A Digital Update, By The Numbers

Local Online Advertising Conference 2015

Gian Fulgoni
Co-Founder & Chairman Emeritus
comScore, Inc.

© comScore, Inc. Proprietary.

Topics

The Rise of the Digital Omnivore

Update on Digital Commerce
A New View of Online Advertising
The Future of Digital Payments

© comScore, Inc. Proprietary. 2

Data sourced from comScore’s global panel of 2 million Internet users

2 Million Person Panel PERSON-Centric Panel with

360°View of Person Behavior WEBSITE-Census Measurement

Web
Visiting &
Online Search
& Offline Behavior
Online
Buying Advertising PANEL CENSUS
Exposure
Transactions

Media & Video Demographics,

Consumption Lifestyles
PANEL & Attitudes
Unified Digital Measurement™ (UDM)
Mobile Internet
Usage & Behavior Patent-Pending Methodology
1 Million Domains Participating
Adopted by 80% of Top 100 Global Media Properties

Plus 5 Million TV Set Top Boxes for 3-Screen Measurement

© comScore, Inc. Proprietary. V0411 3
The Rise of the Digital Omnivore

© comScore, Inc. Proprietary.

Continued strength in adoption of smartphones and tablets has led to
a dramatic shift in media engagement on these platforms

Number of U.S. Smartphone and Tablet Owners

Source: comScore MobiLens and TabLens, U.S., 2000-2014
200,000,000
182 MILLION
75% PENETRATION
180,000,000 +16%
Number of Device Owners

vs. YA
160,000,000

140,000,000

120,000,000
97 MILLION
40%
100,000,000
PENETRATION

80,000,000

60,000,000
+18%
vs. YA
40,000,000

20,000,000

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

© comScore, Inc. Proprietary. 5

Digital engagement has doubled in the past three years, led by massive
growth in mobile usage, but desktop engagement has not declined

Total U.S. Internet Usage in Minutes (Billions) by Platform

Desktop, Smartphone, and Tablet

1,256 +26%
995 +83%
172 +39%

124 +1040%
+29%
543 574
442 +237%
11
131
+7% +19%
429 510
401

December 2010 December 2013 November 2014

Source: comScore Media Metrix Multi-Platform, Dec13 and Nov14
Note: Dec-2010 Smartphone and Tablet numbers are estimated based on earliest observed comScore
smartphone engagement data calibrated by number of smartphone users at that time.
© comScore, Inc. Proprietary. 6
Strong growth in mobile app usage has propelled apps to a majority of
digital engagement at 56%, while total mobile time is at 64%

Share of U.S. Digital Media Time Spent Shifts by Platform

Source: comScore Media Metrix Multi-Platform & Mobile Metrix, U.S.,
75% March 2012 - November 2014

64%
65% Mobile

56%
55% 52% Mobile App

45% 48%

40% 36%
35% Desktop

25%

© comScore, Inc. Proprietary. 7

App usage is very selective: 42% of all app time spent on smartphones
occurs on an individual’s most used app, while 75% of app usage
occurs on the top 4 apps

Share of Time Spent on Apps Across Ranks

45% Source: comScore Custom Analytics, U.S., Age 18+, June 2014
42%
40%

35%

30%

25%

20%
17%
15%
12%
10%
10%
6%
5%
4% 3% 2% 2% 1% 1%
0%
1 2 3 4 5 6 7 8 9 10 11+
Individuals’ Top Ranked App by Usage

© comScore, Inc. Proprietary. 8

 The largest digital media brands (FB, GOOG, AAPL, YHOO, AMZN,
EBAY) make up 16 of the top 25 most used apps

Top 25 Mobile Apps by Unique Visitors (000)

Source: comScore Mobile Metrix, U.S., Age 18+, November 2014

Facebook 113,467
YouTube 83,985
Google Search 78,261
Google Play 75,511
Facebook Messenger 70,332
Pandora Radio 68,330
Google Maps 60,721
Gmail 60,406
Instagram 48,932
iTunes Radio/iCloud 37,923
Apple Maps 36,544
Twitter 35,036
Amazon Mobile 31,788
Yahoo Stocks 29,828
The Weather Channel 28,936
Google+ 28,602
Pinterest 28,473
Snapchat 24,908
Netflix 24,671
Walmart 24,438
Castle Story 23,461
23,351
eBay 21,791
Yahoo Mail 19,339
18,106

© comScore, Inc. Proprietary. 9

iPhone app users earn about 50% more in income than Android phone
users, and engage with their apps for 17 more hours per month

Source: comScore Mobile Metrix, U.S., Age 18+, November 2014

64.2 80.7
39 40
$87,000 $59,000
67 50

© comScore, Inc. Proprietary. 10

There is large variation in importance of mobile engagement
across content categories

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Some locally-focused content categories are seeing consumption
shift to mobile much more rapidly than others

Share of Content Category Time Spent by Platform

Source: comScore Media Metrix Multi-Platform, U.S., Jan 2015
Maps 10% 90%
Coupons 13% 87%
Weather 18% 82%
Personals 35% 65%
Job Search 41% 59%
Regional/Local 49% 51%
News/Information 49% 51%
Search/Navigation 58% 42%
Real Estate 63% 37%
Classifieds 65% 35%
Directories 68% 32%
Government 84% 16%
Desktop Mobile

© comScore, Inc. Proprietary. 12

 Digital Commerce

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 Retail digital commerce (desktop + mobile) reached $82.8 billion
in Q4 2014, up 16% vs. YA, with m-commerce accounting for 13% of all
sales
Desktop + Mobile Retail Commerce Dollar Sales ($ Billions)
Source: comScore e-Commerce & m-Commerce Measurement
Desktop
+21% +17% +17% +17% +15% +16% +14% +12% +13% +13% +14% +16%

$82.8

$71.4 $10.7
Billions ($)

$64.0 $8.3 $63.4

$61.6 $60.6
$7.2 $56.1 $54.5 $7.3
$54.3 $6.8 $6.7
$48.8 $47.0 $5.9 $4.7 $72.1
$45.4 $5.8 $63.1
$4.5 $3.8 $56.8 $56.1 $54.8
$4.6 $53.9
$50.2 $49.8 $47.5
$44.3 $43.2 $41.9
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

© comScore, Inc. Proprietary. 14

In terms of discretionary spending, m-Commerce growth is far
outpacing e-Commerce & bricks-and-mortar

Q4 2014 Y/Y Retail Spending Growth by Channel

Source: Dept. of Commerce, comScore e-Commerce & m-Commerce Measurement

+35%

+30% +29%

+25%

+20%

+15% +14%

+10%

+5% +3%

+0%
Total Discretionary Retail E-Commerce M-Commerce

© comScore, Inc. Proprietary. 15

 Digital Commerce accounted for 13.6% of consumers’ discretionary
spending in Q4 2014, while Desktop alone remains under 12%.

Desktop & Mobile e-Commerce Share of Consumer Retail Spending

Source: comScore e-Commerce/m-Commerce & US Department of Commerce for Retail

13.6%
12.0% Q4 ‘14
(Q4 ‘13)
14%
11.2%
13% (Q4 ‘12)

12%
11% Digital Commerce Share (desktop+mobile)
11.8%
10% Q4 ‘14
e-Commerce Share (desktop) 10.6%
9% (Q4 ‘13)

8%
10.0%
(Q4 ‘12)
7%
6%
5%
4%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

*Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales

excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts,
© comScore, Inc. Proprietary. 16
Gasoline Stations and Health & Personal Care Stores.
Not being able to see product detail is the second most common issue
faced when making a purchase via smartphone (and the least cited
issue on tablets)

Barriers of Mobile Purchasing – Average of Frequency and Severity of Issues

Source: comScore Custom Survey

Smartphone Tablet
Scores were computed by multiplying ratings
for “frequency” and “severity” of each issue,
for each device (on a 7-pt scale, see question
text below)

20.2 19.6 19.3 19.2 18.6 18.4 18.4

17.1 16.1 16.0 15.9 15.9
15.0 15.0

Do not feel secure Cannot see the Navigating between Cannot browse Too difficult to Connection Cannot navigate to
providing payment product detail screens is too between multiple input my name, speeds/spotty coupons/discounts
information over difficult/slow screens easily to address, and service slows down easily
mobile devices comparison shop payment the browsing
information process

© comScore, Inc. Proprietary. 17

By product category, Digital Content showed the greatest penetration
via mobile, with Computer Hardware the least ‘mobile’

Q4 2014 Share of Product Category Digital Commerce

Spending by Platform for Selected Categories
Source: comScore e-Commerce & m-Commerce Measurement
13%
60% 65% 70% 75% 80% 85% 90% 95% 100%

Total Digital Commerce 87.0% 7.4% 5.6%

Digital Content 70.5% 16.7% 12.8%

Event Tickets 75.7% 15.8% 8.5%

Jewelry & Watches 77.0% 13.6% 9.4%

Home & Garden 88.4% 6.7% 5.0%

Consumer Electronics 91.6% 5.1% 3.3%

Computer Hardware 92.0% 5.1% 3.0%

Consumer Packaged Goods 92.0% 5.0% 3.0%

Desktop Smartphone Tablet

© comScore, Inc. Proprietary. 18

A New View of Digital Advertising

© comScore, Inc. Proprietary.

 Measurement of Targeting Accuracy,
Viewability,benchmarks
Industry Brand Safety and
canNon-
help
Human Traffic
media provides
buyers and much-needed
sellers set
transparency in an increasingly opaque,
campaign delivery expectations.
programmatic world.

© comScore, Inc.
© comScore, Inc. Proprietary. Proprietary. 20
Viewability rates vary by campaign, publisher & placement type,
but need to be improved. Viewability lower on the exchanges.

% Ads Viewable by Placement Type

Premium
Premium is defined
sites as impressions run directly on a property, media title, channel, sub-channel,
group or sub-group per comScore Media Metrix definitions. Non-Premium is defined as
impressions run indirectly via an Exchange

Source: comScore vCE, 2012-2013, Global.

© comScore, Inc.
© comScore, Inc. Premium is defined by Ad Metrix as having an average CPM above USD $5.00 and an average monthly ad revenue of
Proprietary.
$100,000. Proprietary. 21
The importance of viewability:
Higher viewability disproportionately increases campaign sales lift

Digital Sales Lift

Index
Indexed to 100 for Less Than
50% Viewability of
Impressions
175
40% improvement in
viewability
100 generated

75% increase in
sales lift
Less Than At Least 70%
50% Viewability
Viewability
© comScore, Inc.
© comScore, Inc. Source: comScore and Kellogg’s case study, 2012.
Proprietary. Proprietary. 22
Kellogg’s realizes substantial benefits from digital in-flight
campaign optimization

Brand 1 ROI Brand 2 ROI

6x

5X
3X
2X
ROI ROI

Year 1 Year 2 1H Year 3 Year 1 Year 2 1H Year 3

© comScore, Inc.
© comScore, Inc. Source: comScore and Kellogg’s case study, 2012.
Proprietary. Proprietary. 23
The Future of Digital Payments

© comScore, Inc. Proprietary.

PayPal, which traditionally experiences strong decreases in share during the
holidays, held over 13% of US retail dollar share in Q4. Private Label store
cards gaining share
US Dollar Share of Retail Digital-Commerce

2.1% 3.0% 2.6% 2.5% 2.4%

0.7% All Other
12.6% 14.8% 15.1% 15.3% 13.3%
Emerging
7.8% Payments
6.5% 6.9% 8.3% 9.9%
PayPal

Private-Label
Store Card
Credit/Debit
Card
77.5% 75.7% 75.4% 73.9% 73.7%

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

© comScore, Inc. Proprietary. Source: comScore e-Commerce Measurement 25

 Over 15% of mobile buyers have used Near Field Communication
(NFC) to pay in a physical store. Slight increase in 2014.

Methods of Mobile Purchasing Base: Mobile Buyers

Q4 2014 Q3 2014

56%
Navigating to a mobile website
62%
Remote
Commerce
45%
Navigated to a mobile app
48%

33%
By Bar/QR Code Application
33%
Proximity
Payments
17%
Near Field Communication
15%

Base: Mobile Buyers=500 (Q3); 526 (Q4)

© comScore, Inc. Proprietary.

Source: Emerging Digital Payments Advisor
In <<HQLASTMONTH>>, which of the following methods did you use to buy goods or services on your smartphone? Please
select all that apply.
26
 One fourth of U.S. consumers who made an online purchase are aware
of Apple Pay, but usage still low. PayPal leads by substantial margin.

Digital Payment Tools Awareness and Usage of Digital Wallets

Awareness of Digital Wallets Usage of Digital Wallets

-Among Digital Buyers- -Among Digital Buyers-
PayPal 90% PayPal 79%
Google 44% Google 7%
PayPal Credit 42% PayPal Credit 18%
Amazon 38% Amazon 16%
Bitcoin 27% Bitcoin 1%
Apple Pay 25% Apple Pay 2%
Visa Checkout 24% Visa Checkout 6%
Starbucks 24% Starbucks 11%
iTunes 20% iTunes 6%
Dunkin' Donuts 13% Dunkin' Donuts 3%
MasterPass 11% MasterPass 1%
Serve 7% Serve 2%
Samsung Wallet 7% Q4 2014 Samsung Wallet 1% Q4 2014
Square Order 6% Square Order 1% Q3 2014
Q3 2014
Softcard 5% Softcard 1%
LevelUp 3% LevelUp 1%
CurrentC 2% CurrentC 0%
Base: Total Respondents: 2,857 (Q3); 2,878 (Q4) Base: Respondents aware of any digital payment tools: 2,567 (Q3); 2,672 (Q4)

© comScore, Inc.
Source: Emerging Digital Payments Advisor
Proprietary. DIGPAY1. Which of the following digital payment tools, if any, are you aware of? Please select all that apply. 27
DIGPAY2. Which of the following digital payment tools, if any, have you ever used? Please select all that apply.
28% of Apple owners say they intend to use Apple Pay during the first
half of 2015. Security is cited as the most influential factor when
choosing to use the service.
Intent to use Apple Pay Q4 2014

Intend to use Apple Pay Most influential factors when choosing to use Apple Pay,
in Next 6 Months assuming availability on any device.
(7 point scale, Top 2 Box, % Likely) (7 point scale, Top 2 Box, % Influential)

Smartphone Owners Apple Owners Android Owners

28%
44%
Offers enhanced security 59%
35%

42%
Ease of use 55%
36%

40%
Offers rewards 50%
35%

39%
Offers discounts 49%
34%

Widely accepted by 39%

Apple Owners 52%
merchants 32%
Base: 251 (Apple Owners)
Base: 708 (Smartphone Owners); 251 (Apple Owners); 435 Android Owners

Source: Emerging Digital Payments Advisor

QAPPLEPAY3: Apple recently launched a service called Apple Pay that lets you make purchases with a credit or debit card in mobile

© comScore, Inc.
apps by tapping a checkout button or in retail stores by holding your phone over a card reader. Your purchases are authorized by using
Proprietary. your fingerprint. How likely are you to use Apple Pay in the next six months?
QAPPLEPAY4: How influential are the following factors in choosing to use Apple Pay, assuming it was available on your phone today?
28
QOS_MOB. What type of smartphone do you have?
 Grocery stores are the most oft-cited merchants to accept Apple Pay
among both Apple and Android owners.

Apple Pay Merchants Q4 2014

At what types of stores would you use Apple Pay,

assuming it was available on your phone today?

Smartphone Owners Apple Owners Android Owners

Grocery store 36%

Department store or big box store 32%

Gas station 28%

Fast food restaurant 27%

Full service/sit-down restaurant 26%

Drug store 26%

Digital goods store 21%

Hotels 19%

Local/Small Retailers 16%

Airlines 15%
Base: 708 (Smartphone Owners); 251 (Apple Owners); 435 Android Owners

Source: Emerging Digital Payments Advisor

QOS_MOB. What type of smartphone do you have?

© comScore, Inc.
QAPPLEPAY5: At what types of stores would you use Apple Pay, assuming it was available on your phone today? Please select all that
apply.
Proprietary. QAPPLEPAY6: Apple Pay lets users add up to eight credit or debit cards to make purchases in stores and in apps without swiping a card 29
or entering card details. If you were to use Apple Pay, what types of cards would you add to Apple Pay? Please select all that apply.
In mid February 2014, Samsung acquired mobile payments startup
LoopPay, a technology that doesn’t require NFC and is already
compatible with around 90% of POS terminals.
Samsung LoopPay Acquisition Q1 2015

Feb. 18, 2014: “Samsung has acquired mobile payments startup LoopPay, as
good a sign as any that it will soon launch a competitor to Apple Pay.”

“Samsung plans to show off a new mobile

payments offering at its Galaxy S6
smartphone launch on March 1”

“The LoopPay setup "has

the potential to work" in
about 90 percent of
existing POS terminals,
according to Samsung,
something that could help
the technology spread
quickly.”

© comScore, Inc. Proprietary. 30

Key Findings: Mobile and Digital Commerce

 Mobile digital engagement has surged -- to the extent that

marketers MUST have a mobile strategy.
 However, overall usage of the desktop has not declined, so
marketers also need to maintain a desktop strategy.
 Apps have become the majority way of accessing the internet.
 The app challenge for marketers is a two-fold conundrum: first, how
to get the app downloaded to the mobile device, but then how to
ensure usage.
 The channel shift to digital-commerce seems to be accelerating as
more consumers opt for shopping online or end up converting
online due to increased prevalence of mobile-driven showrooming
behavior.

© comScore, Inc. Proprietary. 31

Key Findings: Digital Advertising

 The viewability of digital ads has been proven to be an important

determinant of digital ad campaign effectiveness.

 But, digital viewability rates have been shown to be low, especially

on the programmatic exchanges, creating a demand from buyers for
guaranteed viewability.

 Overall publisher response is still in a state of flux but appears to

be heading towards guarantees.

© comScore, Inc. Proprietary. 32

Key Findings: Mobile Payments

 Private label store cards and emerging payment methods are

gaining e-Commerce market share against traditional credit/debit.
 Mobile commerce is branching into two categories, where remote
commerce is analogous to e-commerce buying and proximity
payments, which impact in-store sales.
 Digital payment tools hope to improve checkout conversion for
remote and proximity transactions; usage of these tools is currently
low, but growing
• Niche solutions like Starbucks and Dunkin Donuts show that adoption
may be driven by three key concepts: demonstrating value to a
consumer, frequency of transactions and transaction size.
• Apple Pay is primarily being deployed for proximity payments, which
require NFC-enabled POS systems at merchants; upgrade timing might
be ideal considering US shift to EMV cards

© comScore, Inc. Proprietary. 33

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