Case Study The Hidden Impact of Display Advertising

Case Study: The Hidden Impact of Display Advertising April 2010 Yahoo! Asia-Pacific In partnership with:

Background • Much of previous research and case studies are focused around the branding effects of display ads • Some emerging work around the impact of display ads on search behaviour (e. g. Professor Hairong Li, Michigan State University (2009) “Unpuzzling the Synergy of Display and Search”) • Our study explores the impact of display advertising on brand perceptions and search intent for Starwood Hotels: 1. Did display advertising impact brand perceptions? 2. Did display advertising impact branded search intent? 2

“The bigger battle in search may very well be won before the search is even conducted. ” Nick Nyhan CEO Dynamic Logic

WPP-Google China preliminary findings • Display ad exposure increased likelihood of category search – observed within first 2 days. Display ads can increase category search probability to 1. 57 one day after the exposure (and up to 1. 20 two days after the exposure). No significant impact on category search probability rate after 3 days. Source: Professor Hairong Li, Michigan State University (2009) “Unpuzzling the Synergy of Display and Search” 4

WPP-Google China preliminary findings • Display ad exposure increased likelihood of branded search – impact observed even after first 2 days. Display ads can significantly increase branded search probability within the first two days. Interestingly, branded search probability can still increase to 1. 73 seven days after the initial exposure. Source: Professor Hairong Li, Michigan State University (2009) “Unpuzzling the Synergy of Display and Search” 5

Yahoo!-Starwood-Dynamic Logic Case Study • Brand: Starwood Hotels and Resorts • Study Objectives: 1. Did the display ads impact brand metrics? 2. Did the display ads impact branded search intent? • Target Respondents: Mid-Market to Luxury Hotel Guests • Study Approach: Online interviews using Control/Exposed methodology • Study Design: Sample Size n=2, 578 (1, 156 control; 1, 422 exposed) Markets 5 (Hong Kong, China, Japan, Singapore, Australia) Recruitment Sites Yahoo! and MSN sites 6

01 Did the display advertising impact brand perceptions? 7

Different impact across guest segments… Mid-Market Hotel Guests Brand Attributes Control (%) Exposed (%) Delta Offers me what I look for in my vacation 26 30 +3. 5 Different hotels and resorts for travelers with different lifestyles, needs 30 35 +5. 0 Has flexible booking options 27 32 +4. 6 Offers excellent value for money 23 28 +4. 4 Provides great customer service 29 34 +5. 0 Has unique and distinctive hotels and resorts 28 32 +3. 8 21 23 +1. 7 Control (%) Exposed (%) Delta Offers me what I look for in my vacation 35 37 +1. 6 Different hotels and resorts for travelers with different lifestyles, needs 37 39 +2. 1 Has flexible booking options 35 32 -2. 4 Offers excellent value for money 30 30 -0. 8 Provides great customer service 38 41 +2. 8 Has unique and distinctive hotels and resorts 34 37 +2. 5 Is my dream hotel 29 29 -0. 1 Is my dream hotel Luxury Hotel Guests already predisposed towards the Starwood brand as evidenced by the higher baseline scores Brand Attributes Significant difference between control and exposed group at a 90% confidence level 8

Optimal frequencies for desired impact… 3 -4 ad exposures needed to strengthen brand perceptions significantly for less- engaged guest segment Mid-Market Hotel Guests Brand Attributes Control (%) 1 2 3 -4 5 -9 10+ Exposed (%) Delta Exposed (%) Delta Offers me what I look for in my vacation 26 28 +2. 0 27 +1. 0 33 +7. 1 28 +2. 0 33 +6. 8 Different hotels for different lifestyles , needs 30 32 +2. 0 37 +6. 5 39 +8. 5 36 +5. 5 37 +6. 2 Has flexible booking options 27 30 +2. 6 33 +6. 1 38 +10. 7 31 +3. 5 30 +3. 2 Offers excellent value for money 23 25 +1. 8 30 +6. 7 28 +5. 1 30 +6. 8 28 +4. 8 Provides great customer service 29 32 +2. 8 34 +4. 6 42 +12. 6 33 +3. 8 33 +4. 4 Has unique and distinctive hotels and resorts 28 28 +0. 2 37 +9. 6 32 +3. 9 32 +4. 5 33 +5. 2 Is my dream hotel 21 19 -1. 9 24 +2. 7 24 +3. 6 25 +4. 5 25 +4. 1 Luxury Hotel Guests Brand Attributes Control (%) 1 2 3 -4 Exposed (%) Delta Exposed (%) 5 -9 Delta Exposed (%) 10+ Delta Exposed (%) Delta Offers me what I look for in my vacation 35 33 -2. 1 28 -7. 4 41 +5. 5 34 -1. 5 50 +14. 5 Different hotels for different lifestyles , needs 37 34 -3. 1 37 -0. 3 48 +10. 4 43 +6. 2 40 +3. 1 Has flexible booking options 35 28 -6. 8 26 -8. 4 36 +1. 4 34 -0. 7 40 +5. 6 Offers excellent value for money 30 29 -1. 6 25 -5. 8 34 +4. 1 26 -3. 9 33 +3. 0 Provides great customer service 38 35 -3. 2 42 +4. 0 46 +7. 8 42 +3. 4 46 +7. 8 Has unique and distinctive hotels and resorts 34 33 -1. 7 35 +0. 8 44 +10. 0 32 -2. 2 43 +8. 8 Is my dream hotel 29 28 -1. 5 21 -8. 3 41 +11. 6 21 -8. 6 35 +5. 3 Significant difference between control and exposed group at a 90% confidence level 9

Findings • Results suggest that display ads have different impact on audiences at different phases of brand involvement: – Mid-market hotel guests were evaluating Starwood at the brandbonding stage. Display ads were effective in improving their overall brand perceptions. – On the other hand, the display ads helped reinforce brand perceptions for luxury hotel guests who already have a strong affinity for the brand (highlighted by their comparatively higher baseline scores). • 3 -4 ad exposures needed to shift brand perceptions for the less-engaged guest segments 10

02 Did the display advertising impact branded search intent? 11

Different impact on behavioral intent across segments… Mid-Market Hotel Guests Intent Measures Display ad impact brand perceptions more than behavioral intent (no significant life noted) Control (%) Exposed (%) Delta Search Intent 22 21 -0. 8 Likelihood to Visit Starwood. com 19 20 +1. 1 Likelihood to Make Reservations 13 15 +1. 8 Luxury Hotel Guests Intent Measures Display advertising significantly moved behavioral intent for the more brand-engaged luxury guest segment Control (%) Exposed (%) Delta Search Intent 32 38 +6. 5 Likelihood to Visit Starwood. com 25 35 +9. 7 Likelihood to Make Reservations 24 33 +9. 7 Significant difference between control and exposed group at a 90% confidence level 12

More ad exposures needed to move users from ‘affinity’ to ‘action’ More ad exposures (10+) needed to move mid-market guest segment into action Mid-Market Hotel Guests Intent Measures Control (%) 1 Exposed (%) 2 Delta Exposed (%) 3 -4 Delta Exposed (%) 5 -9 Delta Exposed (%) 10+ Delta Exposed (%) Delta Search Intent 22 19 -2. 4 17 -5. 3 23 +0. 9 19 -2. 4 28 +6. 2 Likelihood to Visit Starwood. com 19 20 +0. 5 16 -3. 3 24 +4. 5 21 +1. 2 23 +3. 2 Likelihood to Make Reservations 13 14 +0. 3 12 -1. 4 13 +0. 2 15 +1. 5 22 +8. 5 In contrast, 3 -4 ad exposures needed to move behavioral metrics for the more engaged luxury hotel guest segment Luxury Hotel Guests Intent Measures Control (%) 1 Exposed (%) 2 3 -4 5 -9 10+ Delta Exposed (%) Delta Search Intent 32 31 -0. 7 35 +3. 4 44 +12. 6 45 +13. 6 43 +11. 4 Likelihood to Visit Starwood. com 25 31 +5. 8 30 +4. 6 41 +15. 7 30 +4. 9 44 +19. 2 Likelihood to Make Reservations 24 27 +3. 5 26 +2. 7 44 +20. 7 34 +10. 4 40 +16. 7 Significant difference between control and exposed group at a 90% confidence level 13

For ‘in-market’ Luxury hotel guests, display ads have significant impact on both brand intent measures Luxury Hotel Guests (travelling in next 6 months) Brand Intent Measures Control (%) Exposed (%) Delta Unaided Brand Awareness 2. 1% 5. 9% +3. 8 Aided Frequent Guest Program Awareness 35. 7% 52. 4% +16. 7 Search Intent 34. 9% 44. 5% +9. 5 Likelihood to Visit Starwood. com 26. 7% 40. 2% +13. 4 Likelihood to Make Reservations 24. 5% 37. 4% +12. 9 Significant difference between control and exposed group at a 90% confidence level 14

Display ads also improved search intent amongst Luxury hotel guests who have not searched hotels online previously Luxury Hotel Guests Intent Measures Searched Hotels Online in Past Three Months Did Not Search Hotels Online in Past Three Months Control (%) Exposed (%) Delta Search Intent 41 43 +2. 2 12 26 +14. 2 Likelihood to Visit Starwood. com 32 40 +8. 2 10 21 +10. 8 Likelihood to Make Reservations 27 38 +10. 5 13 24 +10. 5 Significant difference between control and exposed group at a 90% confidence level 15

Findings • While the display ads have helped reinforced brand perceptions for the Luxury hotel guest segment, its impact was most significant in shifting behavioral intent. • Greater efforts were however needed for the Mid-market hotel guest segment. This likely stems from the different stages of brand acceptance across segments. • Frequency of exposure requirements differ between segments: – 3 -4 display exposures were optimal at impacting intent measures for the Luxury hotel guest segment (vs 10+ for Mid-market segment) 16

Summary 17

Display advertising has different impact on different customer segments Display campaign impacted luxury hotel guest segment most significantly in their action intent, while reinforcing their brand perceptions. Mid-market hotel guest segment was placed higher on the brand funnel. Display ads helped build brand affinity. However, more exposures were needed to move guests from ‘affinity’ to ‘action’. ne ss Awareness Aw are Message Association Mid-Market Segment Attributes as Behaviour Intent Pe rsu Luxury Segment ion Favourability 18

Implications • Think integrated – leverage both display and search tactics to drive performance goals. Display ads impact consumer behavior beyond the initial exposure. • Utilize different messaging tactics for consumers at different stages of brand relationship. • Consider frequency management strategies across sites and segments to optimize campaign objectives e. g. awareness build vs performance 19