Beringer to explore strategic options. The company was
sold to a strategic buyer.
ƒ A marketing execution company hired Beringer to restructure the organization to reduce overhead
costs and become more competitive.
ƒ Beringer was engaged by a Canadian advertising and design firm to acquire a digital agency to
expand its capabilities.
ƒ An independent agency engaged Beringer to conduct a corporate restructuring to improve
profitability, strengthen the balance sheet and develop a partner compensation model. The review
also developed a valuation formula for new shareholders entering the business.

We welcome the opportunity to discuss your company’s acquisition or divestiture strategy, restructuring
activities or any other facet of your business.

Perry Miele Bill Kostenko Andrea Nickel Mark Farber

Chairman CEO Vice President Vice President
ext. 5246 ext. 5224 ext. 5202 ext. 5236

141 Adelaide Street West, Suite 750, Toronto, ON M5H 3L5

Phone: (416) 928-2166 Fax: (416) 928-1480
www.beringercapital.com

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