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NEWREALITIES2012CONSUMER RESEARCH FROM JACK MORTON WORLDWIDE NEW REALITIES 2012 /1

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EXECUTIVE SUMMARYNEW REALITIES 2012 reports topline findings from quantitativeresearch conducted in late 2011 among consumers in Brazil,China, India and the US.Four key findings stand out in particular:# 1 PEOPLE ARE THE MOST POWERFUL AD MEDIUM ^^ Friends and family are the #1 influence on consumer : -) awareness and purchase# 2 GIVING PEOPLE SOMETHING TO TALK ABOUT TRUMPS “GOING VIRAL” : -/ Consumers aren’t likely to advocate brands they haven’t had great personal experiences with# 3 ALL FORMS OF ADVOCACY ARE NOT THE SAME Consumers are skeptical about the value of a “like” CONSUMERS AGREE: SHOPPER MARKETING # 4 WORKS More change their minds at POS due to staff, in-store experience and information than priceAdditional insights from the 2012 NEW REALITIES will bereleased in the future or may be requested by contactingJack Morton. NEW REALITIES 2012 /2

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TABLE OF CONTENTSIntroduction: 2012 4About the Research 5New Reality #1 – People are the most powerful medium 6New Reality #2 – Giving people something to talk about trumps “going viral” 10New Reality #3 – All forms of advocacy are not the same 12New Reality #4 – Consumers agree: Shopper marketing works 14Learn More 17About Jack Morton 18 NEW REALITIES 2012 /3

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INTRODUCTION: 2012Josh McCallThere’s no question that 2012 will be an eventful year. We’llspend much of the next 12 months speculating about outcomesof events in 2012 that we can only guess at now – like thewinner of the US presidential election, the victors at the summerOlympic games in London and above all the health of theglobal economy. (I’ll go out on a limb now and predict that,Hollywood movies and ancient forecasts notwithstanding, theworld will not come to an end in 2012.) Josh McCall Chairman & CEO of Jack Morton WorldwideWith so much that can’t be predicted, it’s all the more usefulto study what we can, to gain insights into the world we andour clients live and work within in 2012. It’s in that spirit thatwe set out on a research project, NEW REALITIES 2012, aimedat enhancing our understanding of what is always at the heartof our clients’ world: consumers. How do they learn aboutbrands in 2012? What influences their decisions? Wheredoes advocacy come from? What makes them recommendbrands and talk about them with others? And does a “like” onFacebook really mean anything to them?The following pages highlight top-level findings and focus onfour truths we’re betting will be key not only in 2012 but in theyears to come – today’s important “new realities”.Let us know what you think, and look for more research in themonths ahead. And meanwhile, have a great 2012. NEW REALITIES 2012 /4

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ABOUT THE RESEARCHNEW REALITIES 2012 is based on an online survey conductedamong 2,400 consumers between September 26 and October10, 2011. Respondents were aged 18 and older, equallydistributed by age, gender and income. Equal numbers ofsurvey participants were drawn from the US, Brazil, China andIndia. All findings are statistically significant at a 95 percentconfidence level.In addition to the findings highlighted in the pages that follow,NEW REALITIES 2012 also investigated consumers’ varyingperceptions relating to a range of product categories andtypes, including considered purchases (automobiles, insurance,banking, computers, software) and nominal purchases (OTC painrelievers, household cleaning, fast food, snacks). Results from thisinvestigation of product sectors will be released at a later date ormay be requested by contacting Jack Morton. NEW REALITIES 2012 /5

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NEW REALITY #1PEOPLE ARE THE MOST POWERFUL AD MEDIUMFor decades now, our industry has been talking about when they’re in the market. They also continually scan what“advertising” as a patient on the critical care list. Yet others are doing – for example, “Observing people use them”advertising is alive and well. Its most powerful medium: people. is the third most likely way consumers worldwide become aware of products, and in China, consumers say it’s the mostWhen we asked consumers as part of the NEW REALITIES 2012 valuable channel for making purchase decisions.research “What makes you aware of the products and servicesyou buy?” and “What channels have the most value in your This “people as ad medium” trend is also becoming moredecision-making?” they pointed to the people in their lives who powerful: since 2009, when we conducted parallel research inact as resources for information and advocacy. China and the US, “friends and family who volunteered their opinion” rose from 43 percent to 49 percent agreement as theConsumers are very clear on this point: the greatest influence top path to awareness about products and brands in the US;on their decision-making is friends and family [ figs. 1– 3 ]. “friends and family from whom you sought out opinions” roseThe number one way consumers become aware of products even more dramatically from 53 percent to 65 percent as theand services they buy is friends and family who volunteer most valued channel for decision-making in the US. (The 2009their opinions. And the most valuable influence on consumers’ research did not extend to Brazil and India.)purchase decisions is friends and family whose advice theyseek out. So if the most powerful advertising medium around is people talking to other people, the question is: what makes peopleThis “people as ad medium” trend is true whether consumers talk? The research suggests the answer (see New Reality #2).hail from Brazil, China, India or the US. It’s true whether they’reyoung or old, male or female. And it’s true whether they’rebuying an expensive considered product like a car or makingan inexpensive nominal purchase like fast food (though it’smore true by about 10 percentage points in the case of carsversus fast food). People hear daily from their friends andfamily about brands, and they instinctively seek out advice NEW REALITIES 2012 /6

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TOP 10 WAYS CONSUMERS BECOME AWARE OF THE PRODUCTSAND SERVICES THEY BUY Global US Brazil China India average Friends and family who volunteered their opinion 51 49 53 50 53 Advertising by company (e.g., TV, print, Internet ads) 45 41 50 38 50 Observing people use them 43 36 47 44 46 Friends and family from whom you sought out opinions 37 29 38 40 41 Company’s website 29 26 28 30 32 Information at store or on-shelf 28 22 33 26 29 Promotion (e.g., coupons, special pricing) 27 29 27 26 25 Research you conducted on the Internet 27 27 31 22 26 Product reviews by experts (e.g., in magazines, on Web) 22 17 21 19 30 In-store experience or media 20 16 21 21 22 (percent agreeing)[ fig. 1 ] NEW REALITIES 2012 /7

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TOP 10 MOST VALUABLE SOURCES OF INFORMATIONWHEN MAKING PURCHASE DECISIONS Global US Brazil China India average Friends and family from whom you sought out opinions 56 65 55 58 44 Friends and family who volunteered their opinion 55 61 53 61 43 Research you conducted on the Internet 47 61 41 48 37 Product reviews by experts (e.g., in magazines, on Web) 47 55 45 45 43 In-store experience or media 44 55 46 41 35 Advertising by company (e.g., TV, print, Internet ads) 43 53 51 27 41 Product reviews by experts (e.g., in magazines, on Web) 43 57 41 40 35 Promotion (e.g., coupons, special pricing) 42 57 40 40 31 Companys website 42 57 39 35 35 Research you conducted outside the Internet 42 56 34 46 32 (percent agreeing)[ fig. 2 ] I listen to the people that I trust! NEW REALITIES 2012 /8

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TOP 10 MOST VALUABLE SOURCES OF INFORMATIONWHEN MAKING PURCHASE DECISIONS (US CONSUMERS) US Age Age Age Male Female average 18-25 26-42 43-62 Friends and family from whom you sought out 65 64 63 68 61 69 opinions Friends and family who volunteered their opinion 61 61 59 64 57 65 Research you conducted on the Internet 61 59 61 63 60 63 Product reviews by peers (such as in publications, 57 59 57 56 56 59 on the Web) Promotion (such as coupons, special pricing, etc.) 57 51 54 66 52 62 Companys website 57 55 56 60 55 59 Research you conducted outside the Internet 56 52 55 61 55 56 Product reviews by experts (such as professionals 55 55 55 56 54 56 in magazines, on the Web) I research online! In-store experience or media 55 52 50 63 53 56 Advertising by the company (such as TV, print, 53 44 53 63 51 56 Internet ads) (percent agreeing) shown for US consumers by age and gender[ fig. 3 ] NEW REALITIES 2012 /9

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NEW REALITY #2GIVING PEOPLE SOMETHING TO TALK ABOUT TRUMPS “GOING VIRAL”Advocacy. It’s today’s holy grail of marketing: people acting as Sadly, and somewhat paradoxically, attempting merely toyour advertising medium by recommending your brand to their “go viral” more often seems to lead to sameness that fails topeers (see new reality #1). But what inspires advocacy? Or put differentiate. It’s not “special”. Mere talk is not advocacy;another way, what makes people talk? advocacy must be earned. Providing a direct positive experience is a prerequisite for earning advocacy for the vastAccording to the consumers involved in our research, the majority of consumers. Creating a unique experience thatanswer is experience: direct, positive experience with your speaks authentically to the brand is a way to break throughbrand. Across the world, across generations and genders, to consumers.three out of four consumers strongly agree with the statement“I only advocate brands when I have had great personalexperiences with them.” In the US, 79 percent agree with thisstatement, and over four in five (81 percent) women. Obviously,“experience” can be defined and delivered in many ways: itcan comprise a literal, direct, hands-on experience with theproduct or service, but it could just as easily comprise engagingconsumers with information about the brand in such a visceralmanner that it achieves the status of an experience.For all those marketers tempted to get consumers to recommendtheir brands simply by “going viral”, according to our researchit’s not enough. Consumers also agree that given all the clutterand noise, “if a brand wants to get my attention it has to dosomething special”. Three in five US consumers and well overfour in five Chinese consumers expect brands to stand out inthis way. NEW REALITIES 2012 /10

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TO INSPIRE ADVOCACY, GIVE PEOPLE SOMETHING TO TALK ABOUT Global US Brazil China India average I only advocate brands when I have had great personal 76 79 74 78 78 experiences with them With all the media and information available to me, if a 75 65 71 84 78 brand wants to get my attention it has to do something special I feel so strongly about a certain brand, or brands, I am an 66 62 51 80 74 active advocate for them (percent agreeing)[ fig. 4 ] I’ve tried it! I would definitely recommend it. I told my friend it’s a good product! Does it work? I want to try it first. NEW REALITIES 2012 /11

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NEW REALITY #3ALL FORMS OF ADVOCACY ARE NOT THE SAMESocial networks have transformed daily life for us all – or Similarly, although just one in four consumers worldwide (25certainly for the 83 percent of those surveyed who are percent) and almost one in three in Brazil (31 percent) agreemembers of a social network [ fig. 5 ]. It’s become like the air that “Social network sites are a good source of word-of-mouthwe breathe, expected and critical for brands to master. Too information on brand experiences”, in the US (where Facebookoften, however, brands mistakenly assume a “build it and was invented) an even more tepid 18 percent share this view.they will come” inevitability for their own presence on social In fact in the US slightly more people (19 percent) agree thatnetworks – believing that it’s just a matter of building a brand they “do NOT consider information on social sites to be goodpage and getting “likes”. But as the research shows, brands research for brand decisions”; just seven percent consult socialcan’t assume that advocacy generated online is always going network sites first when researching brand decisions.to be enough to persuade consumers. They have to use socialmedia as part of a bigger experience. Equally contradictory are consumers’ statements about the value of “likes”. About one in five says “liking” or “friending”NEW REALITIES 2012 certainly reaffirms that the social web brands is “silly” – yet an equivalent number say they’re moreis hugely important to consumers worldwide – but the data likely to consider a brand that has a lot of “friends”. Again USis not unequivocal on how they are using social media to consumers are more skeptical: only one in ten admits to beingmake brand decisions. Some responses seem contradictory influenced by brands’ popularity on social networks. Outside– or at least to point to consumer conflict over the ubiquity the US, especially in gregarious Brazil, consumers are moreversus the meaningfulness of social networks vis a vis brand inclined to hit the “like” button.recommendations. For example, despite the fact that over fourout of five respondents are using social networks, only one in Clearly, brands must look to social networks to amplifyfive (22 percent) agrees that “I use the social network sites to advocacy – but remember that not all forms of advocacy areshare brand information and experiences the same way I do… the same. Count clicks that create a positive halo but don’tin the real world”. Slightly more (24 percent) even say that “The put too much stock in them. Enable recommendations thatrecommendations I make in person are more meaningful than support information-gathering. And ultimately, prioritize the trulythose I make online”; among Gen X consumers, this number “meaningful” interactions and advocacy that fuelrises to 39 percent. active decision-making and purchase. NEW REALITIES 2012 /12

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MOST CONSUMERS USE SOCIAL NETWORKSBUT DISAGREE ABOUT ITS IMPACT Global US Brazil China India average The recommendations I make in person are more meaningful 24 22 26 20 29 than those I make online Are you a member of any social network group, like Facebook, 83 84 91 64 92 MySpace, LinkedIn, etc.? For those answering “yes” above, the following represent percent strongly agreeing I only “like" or "follow" brands that I care about on Facebook 23 23 32 15 20 I think “friending" or pushing "like" buttons for brands on social sites is silly 19 20 18 17 22 I do NOT consider information on social sites to be good research 14 19 17 18 18 for brand decisions Social network sites are a good source of word-of-mouth information 25 18 31 23 27 on brand experiences I use the social network sites to share brand information and experiences 22 11 23 22 21 the same way I do with family, friends and co-workers in the real-world I am more likely to consider a brand that has a lot of “friends” 18 10 17 22 23 or is “liked” by many If they ask me, Ill “like" or "follow" most brands I use on Facebook 18 10 19 20 24 If I need to do research for a brand decision, a social network site 16 7 13 23 20 is the FIRST place I will check[ fig. 5 ] (percent agreeing) [9-10 on a scale of 1-10]) NEW REALITIES 2012 /13

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NEW REALITY #4CONSUMERS AGREE: SHOPPER MARKETING WORKSGiven the simultaneous ubiquity and innovation in mobile In the same vein, consumers spoke plainly about the significanttechnology, it’s not surprising that many predict shopper impact of the store experience as well as the need to createmarketing will be one of the fastest-growing areas of the differentiating and unique brand experiences.industry in 2012. There’s a tremendous opportunity to bring For example, three out of four consumers agreed that “Mytargeted information and offers to motivated consumers in experience in-store has a huge impact on purchase decisions”.“shopper mode” and thereby tip the balance. Similarly, 72 percent agreed that “Brands in some categories are mostly the same, so it’s good service or unique customerYet the research shows that there are broader considerations experiences that make me buy one brand over another”.than just technology and access to information in shiftingshoppers into buyers [ figs. 6 – 7 ]. As part of NEW REALITIES That’s a huge endorsement of brands’ need to invest in2012, we asked consumers about any recent experiences in building not only compelling retail experiences but also, morechanging their minds about a purchase decision at the point fundamentally, strong experience brands that immediatelyof sale. On average just about half of consumers worldwide differentiate otherwise similar offerings. And as we found in oursaid they had changed their minds – and for the majority BEST EXPERIENCE BRANDS research, a majority of consumersof them, the aggregated factors of getting new information, say that experience is the single biggest factor impacting theirsome kind of demonstration or an in-store experience were brand choices; many will even pay more for a brand that offerssignificantly more likely to influence them than price. Needless a unique experience.to say, the combined impact of these factors puts pressure onin-store staff (whether the brand’s own, its channel partners’ orfranchisees’) to be effective and persuasive demonstrators andinfluencers. Put more positively, it suggests that marketers havean opportunity to invest in a better in-store experience insteadof cutting price and margin. NEW REALITIES 2012 /14

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EXPERIENCE AND INFORMATION ARE MORE LIKELY THAN PRICE TOCHANGE CONSUMERS’ MINDS AT THE POINT OF SALE Global US Brazil China India average Yes 51 29 50 68 58 For those answering “yes” above, the following represent percent agreeing that the decision was Mainly financial 39 48 34 35 38 Not mainly financial 62 52 66 65 62 Mainly informational 32 32 26 38 31 Mainly demonstration/experiential 30 20 40 27 31 (percent agreeing)[ fig. 6 ] In-store experience What changes my matters! mind when I shop? NEW REALITIES 2012 /15

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IN-STORE EXPERIENCE TURNS SHOPPERS INTO BUYERS Global US Brazil China India average My experience in-store has a huge impact on purchase decisions 76 78 63 79 74 I am more likely to buy a new brand if I can actually experience 76 77 68 81 76 it myself Brands in some categories are mostly the same, so its good 72 68 63 79 76 service or unique customer experiences that make me buy one brand over another (percent agreeing)[ fig. 7 ] NEW REALITIES 2012 /16

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LEARN MORELook for more insights from NEW REALITIES 2012 to bereleased in the future. To request insights relating to productcategories or other aspects of the research, contactliz_bigham@jackmorton.comTO READ EARLIER ARTICLES, VISIT JACK MORTON’S SLIDE CHANNELOR CLICK ON THE INDIVIDUAL LINKS BELOW:Best Experience Brands Read now >>What is an Experience Brand? Read now >>Experience Brands and the New Engagement Model (research) Read now >>TO JOIN THE CONVERSATION ABOUT BEST EXPERIENCE BRANDS,PLEASE CONNECT WITH US ONLINE:Follow us on twitter: @jackmortonVisit us online: jackmorton.comRead our blog: blog.jackmorton.com NEW REALITIES 2012 /17

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JACK MORTON WORLDWIDE IS A GLOBAL BRAND EXPERIENCEAGENCY WITH OFFICES ON FIVE CONTINENTS. OUR AGENCYCULTURE PROMOTES BREAKTHROUGH IDEAS ABOUT HOWEXPERIENCES CONNECT BRANDS AND PEOPLE – IN PERSON,ONLINE, AT RETAIL AND THROUGH THE POWER OF DIGITALAND WORD OF MOUTH INFLUENCE. WE WORK WITH BOTHBTOC AND BTOB CLIENTS TO CREATE POWERFUL AND EFFECTIVEEXPERIENCES THAT ENGAGE CUSTOMERS AND CONSUMERS,LAUNCH PRODUCTS, ALIGN EMPLOYEES AND BUILD STRONGEXPERIENCE BRANDS. RANKED AT THE TOP OF OUR FIELD, WE’VEEARNED OVER 40 AWARDS FOR CREATIVITY, EXECUTION ANDEFFECTIVENESS LAST YEAR, INCLUDING BEST NEW PRODUCTINTRO, BEST MEDIA EVENT AND EMPLOYEE CAMPAIGN OF THEYEAR. JACK MORTON IS PART OF THE INTERPUBLIC GROUP OFCOMPANIES, INC. (NYSE: IPG).© Jack Morton Worldwide 2012 NEW REALITIES 2012 /18