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February 11, 2010 State of the U.S. Online Retail Economy in Q4 2009 Gian Fulgoni, Chairman, comScore, Inc. Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar

Com Score Q4 2009 Sor Webinar

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Page 1: Com Score Q4 2009 Sor Webinar

February 11, 2010

State of the U.S. Online Retail Economy in Q4 2009

Gian Fulgoni, Chairman, comScore, Inc.

Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar

Page 2: Com Score Q4 2009 Sor Webinar

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

� E-commerce data includes all worldwide buying on U.S. sites

� Unless explicitly stated otherwise, the term comScore e-commerce refers to online retail spending, which excludes travel, autos and auctions

� Behavioral activity through December 2009

Online / Offline Transactions

DemographicsLife Stages

Web Visiting and Viewing

360°View of Consumer Behavior Analysis Parameters

2© comScore, Inc. Proprietary and Confidential.

� Survey issued in January 2010, n=1010

� Consumer Measurements:

– Site Visitation

– Buying

– Attitudes and Intentions

– Demographics

– Mobile

– Video

– Advertising & AdEffx Measurement

� Retailer Views

– Large vs. Small RetailersMedia

Exposure

Search BehaviorVideo

Page 3: Com Score Q4 2009 Sor Webinar

DEMOGRAPHICS• Self-reported and validated

• Appended Segments (e.g. Claritas, Acxiom)

• Individual & Household Level

WEB VISITING & VIEWING• All Website/Page Click Stream• Content Viewed• Search Engine Queries• Keyword Used

SURVEYS• Email or Contextual “Pops”

• Behavior-activated Surveys

• Observation of All Surveys Taken Across All Suppliers

ONLINE TRANSACTIONS• All Secure Session Activity• Purchases and Subscriptions• Price Paid, Shipping & Handling,

Promotions

comScore Customer Knowledge Platform: A 360°View of 2 Million Global Internet Users

3© comScore, Inc. Proprietary and Confidential.

Across All SuppliersPromotions • Applications/Configurations

MARKETING STIMULI• Online Ads

• Referral LinksTV VIEWING• Link to Digital Set Top TV Data

Using Name & Address

Designed to be representative of the online populat ionProjectable to the total U.S. population

TRUSTe certified for information privacy & security

OFFLINE PURCHASING• Linked using Name and Address

• Client CRM Databases

• Retailer Loyalty Card Data

Page 4: Com Score Q4 2009 Sor Webinar

Validation of comScore Sales Data:Comparison of comScore data to U.S. Department of C ommerce

4© comScore, Inc. Proprietary and Confidential.

*Note: To be consistent with DOC, comScore estimate excludes travel and events tickets but includes auction fees and autos.

Page 5: Com Score Q4 2009 Sor Webinar

e-Commerce continues to gain share of retail spendi ng

E-commerce Share of Corresponding Retail Spending*Source: comScore for e-Commerce & U.S. Department o f Commerce (DOC) for Retail

Com

mer

ceS

hare

4.6%5.1%

4.3%4.5%

5.3%5.9%

5.0%5.3%

6.4%6.7%

5.9%6.3%

7.4% 7.3%

6.5% 6.6%

7.6% 7.7%

6.8% 6.9%

7.7%

5.0%

6.0%

7.0%

8.0%

9.0%

5© comScore, Inc. Proprietary and Confidential.

*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, Gasoline Stations and Health & Personal Care Stores.

E-C

omm

erce

e-Commerce share peaks in colder seasons (Q4 & Q1)

4.3%

3.7%

4.0%

4.6% 4.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Page 6: Com Score Q4 2009 Sor Webinar

$77 $84 $80

$143+29%

+26%

+22%

+19%

$171$200

+17%

+12%+9%

+7%

2009 total retail e-commerce sales were down 2% ver sus year ago, with travel sales down 5% and non-travel flat

$214

-5%

$210

-2%e-Commerce Dollar Sales Growth ($ Billions)Source: comScore e-Commerce Measurement

6© comScore, Inc. Proprietary and Confidential.

$42 $53 $67 $82$102

$123 $130 $130$30

$40

$51

$61

$69

2002 2003 2004 2005 2006 2007 2008 2009

$72$93

$117

Non-Travel

Travel

+29%

+26%

+33%

+26%

+28%

+20%

+24%+24%

+13%

+20% +6% 0%

Page 7: Com Score Q4 2009 Sor Webinar

Q4 09 marked the first sign of positive growth in t he year, with both retail and e-commerce showing gains vs. YA

Quarterly e-Commerce Sales Growth vs. YASource: comScore e-Commerce Measurement

17%

23%

19%

11%13%

6%

-3% 0% -1%-2%

-5%

0%

5%

10%

15%

20%

25%

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

23%

3%

7© comScore, Inc. Proprietary and Confidential.

Note: The U.S. Department of Commerce calculation includes total retail and food service sales, which also includes motor vehicles and parts dealers.

Quarterly Retail & Food Services Sales Growth vs. Y ASource: U.S. Department of Commerce (DOC)

4%4% 5%4% 3%

-8%

-15%

-10%

-5%

0%

5%

10%

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

1%2%

-9%-10%

-7%

2%

Page 8: Com Score Q4 2009 Sor Webinar

Looking at quarterly sales and sequential changes, we see that e-commerce sales growth has been stagnant for past tw o years

$39.1 $38.1

e-Commerce Dollar Sales ($ Billions)Source: comScore e-Commerce Measurement

-9% -7% +4% +43% -15% -3% +5% +38% -20% -2% -1% +26% -18% -3% -2% +32%% Chg

vs. Prior Quarter

$39.0$45.0

8© comScore, Inc. Proprietary and Confidential.

Bill

ions

($)

$33.0 $27.2

$28.4

$39.1

$31.2

$30.6

$30.3

$38.1

$30.2

$29.6$31.0

$39.0

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09

$22.2

$23.1$23.9$28.0

Page 9: Com Score Q4 2009 Sor Webinar

We’re seeing significant variance in sales performa nce across retail categories

Q4 2009 e-Commerce Sales Growth vs. YA by Retail Ca tegorySource: comScore e-Commerce Measurement

Category Growth vs. YA

JEWELRY & WATCHESUp

CONSUMER ELECTRONICS (x PC PERIPHERALS)Up

COMPUTER SOFTWARE (X PC GAMES)Up

EVENT TICKETSUp

BOOKS & MAGAZINESUp

COMPUTERS / PERIPHERALS / PDAsMarginally Up

9© comScore, Inc. Proprietary and Confidential.

COMPUTERS / PERIPHERALS / PDAsMarginally Up

MUSIC, MOVIES & VIDEOSMarginally Up

SPORT & FITNESSMarginally Up

HOME & GARDENMarginally Down

FURNITURE, APPLIANCES & EQUIPMENTMarginally Down

VIDEO GAMES, CONSOLES & ACCESSORIESMarginally Down

APPAREL & ACCESSORIESMarginally Down

FLOWERS, GREETINGS & MISC GIFTSMarginally Down

TOYS & HOBBIESDown

Page 10: Com Score Q4 2009 Sor Webinar

2009 Holiday E-Commerce Wrap-Up

10© comScore, Inc. Proprietary and Confidential.

Page 11: Com Score Q4 2009 Sor Webinar

This year’s season started earlier and lasted longe r than any prior year

Millions ($)

2008 2009 % Change

November 1 – December 31 $27,982 $29,084 +4%

Thanksgiving Day (Nov. 26) $288 $318 +10%

Black Friday (Nov. 27) $534 $595 +11%

2009 Holiday Season E-Commerce Spending vs. Corresp onding Days in 2008*Source: comScore e-Commerce Measurement

11© comScore, Inc. Proprietary and Confidential.

$534 $595 +11%

Cyber Monday (Nov. 30) $846 $887 +5%

Green Monday (Dec. 14) $859 $854 -1%

Green Tuesday (Dec. 15) $754 $913 21%

Final Weekend Before Christmas (Dec. 19-20) $677 $767 13%

*Corresponding days based on corresponding shopping days Heaviest online shopping day on record

“One year after the worst holiday shopping season on record, retailers are no doubt breathing a sigh of relief as consumers loosened their purse strings somewhat thi s year.” – Motley Fool, January 8, 2010

Page 12: Com Score Q4 2009 Sor Webinar

4% growth in spending was driven by a 10% increase in the number of buyers, but they spent 5% less per buyer

Metric 2008 2009 % changeDollar Sales ($ Billions) $28 $29 +4%

Dollars per buyer $263 $250 -5%

Buyers (Millions) 81.6 91.8 +10%

Average Order Value $80.93 $75.59 -7%

Key e-Commerce Buyer and Transaction MeasuresNov. 1 – Dec. 31 vs. YA

Source: comScore e-Commerce Measurement

12© comScore, Inc. Proprietary and Confidential.

Average Order Value $80.93 $75.59 -7%

Transactions (Millions) 175 183 +11%

Transactions per Buyer 3.26 3.31 1%Buyer Penetration (Total Internet)

49% 51% +4%

Page 13: Com Score Q4 2009 Sor Webinar

e-Commerce gained share of consumers’ wallets in mo st product categories during the holiday shopping season, but Apparel/Clothing fared better offline

e-Commerce and Retail Sales Growth in Nov. & Dec. 2 009 vs. YASource: comScore for e-Commerce & U.S. Department o f Commerce (DOC) for Retail

e-Commerce (source: comScore) % change vs. YA

e-Commerce (non-travel) +4%

Retail (source: DOC) % change vs. YA

Retail (exc. Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores)

+2%

13© comScore, Inc. Proprietary and Confidential.

Consumer Electronics (excl. peripherals)

+15%

Sport & Fitness, Books & Magazines and Music, Movies & Video

+5%

Furniture, Appliances & Equipment

+5%

Apparel & Accessories -4%

Electronics Stores -2%

Sporting Goods, Hobby, Book & Music Stores

+2%

Furniture & Home Furniture Stores

-5%

Clothing & Clothing Accessories

+4%

Note: Comparisons should not be considered exact as comScore and U.S. Department of Commerce category definitions are not identical.

Note: Growth rates are not adjusted for the holiday season, meaning the calculation does not compare corresponding shopping days from 2008 to 2009.

Page 14: Com Score Q4 2009 Sor Webinar

The number of retail promotions in December 2009 was significa ntly higher than past years but discount levels were mod est relative to YA

150

200

250

300

350

400

450

500

Daily Offers Per Store

2006

2007

2008

14© comScore, Inc. Proprietary and Confidential.

“The retailers risk cannibalizing their 2010 sales by offering such juicy deals at Christmastime. "The question is, ‘Are we sucking the demand out of the first part of next year?’" asks Hargreaves, the Pacific Crest Securities analyst.”

– Time Magazine, Dec 15, 2009

0

50

100

150

Month and Day

2008

2009

Page 15: Com Score Q4 2009 Sor Webinar

Larger retailers gained online dollar share from sm aller retailers

Sales ($ Millions) 2008 2009 % Change

Total $27,928 $29,034 4%

Top 25 Retailers $16,634 $18,538 +11%

<25 Retailers $11,294 $10,496 -7%

15© comScore, Inc. Proprietary and Confidential.

Sales Share 2008 2009 Pt Change

Total 100.0% 100.0% N/A

Top 25 Retailers 59.6% 63.8% 4.2 pts

<25 Retailers 40.4% 36.2% -4.2 ptsSource: comScore, Inc. Time Period: Nov. 1 – Dec. 31 vs. year ago

The difference in performance between large and sma ll retailers indicates a need for caution when reviewing third party claim s of industry e-commerce

sales trends that are based on a sample of larger r etailers only

Page 16: Com Score Q4 2009 Sor Webinar

Approximately 40% of largest 25 retailers showed gr owth rates above 10%

Fastest Growing of the Top 25 Retailers Ranked by Dollar Sales Growth

Source: comScore e-Commerce Measurement

Amazon.com Very Strong

HSN.com Very Strong

Sears.com Very Strong

16© comScore, Inc. Proprietary and Confidential.

HP.com Very Strong

Costco.com Very Strong

BestBuy.com Strong

Apple.com Strong

QVC.com Strong

Walmart.com Strong

Note: Growth rates based on total dollar sales from Nov. 1 – Dec. 31, 2009 vs. year ago

Page 17: Com Score Q4 2009 Sor Webinar

Combined share for Amazon and Walmart grew signific antly; Amazon’s share is still substantially higher than t hat of Walmart’s

e-Commerce Dollar Share for Walmart and AmazonSource: comScore e-Commerce Measurement

7.5% 2.7%9.5%

3.2%10%

Nov 1 - Dec 31, 2008Amazon & Walmart All Others

13%

Nov 1 - Dec 31, 2009Amazon & Walmart All Others

17© comScore, Inc. Proprietary and Confidential.

89.8%87.3%

“In late 2009, as consumers showed their sensitivity to low prices, price wars returned to the retail l andscape with Walmart and Amazon engaging in book and DVD pri ce wars which eventually turned into an all out war to

have the cheapest consumer electronics.” – WalletPop. com

90% 87%

Page 18: Com Score Q4 2009 Sor Webinar

National Federation of Independent Businesses:December 2009 Survey of Members

� When asked if sales increased/decreased during Oct – Dec ‘09 vs. prior three months:

– A net 25% said sales had declined

– Lack of sales was the single most important problem faced by small businesses, being cited by 35% of respondents

– Widespread price cutting contributed to the reports of lower nominal sales

� When asked if profits increased/decreased during Oct – Dec ‘09 vs. prior three months:

– A net 43% said profits had declined.

– Only 12% of owners reported higher earnings in most recent three months

18© comScore, Inc. Proprietary and Confidential.

– Only 12% of owners reported higher earnings in most recent three months

– 54% reported lower earnings with 65% citing weaker sales as the cause

– Low sales volume was the number one reason cited for lack of earnings by 35% of respondents

� Today, the small business “job generating machine” remains in reverse. Jobs are being lost and new hiring is very weak. When asked if they were pl anning to create new jobs:

– A seasonally-adjusted net 2% of owners reported they didn’t plan to create new jobs over the next three months. (Note: this is an improvement of one percentage point over the November survey.)

– While the trend for increased employment is going in the right direction, there is no indication that job growth from small businesses will be strong enough to dramatically reduce the country’s unemployment rate

Page 19: Com Score Q4 2009 Sor Webinar

In-store pick up increases in importance in the fin al few hectic days before Christmas

Share of Transactions for In-Store Pick Up Purchase s vs. All Other PurchasesShare Based on Total e-Commerce Spending at Four Large Retailers that Offered In-Store Pick Up

Source: comScore e-Commerce Measurement

64% 60%52%

In-Store Pick Up Other

19© comScore, Inc. Proprietary and Confidential.

36% 40%33%

27% 28% 30% 25%

48%

64% 60%67%

73% 72% 70% 75%

Week Ending Nov 8, 2009

Week Ending Nov 15, 2009

Week Ending Nov 22, 2009

Week Ending Nov 29, 2009

Week Ending Dec 6, 2009

Week Ending Dec 13, 2009

Week Ending Dec 20, 2009

Week Ending Dec 27, 2009

Page 20: Com Score Q4 2009 Sor Webinar

Free shipping growing in importance, accounting for an incremental 6 points of all transactions in 2009. 75% of consumers would shift to another retailer at checkout if shipping not free

Share of E-Commerce Transactions that Include Free ShippingSource: comScore e-Commerce Measurement

43%46%

50%

45% 44% 45%50%

60%

20© comScore, Inc. Proprietary and Confidential.

31%

36% 37% 36% 35% 36%39%

42% 41%39%

42%39%

43%41% 41%

45% 44% 45%41%

20%

30%

40%

Series1

Series2

2008

2009

Page 21: Com Score Q4 2009 Sor Webinar

Big brands topped the list of heaviest retail adver tisers this holiday season, with a few smaller brands like Snor gTees and Lexar Crucial making the top five

Top Retail Advertisers by Sub-Category from Nov 1 – Dec 31 2009Source: comScore Ad Metrix

Apparel Total Display Ad Impressions (000)

1. Levi Strauss & Co. 1,238,873

2. Nordstrom, Inc. 1,182,057

3. L.L. Bean, Inc. 409,877

4. Nike 369,659

5. SnorgTees.com 347,829

Consumer Electronics Total Display Ad Impressions (000)

1. RadioShack Corporation 1,761,644

2. Best Buy 889,128

3. Samsung Group 618,914

4. Sony Electronics 515,528

5. Buy.com 314,381

21© comScore, Inc. Proprietary and Confidential.

5. SnorgTees.com 347,829

Computer Hardware Total Display Ad Impressions (000)

1. Dell 2,540,019

2. Hewlett Packard 1,849,652

3. Apple 726,613

4. Systemax Inc. 242,130

5. Lexar Crucial 121,951

Department Stores Total Display Ad Impressions (000)

1. Wal-Mart 3,401,226

2. Target Corporation 2,236,785

3. Nordstrom, Inc. 1,182,057

4. Macy’s Inc. 1,163,822

5. Sears 1,134,016

5. Buy.com 314,381

Page 22: Com Score Q4 2009 Sor Webinar

Social media is an increasingly important driver of commerce

How Social Media Influenced Purchase % of HolidayShoppers

Social media has influenced my holiday purchases 28%Reading a consumer-generated review about a product online (including personal blogs) influenced me to purchase it

13%

Reading an expert review about a product online influenced me to purchase it 11%

I have followed a company Fan Page on Facebook to take advantage of special offers/deals

7%

22© comScore, Inc. Proprietary and Confidential.

offers/dealsA friend’s status update about a product on Facebook influenced me to purchase it 6%

Watching a related video online influenced me to purchase a product 5%

I have followed a company on Twitter to take advantage of special offers/deals 5%

A tweet about a product on Twitter influenced me to purchase it 3%

Other 2%

Source: comScore Survey Time Period: Dec. 4-7, 2009, n=425

“Review sites like Retrevo are incorporating Twitter into their platform and retailers like BestBuy, Dell and others are taking advantage of social media to promote their deals and products. Dell reported that it rung up $6.5 million in sales thanks to

Twitter promotions. Obviously, social networks can be a boon to retailers.” - TechCrunch, Dec. 8, 2009

Page 23: Com Score Q4 2009 Sor Webinar

Key Trends That Will Help to Shape 2010

23© comScore, Inc. Proprietary and Confidential.

Page 24: Com Score Q4 2009 Sor Webinar

61% of consumers rate economic conditions as poor, which although far from ideal is an improvement from a year ago

Perception of Economic Conditions

Q. How would you rate economic conditions today?Source: comScore Surveys

24© comScore, Inc. Proprietary and Confidential.

77%68% 66% 61% 61%

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10

Poor

Page 25: Com Score Q4 2009 Sor Webinar

Consumer Agreement with Economic Statements

48% of consumers are pessimistic about future econo mic conditions; Only 9% believe we’ve turned corner without further problems

25%

23%

“We haven’t hit bottom yet; the worst is still to come.”

“We’ve turned the corner, but I would not be surprised if the economy dropped again before it

fully recovers.”

Q. Which statement best describes how you feel about the current economic conditions?Source: comScore Survey January 2010

Pessimistic 48%

25© comScore, Inc. Proprietary and Confidential.

23%

30%

13%

9%

fully recovers.”

“We might be headed in the right direction but the signs of improvement are hard to see.”

“The economy is stagnant, not going up or down.”

“We’ve turned the corner and are beginning to see signs of improvement.”

% of All Respondents

Neutral 43%

Positive 9%

Page 26: Com Score Q4 2009 Sor Webinar

In these challenging economic times, consumers have turned to coupon sites; the category has seen significant gro wth in both UVs and Total Visits

Growth in Unique Visitors & Total Visits to Coupon Sites vs. YA

Source: comScore Media Metrix

% Composition of Coupon Users on Selected Retail Sites in December 2009

Source: comScore Segment Metrix

47%

38% 37%39%

35%35%

40%

45%

50%

11%

12%

12%

28%

24%

29%

61%

64%

59%

Overstock.com

The Home Depot, Inc.

JCPenney Sites

36 Million People Visited a Coupon Site in December 2009

26© comScore, Inc. Proprietary and Confidential.

12%

20%

27%

9% 8%

0%

5%

10%

15%

20%

25%

30%

35%

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Total Visits Unique Visitors

5%

6%

7%

8%

8%

8%

8%

18%

20%

22%

21%

23%

25%

24%

77%

74%

71%

71%

69%

67%

68%

Apple.com Worldwide Sites

Amazon Sites

Best Buy Sites

Netflix.com

Wal-Mart

Target Corporation

Hewlett Packard

% Heavy Coupon Site Visitors

% Moderate + Light Coupon Site Visitors

Non-Coupon Site Visitors

Page 27: Com Score Q4 2009 Sor Webinar

Very high traffic levels for many retailer sites bu t supermarket retailers attract few visitors. Suggests supermarkets need to “fish wh ere the fish are” with their online marketing efforts

85.7

54.247.3

41.8

29.7 28.4 23.2 21.4 20.5 19.5 17.5 17.0 17.0 16.2 15.9 15.1 14.7 14.3 14.2 14.1

Total Unique Visitors (Millions) for Top 20 Retaile rs in December 2009Source: comScore Media Metrix

27© comScore, Inc. Proprietary and Confidential.

Walgreens (8.1 Million UVs), Safeway (1.7) and Krog er (1.3) have lower UV levels.

Page 28: Com Score Q4 2009 Sor Webinar

Twitter experienced explosive growth in early 2009, which has since leveled off at about 20 million monthly unique visitors. AP I usage likely means that actual monthly users are even higher

Total Unique Visitors (000) to Twitter.comSource: comScore Media Metrix Media

10,000

15,000

20,000

25,000

Uni

que

Vis

itors

(00

0)

28© comScore, Inc. Proprietary and Confidential.

0

5,000

10,000

Uni

que

Vis

itors

(00

0)

“Companies are using Twitter as a marketing or publi c relations channel, much like an extension to thei r corporate blogs. They will post about corporate acc omplishments and distribute links that take people back to

corporate web pages, press releases, and other prom otional sites.” – ReadWriteWeb.com

Page 29: Com Score Q4 2009 Sor Webinar

500

600

700

800

900

Several luxury invite -only and deal -of -the-day sites hit the scene and flourished in 2009 attracting a cross section of in come groups. But are they buying?

Uni

que

Vis

itors

(000

) +331%

+894%

+185%

+72%

Unique Visitors and Growth vs. YA for December 2009

Source: comScore Media Metrix

Total Internet

HauteLookGilt

GroupeIdeeli RueLaLa

Less than$40K

28% 27% 20% 29% 12%

$40K-$74.9K 35% 31% 30% 32% 23%

% Composition by HH Income for December 2009

Source: comScore Media Metrix

29© comScore, Inc. Proprietary and Confidential.

0

100

200

300

400

Uni

que

Vis

itors

(000

)

+72%$75K-$99.9K 17% 20% 25% 19% 22%

$100K or more

21% 22% 25% 20% 43%

Groupon.com – a relatively new “deal-of-the-day” sit e with a slightly different model and broader appeal – has grown 56% from October 2009 to December 2009.

Page 30: Com Score Q4 2009 Sor Webinar

U.S. Video Viewing and Engagement Metrics for Dec. ’09 Source: comScore Video Metrix

U.S. Online Video: People consuming more video cont ent than year ago and time spent per video is up due to more long -form content

130,000

140,000

150,000

160,000

170,000

180,000

Unique Viewers (000)

+19%

05,000,000

10,000,00015,000,00020,000,00025,000,00030,000,00035,000,000

No. of Videos (000)

+132%

30© comScore, Inc. Proprietary and Confidential.

130,000Dec-2008 Dec-2009

0Dec-2008 Dec-2009

0.0

50.0

100.0

150.0

200.0

Dec-2008 Dec-2009

Videos per Viewer

+95%

0.0

1.0

2.0

3.0

4.0

5.0

Dec-2008 Dec-2009

Minutes per Video

+26%

Page 31: Com Score Q4 2009 Sor Webinar

Online video viewers spend 13% more on e-commerce t han the average Internet user

15%

20%

25%

Total Internet

Video Viewers

113

E-Commerce Buying IndexVideo Viewers vs. Total Internet Population

Source: comScore Video Metrix (Dec 2009) Custom Research

31© comScore, Inc. Proprietary and Confidential.

0%

5%

10%

ALL PRODUCTS APPAREL, ACCESSORIES &

JEWELRY

BOOKS, MUSIC & VIDEO

ELECTRONICS & COMPUTING

HOME & LIVING

113 116 114113

Page 32: Com Score Q4 2009 Sor Webinar

Mobile usage to access retail-specific information has increased vs. YA in both total users and frequency of use but mobile bu ying still limited

# of Subscribers (Millions) and % Growth vs. YA

Accessed Online Retail

Accessed Auction Sites

Accessed ShoppingGuides

Access to Retail-related Sites via Mobile Phones in December 2009% Growth vs. YA

Source: comScore MobiLens

32© comScore, Inc. Proprietary and Confidential.

Almost every day 1.7 +54% 2.1 +55% 1.6 +23%

Ever in month 9.9 +56% 9.6 +33% 8.7 +48%

Growth in these categories exceeds both overall gro wth in the market and top-level News and Info category.

Page 33: Com Score Q4 2009 Sor Webinar

comScore Announces Acquisition of ARSgroup

33© comScore, Inc. Proprietary and Confidential.

� ARSgroup is a leading communications research agenc y specializing in the measurement of advertising persuasion for TV and multi-media ca mpaigns and helping many of the world’s largest brands in the consumer goods, pharm aceuticals, retail and entertainment industries optimize their advertising messages.

� ARSgroup’s ARS Persuasion methodology is one of the world’s most widely documented and independently validated predictive measures of the persuasive effectiveness of advertising creative.

Page 34: Com Score Q4 2009 Sor Webinar

ARS Findings for Retailers: Strength of advertising creative is four times as important in determining sales outcomes as the amou nt of media spent

� Quantify benefits. When making shopping and product decisions, people can have a hard time valuing the benefits presented.

– Say “20% lower prices” instead of “lower prices.”

� Take advantage of multiple executions. When communicating complex or higher order messaging, multiple executions are often needed to ensure understanding and impact consumer behavior.

– Use lower CPM advertising like banner ads. Take advantage of the frequency in a media plan by using multiple executions which together communicate the point.

Frank Findley, VP Research, comScore ARS

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using multiple executions which together communicate the point.

� Don’t forget the emotional content. Ad campaigns that work best create both emotional and rational connections with the consumer.

– When using rich media and video, use compelling emotional and rational content together, in the same execution.

– If this isn’t an option for you, a combination of the two works as well…rely on rich media with sound and motion to connect emotionally and leverage lower CPM channels to reinforce rational messages.

� Make the brand prominent. If the creative doesn’t link back to the brand, then the impact on sales will be missed.

– Be sure to prominently mention the brand verbally and visually. The best outcome is to make the brand the hero of the action.

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Key Takeaways

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Key Takeaways

� 2009 total retail e-commerce sales were down 2% ver sus year ago, with travel sales down 5% and non-travel flat

– Q4 09 marked the first sign of positive growth in the year, with both retail and e-commerce showing marginal gains vs. YA

– comScore expects to see growth in e-commerce in 2010 but absolute growth will be crimped by continued high unemployment, consumer deleveraging and their desire to save

� Holiday season saw 4% growth, slightly surpassing c omScore’s forecast of 3%. This is a marked improvement over last year when sales dropped by 3%

– Sales grew because of an increase in the number of online buyers, but they spent slightly less per buyer than in 2008

36© comScore, Inc. Proprietary and Confidential.

in 2008

– The season started earlier than in previous years because of aggressive and early retailer promotions and lasted longer because of consumer confidence in the reliability of shipping

– Free shipping continued to increase in importance, and social media (especially product reviews) emerged as an influence on consumer buying

� When it comes to the state of the economy, 61% of c onsumers rate economic conditions as poor, which although far from ideal is an improvement fro m a year ago

– 48% are pessimistic about the economy’s future and only 1 in 10 think the economy will improve without further problems

� Couponing, social media, video and mobile are trend s that flourished in 2009 and will persist as we move through 2010

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QUESTIONS?

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To download a copy of our 2009 Digital Year in Review Whitepaper, please visit: www.comscore.com/digital09 .

Please contact us at [email protected] if you have anyadditional questions or comments.

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Thank You!Note: A copy of this presentation will be sent to a ll attendees within 24 hours of today’s webinar.