Booz & Company's social media breakfast meeting presentation from November 3rd 2010. We discuss why social media does matter, what the value is and how to capture the value. It also offers for the first time ever a sizing of the social commerce market (directly selling goods through social media) in this era of social apponomics.

1. Booz & Company
This document is confidential and is intended solely for
the use and information of the client to whom it is addressed.
Social Media Round Table
Amsterdam, November 3, 2010 Discussion Document

2. 2Booz & Company
3 November 2010
Social Media Breakfast Meeting
Does Social Media Really Matter?
The Trend - “Rise of Social Apponomics”
Creating & Capturing Value in this New Era

3. 3Booz & Company
3 November 2010
Social Media Breakfast Meeting
Social Networking has evolved from “keep in touch” to a
means to “accomplish life’s tasks together”
Specific General
Platform Focus
Friend
Meet
PlatformPurpose
Social Media spectrum

4. 4Booz & Company
3 November 2010
Social Media Breakfast Meeting
26%Brasil
10%USA
14%Australia
9%France
15%Spain
17%Italy
18%UK
10%Germany
11%Switzerland
13%Global
Member Community
Share of Time Sept-10
Social media cannot be ignored
Source: Quantcast, Forrester Interactive Advertising Outlook, eMarketer, Booz & Company analysis
63
90
360
86
180
357
-1%
+37%
+100%
VideoSocial NetworksPortals
2009
2007
CAGR
Monthly Unique Visitors 2007 - 2009
(Mn Users/Month Global)
Share of Time on Member Community Sites, by Country
Dec, 2007/2008
(1%) 41% 17%

5. 5Booz & Company
3 November 2010
Social Media Breakfast Meeting
60%
51%
79%
67%
5
Media usage is shifting, followed by consumer behaviour
1) Estimated spend on social networking sites is based on top ad-supported member community sites as ranked by unique visitors in Aug 2009
Source: Nielsen OnlineComscore; Interact Conference Berlin; Analisim Booz & Company analysis
Social Networker
Non Social Networker
-16%
-18%
+11%
+25%
+33%
+26%
Video
game
2.52.0
Magazine
2.73.2
MP3
4.8
3.6
Mobile
5.14.6
TV
9.4
11.5
Online
11.0
8.7
Media Mix - “Social Networker” vs Others
(Hours/Week)
Social Media Impact on Purchase Intent
n = 1,500 consumers
Are you more
likely to buy since
becoming a fan /
follower?
Are you more likely
to recommend
since becoming a
fan / follower?

6. 6Booz & Company
3 November 2010
Social Media Breakfast Meeting
This offers the opportunity to “leapfrog” traditional websites
Source: eMarketer.com
# of mobile SN users
increases rapidly….
…so does the time share
of SN in mobile internet
usage
...while overall
penetration is still low
…offer large potential for
leapfrogging
Trends in mobile SN usage….
Mobile SN
Users (Mn)
Mobile SN
Users % of All
Mobile Phone
Subscribers
% Time Spent
on SN by
Mobile Internet
Users
760
223
76
2008 2010 2014
34.0%
2010
45.0%
20142008
19.0%
1.9%
2008 2010
4.6%
2014
13.3%

7. 7Booz & Company
3 November 2010
Social Media Breakfast Meeting
Does Social Media Really Matter?
The Trend - “Rise of Social Apponomics”
Creating & Capturing Value in this New Era

8. 8Booz & Company
3 November 2010
Social Media Breakfast Meeting
Source: Booz & Company Analysis
2000-2009
Stages
“The race for scale”
Generating web traffic
“The race to commerce”
Turning traffic into sales
Traffic
.com Sales
Reviews
Social CRM
Apps
Social Commerce
Marketplaces
Mobile
Network Weighted
Customer Metrics
A new era in digital: “Social Apponomics”
8
2010+1990-2001
“Social Apponomics”
Creating new commerce
channels
& brand touchpoints

9. 9Booz & Company
3 November 2010
Social Media Breakfast Meeting
Prepare for direct monetization and a blurring of the funnel…
9
Driving
repeat visits
Converting
the funnel
Feeding the
funnel
None Brand-Building
& Energizing
the Base
Social Sites as
Commercial
Portals
E-commerce
Hosted on
Social Sites
Commercialization
Monetization
ThroughCustomerLifeCycle

10. 10Booz & Company
3 November 2010
Social Media Breakfast Meeting
…although so far most companies focus on brand building
Interest of ~50.000 potential buyers
who do not drive Ford at present
4.3 million YouTube views, 540,000
flickr views and 3 million Tweets
Ford selected 100 active in Social Media
Agents from Generation Y that all received
a car for 6 months
Sales more than doubled YOY
Realized #1 body wash in € and
volume
Traffic: >100Mn brand views
P&G launched an interactive web-based
marketing campaign for Old Spice with
spokesman Mustafa
Instead of investing in the annual
Superbowl Ads, Pepsi invested 20 mln in a
Social Media campaign
Social Media Action and Response
42Mn votes reaching >10Mn people
1.6Mn “likes” on FB
922,000 Google pages to date
Free advertising: 6-12 reports/day
ROI
Effective Social Media Engagements
Source: Booz & Company analysis, Nielsen, Youtube, Forbes.com

11. 11Booz & Company
3 November 2010
Social Media Breakfast Meeting
Today, some social apponomics examples achieve real
monetization
Facebook App “In the Wall”Social Stores Social Commerce Apps
11

12. 12Booz & Company
3 November 2010
Social Media Breakfast Meeting
The social commerce market and mobile market is a multi
billion dollar opportunity in consumer alone
+39%
‘15
$7.7
‘14
$6.5
‘13
$4.5
‘12
$3.1
‘11
$2.1
‘10
$1.5
$6.6
$4.5
$3.2
$2.2
$1.5
+44%
US
‘15‘14‘13‘12‘11
$12
$8
$5
$3
$1
+76%
‘15‘14‘13‘12‘11‘10
Social Gaming
$Bn
Mobile Commerce
$Bn
S-Commerce Market
$Bn
12
Source: Booz & Company research & analysis

13. 13Booz & Company
3 November 2010
Social Media Breakfast Meeting
13
Dell Swarm combines social networks and group
buy into interactive buying experience
• Time sensitive: builds excitement and
buzz for participants
• Social buying experience : more people
that buy, the cheaper the price
• Social media link: follow on Twitter, share
via Facebook

14. 14Booz & Company
3 November 2010
Social Media Breakfast Meeting
Nike example: social content annuity + shoes
Non-shoe
products
for runners
Nike Has Seized the Rise of Social
Apponomics
Integrated into all store, web,
mobile, app marketing
Online community of
professional coaches and
athletes
High value subscription content
($99 USD/year)
Sharing and syndication to
social sites (e.g. Facebook,
twitter, etc.)
Connected to team brands
Organized local events created
by the community with a
shared community blog
Read “triumph” stories to stay
engaged with brand/communityTraining and
skill building
content
Athlete
Stories
Product
Features &
Shopping
Social
Networking &
Local
Communities

15. 15Booz & Company
3 November 2010
Social Media Breakfast Meeting
Does Social Media Really Matter?
The Trend - “Rise of Social Apponomics”
Creating & Capturing Value in this New Era

16. 16Booz & Company
3 November 2010
Social Media Breakfast Meeting
32%
39%
42%
42%
50%
58%
58%
67%
72%
80%
81%
90%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Digital / Interactive
Consumer Insights
Behavioural Targeting
Brand Strategy
Customer Marketing
PR
Partnerships
In-House Digital Production
Field Marketing
Event Marketing
Entertainment Marketing
Sponsorship
Marketers are being challenged to innovate operating
models, capabilities, and develop new paradigms
Key Challenges Facing Marketers
Pace of Media Innovation Faster
than Marketer Skill Development
Lots of “Data” But Not Enough
Consumer Insight and Big ideas
Desire for Consumer Engagement and
Relationships, Not Just Impressions
1
3
4
Fragmentation Increasing
Complexity of Marketing Communications
2
Source: Marketing & Media Ecosystem 2010 survey, Booz & Company Analysis
Relative Importance of Key Marketing Capabilities
(Booz & Company Survey Results)
16

17. 17Booz & Company
3 November 2010
Social Media Breakfast Meeting
Although returns can be significant, understanding and
managing risks of social media is as important
Source: Booz & Company analysis
Greenpeace launched a successful
You-Tube campaign to stop the building of
new power houses
Complaint song by music band was viewed
by millions in 3 days
United market share went down by 8% only
5 days after release $180Mn in market
cap
Business Cases
Gap launched a new logo
Due to online disagreement by consumers,
Gap recalled the change
Risks in Social Media
Viral
HOT
Power with the People
Privacy
Competitors

18. 18Booz & Company
3 November 2010
Social Media Breakfast Meeting
The opportunity for value creation and value capture through
social media occurs across the value chain
Social Media in the Value Chain
FMCG Example
Source: Booz & Company analysis
Customer
Service
SalesMarketingLogisticsSourcingManufacturingInnovation
Open
innovation
platform
EXAMPLES
Users produce
the product
Online market
place for
freelancers
Platform where
logistics
professionals
can connect
Social media
marketing
campaign
Online Friend’s
store
connected to
Facebook
Peer to peer
help through
community
Innovation:
>11% Improvement in Netflix
Algorithm
Marketing:
Forum users are brand
advocates - 58% recommend
Sales:
Social actions increases
purchases 4x
ROI EXAMPLES

19. 19Booz & Company
3 November 2010
Social Media Breakfast Meeting
For a previous client we created an ecosystem to support a
flexible and modular marketing analytics platform …
Dash-
boarding
Customer
Relationship
Management
Customer
Facing
Marketing
Tools
Data Collection
& Storage
Analytics
&
Measurement
CLIENT EXAMPLE
19
Flexible & Modular
Infrastructure

20. 20Booz & Company
3 November 2010
Social Media Breakfast Meeting
–––––––––––––NARatings/Reviews View Rate
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Lounge.co
m
Own Channels
–––––––––––1000Opex Avoided (000’s)
–––––––––––ZViews of Answers
–––––––––––XApproved Answers
–––––––––––80%Issue Resolution Rate
–––––––––––3Issues Resolved (000’s)
OPEX/Cost
–––––––––––Etc.
–––––––––––13%Contest Entry Rate
–––––––––––4Contests and Promo Count
–––––––––––10
Rev from Last 6 Months New Products
(000’s)
Innovation
–––––––––––50%MultiChannel
–––––––––––2%Conversion
–––––––––––2000Leads (000’s)
–––––––––––.01$Cost/Lead
–––––––––––20%Ratings/Reviews Collected
–––––––––––30%Net Mention Score
Customer
–––––––––––35%/$160Attach Rate/AOV
–––––––––––5%Coupon Redemption Rate
–––––––––––400Units
–––––––––––420Margin
–––––––––––600/400Sales/Units (000’s)
Sales
–––––––––––
–––––––––––15%Opt in Rate
–––––––––––25%Viral Effect
–––––––––––15 Sec.Time Spent w/ Assets
–––––––––––TBDCost/Impression
–––––––––––10000Impressions (000’s)
Brand
Own.comEtc.Best BuyAmazonEtc.
Spotif
y
Rhapsod
y
iTune
s
Etc.
Our
World
FacebookTwitter
Established ChannelsPlatformsSocialMonthly Dashboard
June 1–June 30 2009
Example: Social analytics linked to a multi-channel dashboard
to track key metrics and change behaviors
% of Customers making it to next part of funnel in
14 days - 60% of impressions became inactive
after 14 days. First 14 day curation process
(content changes only) increased revenue by 50%
Instant Proxy for Net Promoter Score - Caught
Brand Damaging Customer Service Issues and
Addressed
Channel specific estimate of multi-channel
relationship/shopping based on data matching
(email, address, handle, etc.)
CLIENT EXAMPLE
14-day Action Rate 45%
Net Mention Score 30%
Multichannel 50%

21. 21Booz & Company
3 November 2010
Social Media Breakfast Meeting
Total Influenced Revenue* $2B $8B
Total Incremental Revenue $200M $1B
Total Incremental OpInc $50M $500M
Incremental Investment, --
Capabilities: $30M
Headcount: $20M
Example: Leapfrogging can have 4-5x of potential impact
21
Status Quo
Operating Income in $MM
Leapfrog
Operating Income in $MM
0
10
20
30
40
50
60
70
FY11 FY13FY12
0
10
20
30
40
50
60
70
FY11 FY12 FY13
Segment 1
Segment 2
Segment 3
Segment 4
Note: total influenced revenue does not equal social commerce, but revenue that I influenced by social media; Total incremental revenue is social commerce

22. 22Booz & Company
3 November 2010
Social Media Breakfast Meeting
Social Media Does Matter
To stay ahead of the curve, keep in mind the following
takeaways
It’s not just about brand
building, there is a serious
business potential
Future competitors may
leapfrog into your market
There are potential
benefits across the value
chain
Integrated (marketing)
analytics are key
1
2
3
4
5

23. 23Booz & Company
3 November 2010
Social Media Breakfast Meeting
Contact information
Matt Anderson
Partner
Matt.Anderson@booz.com
Tel:+1-713-894-8641
Behdad Shahsavari
Partner
Behdad.Shahsavari@booz.com
Tel: +31622807702
Coen de Vuijst
Partner
Coen.DeVuijst@booz.com
Tel: +31613743895
Tamara Obradov
Associate
Tamara.Obradov@booz.com
Tel: +31610905406