This document provides an overview of digital advertising presented by Christy Belden, Vice President of Media and Marketing at LeapFrog Interactive. It includes sections on the basics of digital advertising, statistics, key terminology, types of digital ads, how digital advertising works, pricing and strategy, and trends. The document aims to educate on diversifying digital advertising approaches.

1. Diversification of Digital Christy Belden, Vice President, Media + Marketing May 26, 2011

2. Diversification of Digital Agenda + Introductions + Basics + Statistics + Key Terminology, Common Acronyms + Resources + Types of Digital Ads + How Digital Advertising Works + Pricing + Strategy + Ad Performance + Measurement + Trends + Current Event + Best Practices 2

3. LeapFrog Interactive 3 Diversification of Digital Twitter: @LFI #display #LFI #digitalmedia Facebook: www.facebook.com/LeapFrogInteractiveAgency Blog: www.leapfroginteractive.com/blog

4. Christy Belden 4 Vice President of Media + Marketing, LeapFrog Interactive Experience: 11 years The Courier-Journal University of Louisville SEMPO Certified Google AdWords Professionals (GAP) Certified Christy knows marketing. Display, PPC, SEO, social media, email, mobile, traditional—she’s been there and done that. She continues to build a deep well of experience and is always in touch with the trends and strategies that provide a solid return on clients’ investments.

5. Examples

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9. Basics

10. Definition of Digital Advertising What is a display ad? + A graphical web advertising unit + A graphical image on the a website used to promote products or services + Otherwise called: + Web Ad + Web Banner + Banner Advertising +Banners 10

11. Definition of Digital Advertising 11

12. Definition of Digital Advertising 12

13. Definition of Digital Advertising 13

14. History of Digital Advertising Recap + The first digital ad appeared on HotWired.com in 1994 + The first ad was called a ‘graphical ad unit’ + MCI, Volvo, Club Med, 1-800-Collect, AT&T and Zima were the first advertisers on HotWired.com 14 Source: http://adage.com/article/digitalnext/happy-birthday-digital-advertising/139964/

15. Statistics

16. Diversification of Digital Did You Know? 16 Ads served to US Internet users in Q1 2011: 1.1 trillion Of those ads, number served via Facebook: 346 billion Total % ads served to US Internet users that were on Facebook in Q1 2011: 31 Banner Ads Spending Was Up 23% YOY in 2010 Source: Huffington Post via TechCrunch/Comscore; eMarketer.com

17. Diversification of Digital Did You Know? 17 *Eric Schmidt, chairman-CEO of Google, predicts online advertising will increase from $62 billion a year to $200 billion in the next 5-10 years. (Ad Age, “Ad Networks Raise Profile with Targeting” May 2011) Source: eMarketer US Ad Spending: Online Outshines Other Media, Dec 2010

18. Diversification of Digital Did You Know? 18 Source: comScore 2010 US Digital Year in Review

19. Diversification of Digital Did You Know? 19 Source: comScore 2010 US Digital Year in Review

20. Diversification of Digital Did You Know? 20 Source: comScore 2010 US Digital Year in Review

21. Diversification of Digital Did You Know? 21 Source: Ad Age, “Facesbook Scores Again With Most Ads on the Web” May 9, 2011

22. Diversification of Digital Did You Know? 22 Source: Ad Age, “Facesbook Scores Again With Most Ads on the Web” May 9, 2011

23. Diversification of Digital Did You Know? 23 Source: comScore 2010 US Digital Year in Review

24. Key Terminology + Common Acronyms + Resources

25. Key Terminology Glossary of Terms + Cookies: code placed in a browser so the browser’s activity is recorded, i.e. visiting a page and it is “remembered” when the browser returns to the site or another ad is served + Beacon: 1x1 pixel tag used to track unique user activities over time, i.e. tracking a user who clicked through on an ad and purchased several days later + Unique visitors (UVs): measure for readership or net audience + Page Views (PVs): measure of requests to load a single page of an Internet site + Ad Impressions: each time an advertisement loads on a user’s screen + Sessions: aka “visits,” is the number of times each unique visitor goes to a website 25 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

26. Key Terminology Glossary of Terms + Ad Exchange: Marketplace-like network of excess inventory on publisher sites which media buyers can access and purchase + Ad Network: Aggregates audiences based on demography or intent to purchase + Mobile Network: sells ad on wireless devices (i.e. phones & tablets) + Video Network: aggregates video inventory to run ads or syndicate video content + DSP: “Demand Side Platform,” platform used by agencies & advertisers to automate media buying across multiple sources with unified targeting, data, optimization, and reports + Ad Server: Technology that disseminates online ads and then, tracks and reports back on performance 26 Source: AdAge, “Special Report: Audience Buying Guide” April 2011

27. Key Terminology Glossary of Terms + Data Aggregator: Pulls together ad-serving data, conversion data, and third-party data in an effort to attach preference attributes to a user or set of users + Ad Verification: Software enabling advertisers to determine if impressions are display in the proper place and whether ads are privacy compliant + Frequency Capping: Using cookies to manage the number of times a user sees specific ad creative, typically utilized to conserve impressions and improve campaign performance + OBA: Online Behavioral Advertising, also a compliance program led by IAB 27 Source: AdAge, “Special Report: Audience Buying Guide” April 2011

28. Common Acronyms Glossary of Acronyms + Key Performance Indicator (KPI): measureable points of interaction between consumer and brand + CPC: cost-per-click + CPM: cost-per-thousand [impressions] + CPA: cost-per-action + Cost-per-download + Cost-per-call + Click-Through Rate (CTR): the number of clicks divided by the number of impressions 28 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

29. Resources Industry Leaders: Associations Digital Advertising Alliance 29

30. Resources Industry Leaders: Networks 30

31. Resources Industry Leaders: 3rd Party Ad Servers 31

32. Resources Industry Leaders: Data Suppliers 32

33. Types of Digital Ads

34. Types of Digital Ads Standard Ad Unit Sizes 34 Skyscraper 160x600 Half Page 300x600 These are the five most common ad sizes, according to the Interactive Advertising Bureau (IAB). Medium Rectangle 300x250 Small Rectangle 180x150 Leaderboard 728x90 Source: IAB, www.iab.com

35. Types of Digital Ads Ad Formats + Specs + .GIF/.JPG/.PNG “Static banner” + .SWF “Flash banner” + .EXP “Rich Media/Expandable banner” 35 *Source: IAB, www.iab.com

36. Types of Digital Ads Ad Format: GIF/JPEG/PNG + .GIF/.JPG/.PNG aka “Static banner” Simple, single-frame image Typically 30K file size* May include “animated .GIF” 36 *Source: IAB, www.iab.com

37. Types of Digital Ads 37 Why Brands Use Static Banners? + Ease of Creation: Organizations with limited creative resources can easily develop static assets + Affordability: With appropriate sized buys, publishers may offer creative services for free + Flexibility of Creative: Self-serve advertising solutions often don’t allow complex display formats like Flash or Rich Media

38. Types of Digital Ads 38 Static Banner Examples

39. Types of Digital Ads Ad Format: Flash + .SWF “Flash banner” More dynamic, flexible coding language allows basic interaction and more complex imagery Typically 40K file size* 39 *Source: IAB, www.iab.com

40. Types of Digital Ads 40 Why Brands Use Flash Banners? + Cost savings: it takes less resources to develop Flash banners and typically there is no 3rd party ad serving required + Available inventory: more publishers will accept Flash banners on their websites than will accept Rich Media + Consumer visibility: slightly more consumers are able to view Flash on their computers than can view Rich Media

41. Types of Digital Ads Flash Banner Examples + Animation occurs in 7-10 seconds + CTA that appears on relevant frame and remains visible throughout the ad + Logo visible during entire ad + Realistic action/movement + Highlights consumer needs and answers with product recommendation + Highlights customizability 41 3 2 4 1 5 7 6 8 9

42. Types of Digital Ads Flash Banner Examples 42 2 1 3 + Simple , quick messaging + Consistent font and text size + Realistic action/movement + Highlights consumer needs and answers with product recommendation + Focuses on a single objective, straightforward CTA + Color scheme appropriate and eye-catching 6 5 4 7 8 9

43. Types of Digital Ads Ad Formats + Specs + .EXP “Rich Media/Expandable banner” Highly interactive, super complex creative which can include multi-functional features Typically 40K with up to 100K polite load, upon click* 43 *Source: IAB, www.iab.com

44. Types of Digital Ads 44 Why Brands Use Rich Media Banners? + Sophisticated functionality: the ability to incorporate games, polls, data collection, file downloads, product showcases, store locators and other interactive features makes Rich Media highly desirable + Outperformance of Flash: due to its nature, Rich Media frequently outperforms Flash on interactivity rates, brand engagement and consumer ad recall + Enhanced reporting/tracking capabilities: almost any metric that relates to functionality of each feature can be measured and reported on, allowing quicker optimizations + Alternative to landing page: depending on a campaign’s goal, Rich Media can serve as the only environment needed to achieve a conversion

45. Types of Digital Ads Rich Media Examples 45 + “Rollover” to act is used rather than “Click” + Tabs in upper right allow user to control their experience inside the ad + Users have the ability to download a brochure that meets their specific needs + “Close” button is clear, visible in bottom right FYI: Carestream® is able to see how many of each brochure was downloaded. Carestream® is able to tie each download to a specific user’s name/email address 1 2 3

46. Types of Digital Ads Rich Media Examples 46 + Specific CTA + Creative use of product showcase feature by highlighting various treats you can make using the product + Allows consumers the option to print the recipe or e-mail it to yourself + Encourages users to use their “in-banner” search function – this is an example of how a brand may use Rich Media to replace a landing page FYI: (1) Kellogg’s® is able to see which recipe was emailed or downloaded the most often 1 2 3

47. Types of Digital Ads Rich Media Examples + Engaging question to capture attention + Specific CTA + Interactive creative with multiple videos for users to watch + Email/data collection feature always visible FYI: (1) Carnival® would be able to feed email addresses directly into their database with an API. (2) Metrics would be able to tell Carnival® how many consumers watched each video 25%, 50%, 75% or 100%. 47 1 2 3

48. Types of Digital Ads Takeover Example 48

49. Types of Digital Ads Overlay Example 49

50. Types of Digital Ads Newest OPA Standards Examples - Pushdown 50 Pushdown Ad Starts as thin ad that expands to take up most “above the fold” space upon click or rollover

51. Types of Digital Ads Newest OPA Standards Examples 51 Fixed Placement Ad Ad stays with you as you scroll up/down through content

52. Types of Digital Ads Newest OPA Standards Examples 52 XXLAd Extra-large ad for high impact/visibility

53. Types of Digital Ads Types of Video Ads Video Ads + In-stream video - Pre-roll, mid-roll, post-roll + Overlay - Transparent overlays + In-banner - Video converted to Flash, plays within ad unit - Click to play or auto play + In-Text Video - User initiated, triggered by highlighted words within content 53 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

54. Types of Digital Ads Considerations + On average, an advertisement has approximately 2-5 second to capture the attention of a user before their attention is elsewhere on a webpage + As of January 2009, Flash banners saw .07% - .14% CTR across all industries + Rich Media banners average .12% - .36% CTR; the goal of a rich media may not be a “click” through to landing page, but instead application completion, file download or coupon print-up + Average brand interaction time for expandable rich media ads is between 11-12 seconds, upon expansion 54 Resources: DoubleClick, PointRoll Industry Data (2009), Atlas 2007-2010

55. Pricing + Strategy

56. Pricing + Strategy Pricing Models CPM + Impressions sold in “packages” or levels + Impressions sold ROS or targeted CPC + Costs accrued every time a click occurs Flat Rates + Associated with sponsorships + Directory listings, supplier guides (B2B) + Classifieds + Sites with limited ad inventory + Site with low tech ad serving 56 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

57. Pricing + Strategy Strategy of Different Structures 57 CPM CPC CPA

58. How Digital Buying Works

59. How Digital Buying Works Types of Buys Ad Network + Sold by categorization of sites (vertical, horizontal, video) + Niche verticals available Direct Buy or Direct-to-Publisher + One-on-one with a website, or small group of related websites + By nature of the buy, selection of individual relevant/niche sites is possible 59 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

60. How Digital Buying Works Ad Network Pros + Audience reach + Scalability + Hyper-targeting + Testing performance business models + Typically lower CPMs + Typically robust reporting 60 Cons + Duplication across sites + Limited transparency + No “cherry picking” + Targeting content within sites + Generally no sponsorship programs + Occasional limitations with ad units and placements

61. How Digital Buying Works Direct Publishers Pros + Sponsorship opportunities + Specialized/niche content + More opportunities for “value adds” + General flexibility of ad formats 61 Cons + Typically higher CPMs + Generally not sold on CPC or CPA + Basic reporting capabilities + Scalability can be limited

62. How Digital Buying Works Targeting Solutions + Geographic + Demographic + Local + Contextual + Day-Parting + Behavioral 62

63. How Digital Buying Works Targeting Solutions Geographic + Zip code data provided by user + Accurate, updated + More granular + IP address identified via ad server - Less granular - Based on IP database 63 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

64. How Digital Buying Works Targeting Solutions Behavioral Targeting + Ads targeted using behavior not content/page + Tracks user’s web usage behavior (via cookies) - Where user goes - Registration data - Survey data - Recency - Keywords 64 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

65. How Digital Buying Works Targeting Solutions Local Targeting + Local content + Portals and ad networks + Geo-based content + User provided demographics + Directories and Internet Yellow Pages + Search options 65 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

66. How Digital Buying Works Targeting Solutions Contextual Targeting + Ads align with content featured on page, via keywords + Attempts to target based on users’ intent - Recency - Keywords 66 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

67. How Digital Buying Works Targeting Solutions Behavioral Targeting + Behaviors tracked via cookies data predict which ads are relevant to a user + Vertical-based 67 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

68. How Digital Buying Works Ad Delivery Process 68 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

69. How Digital Buying Works Ad Delivery Model + Scheduling - Start – Stop dates not pre-defined by media schedule - Day-parting + Smooth - Equal number of of impressions every day of campaign + Weighting - Deliver higher share of voice (% of total impressions) 69 Source: Intelligent Selling of Internet Advertising & Intelligent Planning & Buying of Internet Media – Level 1, Laredo Group, Q2 2009

70. How Digital Buying Works How “Cookies” Work in Targeting http://online.wsj.com/video/how-advertisers-use-internet-cookies-to-track-you/92E525EB-9E4A-4399-817D-8C4E6EF68F93.html 70 Source: Wall Street Journal, “How Advertisers Use Internet Cookies to Track You”

71. How Digital Buying Works Self-Serve Solutions Use self-serve vendors like: When… + Network/Publisher minimums don’t fit your budget + Creative flexibility is not an absolutely must-have + Programs need to be launch quickly 71

72. Ad Performance + Measurement

73. Ad Performance + Measurement Metrics for Rich Media Static Banners: + Impressions + Clicks + Click-Through Rates Flash Banners: + Click-Through Rates + Basic Interactions 73 Rich Media Banners: + Interaction Rates + Panel Views/Interactions + Full plays (Video) + Average Brand Interaction Times + Close Rates + (Depending on goal) CTRs

74. Ad Performance + Measurement Campaign Performance + Effectiveness Influential Factors + Creative + Highlighted Call-to-Action Messaging + Targeting + Relevant Messaging + Ad Placement + Ad Size + Reach & Frequency + Optimizations 74

75. Ad Performance + Measurement Campaign Performance + Effectiveness Engaging Creative (Rich Media) + Higher interactions with rich media + Multiple creative executions + High frequency delivery – avoid banner burn-out by running multiple creatives and ad sizes 75

76. Ad Performance + Measurement Campaign Performance + Effectiveness Highlight Call-to-Action (CTA) + Use active verbs + Recognizable, each to read 76

77. Ad Performance + Measurement Campaign Performance + Effectiveness Targeting + Higher CTRs with targeted messages vs. run-of-site (ROS) + Different creative for different targeted segments + Add geo-location to message 77

78. Ad Performance + Measurement Campaign Performance + Effectiveness Relevant Messaging + Broader offers = higher CTRs + Narrow offers = lower CTRs 78

79. Ad Performance + Measurement Campaign Performance + Effectiveness Ad Placement + Ads above-the-fold – higher CTRs + Ads on home pages – lower CTRs + Ads in targeted, opt-in newsletters – higher CTRs Ad Size + Larger ads – more visibility, typically higher CTRs 79

80. Ad Performance + Measurement Campaign Performance + Effectiveness Ad Frequency + Too much frequency – lower click rates + Too little frequency – hurt branding metrics + Direct response campaigns – evaluate the correct frequency cap to optimize ROI 80

81. Ad Performance + Measurement Campaign Performance + Effectiveness Optimizations+ If budget allows, test (A/B or multivariate) + Vendors should be proactive about recommendations for improvement + Develop a comfortable optimization frequency + Track toward improving your action – calls, downloads, video views, data collection + Experiment with placements, verticals – within reason + Ask vendor for screenshots but monitor when you can 81

82. 82 Mobile Display

83. Mobile Display Did You Know? 83 Percent of US Population (303.6MM) with a mobile phone: 80 Percent of mobile users with text messaging capabilities: 82 Percent with phones capable of browsing the Internet: 72 Percent of users who say they’ve been exposed to mobile ads in last 30 days : 23 Percent of those users who say they responded: 50 * Source 2008 Mobile Marketers Guide mobilemarketer.com

84. Mobile Display What is mobile display? + Display messaging in the mobile device environment + Can link to: + make calls + download apps + share content + submit data/sign-up + enter contests + visit mobile websites 84

85. Mobile Display How to Make an Effective Mobile Display Campaign + Be attentive to environments – ask where your ads may be and explore the environment for yourself + Practice concise messaging – mobile ads don’t leave much room for gregariousness + Be mindful of users’ time - consider where a user may come from and where you’re taking them 85 * Source: PervezSkiora, “What makes mobile display ads effective?” 2011 mobilemarketer.com

86. Mobile Display Popular Networks 86

87. Mobile Display Benefits + Small screen, big audience, powerful targeting capabilities + Performance-based models (Cost-per-call, cost-per-download, cost-per-interaction) + Branding for those who don’t click + Click rates at upwards of 3-6%* + Downloads from clicks at upwards of 16-20%* + Flexibility in program type (sweepstakes, database collection, branding/awareness) + Typically lower minimums + Ease of integration with other marketing tactics 87 * Source: Greystripe & ATT Mobile Ad Solutions, 2011

88. 88 Trends + Current Events

89. Trends + Current Events 89 What’s Happening Now? + Digital Advertising Alliance + Congress pushing “do-not-track” legislation + FTC responds to consumer privacy concerns + IAB introduced Code of Conduct + DAA building on Self-Regulatory Principles of Online Behavioral Advertising + Facebook tests real-time ad targeting, via data mining conversations + DMPs (Data Management Platforms) + AMPs (Audience Management Platforms) + Topic Targeting + ConditionalTargeting & Re-Targeting + Search, Site, Creative

90. Best Practices

91. Best Practices Take-aways + Identify the ONE main objective of the creative + Execute a clear, concise call-to-action + Use consistent messaging (and imagery, where possible) across online & offline channels + Choose colors appropriate for audience and website where ad will be placed + Utilize A/B split testing or other methods of creative testing, create optimization schedule – LEARN! + Align creative with your landing page 91

92. Best Practices What Should You Expect from a Vendor/Agency? + Established goals before campaign launches + Resisted urges to revamp tracking structure or goal (unless absolutely necessary) + Optimization recommendations and analysis of performance + Tracking codes in place on front end + Analytics setup on back end + Regularly schedule reporting 92

93. Best Practices Landing Pages: “DONTs” 93 Banner Ad Landing Page

94. Best Practices Landing Pages: “Almost but not quite” 94 Banner Ad Landing Page

95. Best Practices Landing Pages: DOs 95 Banner Ad Landing Page

96. Best Practices Landing Pages: DOs 96 Banner Ad Landing Page

97. Questions?

98. LeapFrog Interactive Contact Us Christy Belden, Vice President of Media + Marketing cbelden@leapfroginteractive.com Twitter: @LFI Facebook: www.Facebook.com/LeapFrogInteractiveAgency 98

99. Thank You