The Outlook for AdvertisingAdWatch 2004

TNS Media Intelligence/CMRAdvertising and Marketing Intelligence –Across Brand, Media, Industry and Market

Leading provider of strategic advertising and marketing information

Monitoring:

$140 billion in ad expenditures

190 million ad occurrences

2 million brands

20 media

The Advertising Outlook

Five Year Ad TrendsKey Indicators for 2004 SpendingOutlook for 2004 and Beyond

The Past Five Years

The Advertising LandscapeAnnual Multi-Media Expenditure Trends

Continued recovery since 2001

2000 2001 2002 2003-10

-5

0

5

10

15

Percent change

14.1%

-9.1%

4.9% 6.2%

Based on 14 media

The Advertising LandscapeStrongest Media Growth From 1999 to 2003

Spanish Language Network TV

+86.7%

Internet

+40.6

Cable TV

+38.6%

Outdoor

+26.7%

The Advertising LandscapeAnnual Multi-Media Expenditure Trends

Healthy start to 2004

2000 2001 2002 2003 Q1 / 2004-10

-5

0

5

10

15

Percent change

14.1%

-9.1%

4.9% 6.2%

9.6%

Based on 14 media

Advertising CategoriesNew BrandsThe Upfront

Key Indicators for Spending

The Advertising LandscapeTop 10 Categories Q1 2004

Dollars in billions

Retail UP 7%$5.9Non Domestic Auto UP 10%$2.0

Domestic Auto UP 7%$1.8

Transportation and Tourism UP 17%$1.1Banking and Investment Services UP 23%$1.1

Telecommunications Services UP 10%$1.1Pharmaceuticals UP 29%$973

Motion Pictures UP 3%$958Media and Marketing Services UP 17%$955

Restaurants UP 1%$917

The Advertising LandscapeTop Growth Categories Q1 2004

Pharmaceuticals

+29%to $973 Million

Banking and Investment Services+23%to $1.1 Billion

Transportation and Tourism+17% to $1.1 Billion

Media and Marketing Services+17%to $955 Million

Non Domestic Auto+10%to $2.0 Billion

Telecommunications Services+10%to $1.1 Billion

New BrandsStrong First Quarter 2004

Key Categories for New Brands in 2004:In order of dollars spent

Motion Pictures

Domestic Auto

Audio Video Equipment

Pharmaceuticals

Health Aids

New brands spending a minimum of $2.5 million in National media

Number of major new brands up 16% from Q1/2003

0

20

40

60

80

100

120

140

Q1 2001 Q1 2002 Q1 2003 Q1 2004

132$945

114$872

99$723

111$841

Dollars in millions

The UpfrontBusiness as Usual“Will the Upfront Be Half Empty, or Full-of-it”

“Upfront Still Thrives as Party, PR Event”

“The Upfront is Not Broken”

“Advertisers, Agencies: Cable Nets Likely to Benefit from Upfront Share”

“Upfront Loses Traction with Autos”

National TV* Upfront Sales 12% -12% 16% 14% 6-8%

Upfront Estimates

National TV* Media 2% -7% 11% 8%

2000 vs. 1999

Q4 Percent Change

2001 vs. 2000 2002 vs. 2001 2003 vs. 2002Ad Spending

The UpfrontBusiness as Usual

* Includes Network, Cable and Syndication

2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 2003 vs. 2002 2004 vs. 2003

PoliticsOlympics

The Gavel and Baton

The Political MarketplaceContinued Growth

$1.5 billion in spending for 2004

1998 1999 2000 2001 2002 2003 2004

$211Million $124

Million

$625Million

$218Million

$840Million

$300Million

$1.5Billion

2004 dollar amount is estimated

The Political MarketplaceElections

$1.3 billion in spending

All dollar amounts are estimated

Presidential

$600 Million

Congressional

$275 Million

Gubernatorial

$75 Million

State and Local

$200 Million

State Ballot Initiatives

$150 Million

The Political MarketplaceIssue Advocacy / Political

$200 million in total spending

All dollar amounts are estimatedThe leading topics for issue advocacy

Medicare Prescription Drug Coverage

$70 Million

Tribal Gaming

$40 Million

Telecommunications

$25 Million

Tort Reform

$20 Million

The Olympics

The OlympicsRights Fees Continue to Increase

U.S. Summer Olympic Television Rights Fees

0

200

400

600

800

1000

1200

Dollars in millions

1984Los

Angeles

1988Seoul

1992Barcelona

1996Atlanta

2000Sydney

2004Athens

2008Beijing

2012TBD

1980Moscow

$85$226

$300$401

$456

$705$793

$894

$1,181

166%33%

34%14%

55%12%

13%

32%

Source: International Olympic Committee

The OlympicsImpact on Overall Television Ad Spending

The 2000 Sydney Olympics added $750 million in spending

Without Olympics

With Olympics

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

TV A

d Sp

end

($B

)

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep Oct

Nov

Dec

The OlympicsOutlook for Spending

Incremental contribution of $850 million in television spending on the Athens games

1st Half and Full Year 2004

The Advertising Outlook

The Advertising Outlook for 2004Quarterly Growth Trends

1st Quarter

9.6%

2nd Quarter

9.3%

1st Half 2004

9.4%

3rd Quarter

10.9%

4th Quarter

7.7%

2nd Half 2004

9.2%

9.3% Increase 9.3% Increase -- $140.3 Billion $140.3 Billion in Overall Ad Spendingin Overall Ad Spending

The Advertising Outlook for 2004Full Year

The Advertising Outlook for 2004Full Year Growth Estimates by Media

-2 0 2 4 6 8 10 12 14 16

Internet15.8%14.3%

11.5%9.9%

7.0%

9.8%9.8%

8.4%

6.4%6.4%

-.1%

Spot TV

Radio (Network, Spot, Local)Cable Network TV

Spanish Language TV

Network TV

SyndicationOutdoor

Magazines (Consumer, Sunday)Newspapers (National, Local)

B2B Magazines

Beyond 2004An Industry in Transition

The Advertising Outlook

An Industry in TransitionMoving from Analog to Digital

Analog

Passive

Push

Less Bandwidth

Media Silos

Targeted Marketing

Digital

Interactive

Pull

More Bandwidth

Media Convergence

One-to-One Marketing

An Industry in Transition Moving from Analog to Digital

Increased Media FragmentationIncreased Competition for AttentionEmerging Consumer Expectations

The Effects of Fragmentation for AdvertisersA View of the Consumer and of Media Choices

ConsumerMarkets

• More brand choices

• Less brand differentiation

• Substitutability

• Eroding USP

Increased Media FragmentationMore Options in the Marketplace

Out of HomeWireless

OnlineDigital Cable

Traditional Media

The Effects of Fragmentation for AdvertisersA View of the Consumer and of Media Choices

MediaMarkets

• More media vehicles

• Expanded competitive sets

• Smaller audiences

• Higher CPPs

• Eroding USP

ConsumerMarkets

• More brand choices

• Less brand differentiation

• Substitutability

• Eroding USP

An Industry in Transition Moving from Analog to Digital

Effects of FragmentationIncreased Competition for Consumer Attention

Increased Competition for Consumer Attention

Human attention is evolving as a scarce economic resource

Increased Competition for Consumer AttentionConsumer Usage of Media: 1997-2004

Source: Veronis Suhler Stevenson Communications Industry Forecast – July 2003

The hours, per week that a consumer spends with media increased from 56 to 63

Total 56 63

Measured Media 1997 2004

Radio 18 21

Broadcast TV 18 15

Cable & Satellite TV 12 19

Internet 1 4

Newspapers 4 3

Consumer Magazines 3 2

Increased Competition for Consumer AttentionMulti-Tasking Measured Media

Source: October 2003 BIGresearch SIMM survey

More than 70% of consumers use media simultaneously

Television

74%While watching:

Read the newspaper

66%Go online

Radio

57%While listening:

Go online

47%Read the newspaper

18%Watch TV

Newspapers

52%While reading:

Watch TV

50%Listen to the radio

Online

62%While connected:

Watch TV

52%Listen to the radio

20%Read the newspaper

Increased Competition for Consumer AttentionPervasiveness of Multi-Tasking

Competition for Consumer AttentionThe Economic Paradigm has ChangedOLD PARADIGM IS Dollar Centric

Total Media Dollars

Total Marketing Dollars

New PARADIGM IS Attention Centric

Total AttentionBudget

Total Media Attention

Share of MindShare of Voice

An Industry in Transition Moving from Analog to Digital

Effects of FragmentationIncreased Competition for AttentionEmerging Consumer Expectations

Emerging Consumer ExpectationsToday’s Consumer is Empowered

Content

Appealing

Engaging

Informative

Emerging Consumer ExpectationsToday’s Consumer is Empowered

Choice

Availability

Accessibility

Emerging Consumer ExpectationsToday’s Consumer is Empowered

Customization

Sense of ownership

Relevancy

Emerging Consumer ExpectationsToday’s Consumer is Empowered

Convenience

Portability

“When and where I want”

Emerging Consumer ExpectationsToday’s Consumer is Empowered

Choice

Convenience

Customization

An Industry in Transition For Consumers, Advertisers and Media

Fragmentation Attention Expectations

Consumers ChoiceFiltering the “White Noise”

Multitasking and Selection4Cs

Media CompetitionStruggle for relevancy

Leverage brand equityEvolve

Advertisers and

Agencies

Apertures of Opportunity

Engage the Consumer

Accountability

Quantify ROI

Small Audiences

Diminished Returns

Beyond 2004An Industry in Transition

The Advertising Outlook

The Outlook for Advertisingwww.tnsmi-cmr.com

Steven FredericksPresident & CEO