STATS & FACTS:

LOYALTY AND INCENTIVE PROGRAMS

DATA FOR 2013-2014

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THE  LOYALTY  &  INCENTIVES  MARKET  IS  HUGE  

•  The North American Loyalty market is estimated to be $54 billion and growing at 20% per year (Raymond James)

•  US companies spent $76.9 billion on incentives and promotions in 2012-2013. $22.7 billion is spent on incentive and loyalty gift cards alone (Incentive Marketing Association)

•  There are over 2.5 billion loyalty memberships in the U.S. (Colloquy)

•  Loyalty programs generate $48 billion in annual loyalty currency issuances which customers can redeem for goods or services (Colloquy)

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•  Nearly  90%  of  Americans  parDcipate  in  some  type  of  rewards  program  (BusinessWeek)  •  The  average  U.S.  household  belongs  to  ~22  loyalty  programs  –  not  all  acDve  though  (Colloquy)  •  71%  of  Loyalty  Members  have  room  for  more  cards  in  their  proverbial  loyalty  card  wallets  (Maritz)  

LOYALTY  MEMBERSHIP  IN  THE  U.S.  CONTINUES  TO  GROW  RAPIDLY  

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LOYALTY  PROGRAMS  ARE  EFFECTIVE…      …IN  INFLUENCING  PURCHASE  DECISIONS  

Source:  Maritz   Source:  Nielsen  

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LOYALTY  PROGRAMS  ARE  EFFECTIVE…      …IN  INCREASING  CUSTOMER  ENGAGEMENT  

“Reward  program  members  are  70%  more  likely  to  be  WOM  champions  (defined  as  those  who  are  "ac@vely  recommending"  a  product,  service  or  brand)  than  the  general  popula@on”  (Colloquy)  

Source:  Maritz  

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LOYALTY  PROGRAMS  ARE  EFFECTIVE…      …IN  IMPROVING  MARGINS  

“Loyalty  programs  can  increase  a  brand’s  market  share  by  20%  and  improve  customer  acquisi@on  by  up  to  10%”  (Aimia)  

when  done  right!  

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WHAT  THEY  WANT  OUT  OF  A  LOYALTY  PROGRAM  

Customers  

22%  

36%  

51%  

51%  

55%  

Easy  enrollment  op@ons  

Access  to  exclusive  deals  and  coupons    

Ease  of  earning  points    

Monetary  rewards  

Ease  of  redeeming  rewards  

Businesses  

14%  

64%  

70%  

34%  

BeHer  customer  experience  

Customer  engagement  

Customer  reten@on  

More  revenue  

60%  of  firms  consider  loyalty  to  be  a  top  three  strategic  priority    

Source:  Mintel  Source:  Forrester  

2  

LOYALTY PROGRAMS EXIST ACROSS COMPANY SIZE

Confidential – Do not copy or redistribute.

I. Business Overview

II. Market Overview

III. Financial Overview

Program Member Base

90 MM members

34 MM members

22 MM members

12 MM members

5 MM members

4.7 MM members

1.2 MM members

Choose Digital has Already Signed Partnerships with the Leading Loyalty and Incentives Programs in the World

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2  

DEMOGRAPHICS FOR LOYALTY CARD OWNERS VARY

Confidential – Do not copy or redistribute.

I. Business Overview

II. Market Overview

III. Financial Overview

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United Airlines MileagePlus Beta Launch

• Choose Digital soft-launched the United Airlines MileagePlus Digital Media Store in August 2012 • The United Airlines MileagePlus loyalty program is the largest in the world with 90 MM members

• As of March 31, 2013, over 12.2 MM miles have been redeemed by MileagePlus members – $113,000  of  revenue  has  been  processed  through  Choose  Digital’s  platform,  and  the  average  sale  value  per  transaction  has  been

$3.96 to date, underscoring that customers are buying multiple titles in each sales transaction – United has been generating on average 26 MM digital impressions per month for its Choose Digital-enabled Digital Media Store

among a sub-segment of its members during this beta period

• The  quality  of  Choose  Digital’s  content  library  and  software  interface  has  resulted  in  significant  sales  conversion  rates  (above 10%) once a United customer visits the Digital Media Store – MileagePlus members are becoming more familiar with the service, resulting in decreasing bounce rates, down from 30.0% in

August 2012 to 15.5% in March 2013

• Going forward, the Choose Digital team is working toward a full launch with MileagePlus that will include: – (i) demographic tuning of marketing outreach, (ii) trigger targeting around decision points (e.g., an email five days before flight),

(iii) marketing of different mixes of media, (iv) finalizing the content library and (v) increasing the frequency of monthly emails

Choose  Digital’s  Beta  Launch  of  the  United  Airlines  MileagePlus Digital Media Store

Under 25 8.0%

25 - 34 21.6%

35 - 44 28.5%

45 - 54 24.0%

55 - 64 12.2%

Over 65 5.6%

Reward Redemption Demographics by Age Group Sales Demographics by Gender

Male 64%

Female 36%

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CUSTOMER  LOYALTY  ACROSS  PRODUCT  CATEGORIES  (1/2)  

Source:  Nielsen  

29%$

23%$ 22%$20%$ 20%$ 19%$ 19%$ 18%$

16%$ 15%$ 14%$ 13%$ 13%$ 13%$11%$ 11%$

0%$

5%$

10%$

15%$

20%$

25%$

30%$

35%$

Financial$Ins4tu4ons$

Cereal$Brands$

Mobile$Phone$Service$PROVIDERS$

Carbonated$Beverages$

Personal$Computer$Brands$

Mobile$Phone$Brand$

Cable$or$Internet$Service$Providers$

Supermarket$

Personal$Beauty$Products$

Alcoholic$Beverages$

Snack$Brands$

OTC$Health$and$M

edicine$Products$

Personal$Electronics$Brands$

Online$Retailers$

Home$Electronics$Brands$

Home$Appliance$Brands$

%age  of  North  Americans  Who  Say  They  Are  “Completely  Loyal”  To  A  Brand    

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CUSTOMER  LOYALTY  ACROSS  PRODUCT  CATEGORIES  (2/2)  

%age  of  North  Americans  Who  Say  They  Are  “Not  Loyal”  To  Any  Brand    

Source:  Nielsen  

41%$38%$ 37%$ 37%$ 36%$

34%$ 34%$ 34%$32%$ 32%$ 31%$ 31%$ 30%$

28%$

23%$21%$

0%$

5%$

10%$

15%$

20%$

25%$

30%$

35%$

40%$

45%$

Alcoholic$Beverages$

Home$Electronics$Brands$

Home$Appliance$Brands$

Online$Retailers$

Mobile$Phone$Brand$

Snack$Brands$

OTC$Health$and$M

edicine$Products$

Personal$Electronics$Brands$

Cereal$Brands$

Cable$or$Internet$Service$Providers$

Personal$Beauty$Products$

Mobile$Phone$Service$Provider$

Carbonated$Beverages$

Personal$Computer$Brands$

Supermarket$

Financial$InsMtuMons$

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MOBILE  IS  BECOMING  AN  INCREASINGLY  EFFECTIVE  CHANNEL  FOR  LOYALTY  

Source:  Maritz  

The  preferences  for  loyalty  func@onality  on  a  mobile  device  include:  •  Managing  points  •  Redeeming  points    •  Receiving  mobile  alerts    (Maritz)  

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DIGITAL  REWARDS  ARE  AN  INCREASINGLY  ATTRACTIVE  OPTION  •  Digital  media  is  in  great  demand  •  Digital  sales  of  music  albums  are  growing  at  double  digit  percentages  each  year,  now  accoun@ng  for  one  out  of  every  three  albums  sold  

and  1.3  billion  digital  music  tracks  per  year,  according  to  Nielsen  

•  Mobile  devices  are  feeding  the  demand  for  digital  rewards  •  Nearly  70  percent  of  Smartphone  Users  listen  to  music  on  their  phones,  and  of  those  who  do,  64 percent of those who listen to music on

their smartphone do so daily or several times a day according to Paradigm

•  Digital  media  rewards  are  easy  to  redeem  •  55%  of  users  list  ease  of  redemp@on  as  the  most  important  criteria  for  rewards;  digital  media  is  always  redeemable  and  not  scarce  like  

other  reward  op@ons  

•  Digital  media  rewards  appeal  to  all  demographics  •  Books,  music  and  movies  are  consumed  by  all  demographics  and  all  geographies;  with  a  good  selec@on  you  can  easily  appeal  to  everyone  

•  Digital  rewards  increase  customer  engagement  •  Digital  rewards  allow  for  “micro”  redemp@ons,  ensuring  customers  can  enjoy  the  fruits  of  their  loyalty  sooner  and  more  oWen  than  if  

they  only  offered  big  @cket  physical  items  

•  Digital  media  rewards  can  be  cost  effecDve  for  companies  •  Unlike  physical  rewards,  digital  media  rewards  have  no  shipping  costs;  licensing  and  setup  fees  for  digital  rewards  stores  are  usually  also  

aHrac@ve  

14  

CONTACT INFORMATION Atul Sabharwal Founder, Snipp atul@snipp.com 415.595.7151 http://www.snipp.com @snippinc