How to sell more Slingboxes through VOD and DRTV March 19, 2006

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How to sell more Slingboxes through VOD and
DRTVMarch 19, 2006
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Leading the revolution by empowering consumers.

• Founded in 2004, Sling Media gave consumers
  greater control of when, how, and where they view
  television content, through the launch of
  Slingbox.
• The Slingbox quickly became an award winning new
  technology, recognized by Time, Business Week,
  FORTUNE, PC World, and other publications and
  organizations.
• Just last week the Wall Street Journal confirmed
  the revolution, calling the Slingbox a
  particularly disruptive technology.

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Industry recognition wasmatched by sales success.

• 2,500 retail outlets nationwide carry the
  Slingbox, including Wal-mart, Target, Best Buy,
  Dell, and Amazon.
• Over 100,000 Slingboxes have been sold to date.
• The company sells 100-200 units a week on its own
  website.

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Marketing dollars havebeen astutely deployed.

• Avoiding New York, Chicago, and LA, the company
  is focused on smaller markets that achieve cost
  efficiency,
• The company is progressively rolling out to 8-9
  markets per quarter.
• Radio as the dominant medium, supported with
• Print, awareness TV, and banner advertising.
• The company currently targets five high-potential
  segments
• Business Travelers.
• Sports Junkies.
• Information Junkies.
• Ex-pats.
• Mobile Moms.

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The next phaseof marketing is critical.

• The Slingbox is all about TV viewing theres an
  opportunity to deliver a deeper, richer
  experience with TV enthusiasts that communicates
  product benefits through their preferred medium.
• The hero of this next marketing phase, to
  launch late 2Q/early Q3, is a 4-minute, local
  market test of a VOD piece, that is
• Supported by a 30 Branded Navigation Unit, or
  BNU, that drives traffic to the VOD.
• Also supported by a 30 spot lifted from the
  VOD, that employs an Ad Tag or Ad Copy that
  supports retailers, plus tailors and targets our
  message.
• Complemented by a national, 60 direct response
  television test commercial (DRTV).

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This is our proposal to help.

• We have assembled a veteran team strategy,
  account management, copy, art, production, media
  planning buying, data analytics, and call
  center operations to work virtually with
  Sling Media.
• The team is led by
• Robert Solomon, founder of Solomon Strategic.
• Kristi Faulkner and Sandy Sabean, co-founders of
  Words Pictures.
• Karen Harris, a senior, independent media
  planner.
• The teams bios follow this presentation. We
  would be happy to answer any further questions
  you might have about our capabilities and
  experience.

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Heres what well cover

• Weve already provide some background and
  context we now want to discuss
• Our approach to creative.
• Our initial thoughts on media planning.
• A preliminary execution schedule.
• A summary of costs.
• Conclusion and next steps.

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CREATIVE APPROACH.
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We started with three questions1. Does
television make sense?2. Is VOD the best way to
tell our story?3. Will DRTV sell?
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The answers1. Yes!2. Yes!! 3. Yes!!!
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1. Television is the ideal medium for a TV
accessory.

• Sling Media has done extraordinarily well without
  relying heavily on TV. However
• The product appeals most to committed TV viewers
  Biz Travelers, sports/info junkies, etc. --
  with specific viewing interests that could
  benefit from the Slingbox.
• This product cries out to be demonstrated live
  on TV.
• To see it is to understand it, to understand it
  is to desire it.
• Lastly, as we expand the adoption of innovation
  curve beyond innovators and early adopters,
  to the early majority,
• Television is the one medium that can reach this
  group quickly and effectively.

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2. VOD provides even deeper audience engagement.

• A four-minute piece of content is ideal for
  communicating the Slingbox story and
  merchandising the product.
• 25MM households are VOD enabled, with the number
  increasing rapidly. These are exactly the
  prospects we want to engage.
• Everything gets measured unique views, total
  and average duration of viewing, and exact viewer
  data.
• Because cable VOD is a local buy, it drives
  viewers to specific retailers, which should
  mitigate channel conflict.

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The VOD piece is the anchor.

• The VOD deeply engages our prime prospects.
  Creatively, it would be tightly integrated with
  the DRTV. We can achieve this by cutting the 60
  DRTV spots from the VOD itself.
• Sling Media also has equity we can capitalize on
  and use in the video the awards theyve won,
  the people who endorse the product, and an
  easy-to-use website.
• A few initial thoughts
• A How do you Sling? story, focused on devoted
  Slingers who cant live without their Slingbox.
  
• Explore a day in the life of a Slingbox, from
  purchase, to installation, to all the expected
  and unexpected real-life uses.
• We will explore a variety of creative approaches
  based on various consumer insights, and present
  options for your consideration.
• We also will plan for other VOD uses, in retail,
  in sales, on the web.

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Two VOD issues to address.

• VOD via cable is bought by specific local
  markets, not nationally. TiVo is a national buy,
  but the audience may be smaller, less
  concentrated, and could be more expensive. (We
  will do a full comparison and provide a POV.)
• In our media section of the presentation, we will
  recommend two cable VOD test markets Boston and
  Philadelphia.
• Even with just local market presence, we believe
  VOD will be a powerful test vehicle that can roll
  out to other markets.
• 2. The Drive-to-VOD component is critical.
  In cable, well use a separate 30 Branded
  Navigation Unit (BNU), that MSOs sell as part of
  the VOD package. (TiVo uses a gold star
  click-through. We can discuss how to build
  awareness on their platform.)
• Our recommendation is to create the BNUs the same
  way we plan to create the 60 DRTV -- craft them
  from the 4-minute VOD.

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3. DRTV is a powerful, efficient sales weapon.

• There are five reasons why direct response
  television is the ideal platform to promote
  Slingbox
• The 60 units provide the time needed to tell a
  fuller sales story.
• The strong call-to-action encourages consumers to
  seek more information via the web or phone.
• Media time is incredibly affordable, extending
  the value of every dollar invested.
• We ruthlessly measure everything, to know what
  works, and what doesnt.
• We use buy management techniques to reduce cost,
  increase effectiveness, in order to achieve our
  sales goals.

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Our objective a fully integrated campaign with
lots of options.

• The entire creative package would be conceived as
  a whole. So the 60 DRTV spot fits seamlessly
  with the VOD and the 30 BNU.
• The four-minute time frame gives us a wealth of
  creative options to consider
• We could tailor 60 DRTV spots for each of the
  five key target segments.
• We could focus on the why and how of the
  product, to stimulate enthusiasm.
• We could possibly recruit a celebrity like Amhad
  Rashad as a spokesperson, or for a testimonial.
• We will explore every option in creative
  development.

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For the DRTV, whatshould the call-to-action be?

• In a classic 60 DRTV spot, the call-to-action
  usually is to place an order.
• But, while the Slingbox is a terrific deal, at
  249 its not an impulse purchase.
• There also will be questions about
  ease-of-installation.
• And there will be questions about a guarantee.
• Assuming we could promote an unconditional
  guarantee, we could promote a call-to-order
  call-to-action. But it might be preferable to
  use a drive-to-web or call to inquire strategy.

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Testing calls-to-action.
One option would be to test a range of
calls-to-action. Some options

• Wed like to review these and other alternatives
  with you prior to creative development, to arrive
  at the best choice.

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What about channel conflict?

• Sling Media has done a superb job of
  significantly penetrating the major retailers.
  Although a DRTV spot could have an impact, we
  dont believe this is a risk.
• For one thing, major manufacturers such as Nike
  and Apple sell their products through multiple
  channels, including proprietary direct marketing
  ones.
• Other marketers, such as Dell, have proven the
  efficacy of the Direct.
• Sling Media already uses its own website to close
  sales.
• Our recommendation is to bring the retailers into
  the process, brief them fully, then manage issues
  as they arise.

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Dynamic insertion couldhelp with channel
conflict.

• Dynamic insertion, in the form of AdTags and
  AdCopy, is something to consider in local markets
  where available.
• An AdTag allows you to instantly tailor your
  message to a specific location. For example, New
  York residents in Chelsea are told to go the Best
  Buy on 23rd Street.
• AdCopy allows you to instantly tailor the
  message, to deliver a specific offer or product
  feature.
• Again, working with the 4-minute VOD as our base,
  we could lift a 30 spot that uses an AdTag to
  promote specific retailers.
• This could help reduce concern over the DRTV.
• We also could use AdCopy to create a more robust
  test and learning environment, to see which
  offers or guarantees work.

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A note about creating and producing for dynamic
insertion.

• Simply put, dynamic insertion means the spot is
  edited immediately before airtime by computer
  software.
• At present, AdTag/AdCopy are services only
  available from the cable systems as part of a
  local market buy. For the test, our DRTV spots
  will be bought nationally for cost effectiveness,
  eliminating the AdTag/AdCopy option.
• However, we will plan for the use of this
  technology, and will create and produce each
  piece of content with the specific requirements
  of AdTag/AdCopy in mind. Doing so will give us
  the option of cutting effective 30s later, and
  the ability to run our DRTV in select local
  markets with varying offers or store locations.
• Planning ahead will save tremendously on
  production costs down the line.

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To summarize, heres what well create

• Multiple concepts for a four-minute VOD, (for use
  on TiVo or in local cable markets) leading to an
  execution and production of the selected concept.
• Multiple concepts of a 30 BNU spot, designed to
  drive people to the VOD, leading to the execution
  and production of a single 30 BNU.
• Multiple concepts for 60 DRTV spots to run on a
  selection of national cable networks, leading to
  either the execution and production of a single
  spot, or possibly a number of test spots.
• A 30 lift of any of the above executions
  designed to leverage AdTag/AdCopy down the road.

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INITIAL THOUGHTS ON MEDIA.
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VOD the ultimate, opt-in advertising vehicle.

• The VOD audience is self-selecting they choose
  to watch because they are interested in a product
  and want to learn more.
• Its a great complement to awareness advertising
  and to DRTV.
• It successfully establishes a direct and lengthy
  dialogue with an interested consumer.
• There is no waste, but there is a cost premium.
• VOD is most successful at engaging the audience
  and holding their attention when the information
  presented is relevant and entertaining.
• The creative challenge is to strike a balance
  with the brand message.

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How to negotiate VOD.

• For now, well assume youve explored a VOD buy
  with TiVo, so well focus on the details of cable
  VOD.
• VOD is a local cable buy, usually bought through
  the Spotcable rep, NCC. It is sold
  market-by-market, which makes negotiating with a
  single rep more efficient.
• The cost of the platform depends on a combination
  of
• Server time where the content is housed.
• The amount of BNUs (30 directionals that promote
  the content to the viewing audience).
• Other spots purchased in the plan.
• There are creative sponsorship opportunities that
  drive VOD viewership these could complement the
  media plan. We will explore and evaluate these
  during media planning.

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Choosing a VOD test market.
Wed recommend the top one or two markets with
the greatest potential to reach our consumers.
Leaving out NY,LA, and CHI, the next two most
developed VOD DMAs are Philadelphia and Boston.
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Philadelphia and Boston are excellent choices

• Philadelphia
• Is a highly developed VOD audience.
• It has 850,000 digital cable HH, 1.3 million VOD
  enabled digital boxes.
• It is a strong sports market.
• Boston
• Has 910,000 digital cable HH, 1.4 million VOD
  enabled digital boxes
• Is a strong sports market, plus huge student
  populations (early adopters, TV enthusiasts, and
  ex-pats!)
• Theres a significant suburban influence (Mobile
  Moms)

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A ballpark estimate for VOD.

• This is meant as an FYI only this is not
  included in our media budget.
• Were assuming that you have an estimate for
  TiVos VOD package. For comparison, this is
  where negotiations would begin for a cable VOD
  buy.
• Philadelphia
• Server time for one month -- 38,000
• 400 BNUs -- 80,000
• Boston
• Server time for one month -- 44,000
• 400 BNUs -- 80,000

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VOD how to proceed.

• Youve indicated that TiVo has a compelling VOD
  package. Not knowing the details of what youve
  negotiated, we cant evaluate cables VOD vs.
  TiVo.
• However, our proposal does include developing a
  strategy, plus creating and producing the VOD
  content, regardless of where you choose to run
  it.
• We can help you evaluate all the options in
  further detail at a later time.

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DRTV a different way to buy.

• Sling Media has had success in running awareness
  media, primarily radio, that delivers about 70
  GRPs a week.
• DRTV is different. Our goal isnt to buy reach
  and frequency. Our goal is to buy TV time
  cheaply, so that it can deliver an acceptable
  cost-per-call, cost-per-lead, and, ultimately,
  cost-per-sale.
• To do this we buy unsold, available, remainder
  time, or avails, that can be pre-empted by
  another advertiser willing to pay a higher price
  for the spot.
• This allows us to buy time cheaply. Instead of
  paying tens of thousands, or even hundreds of
  thousands of dollars per spot, we pay just
  hundreds of dollars, or at most a thousand or two
  per spot.

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DRTV comes withits own set of rules.

• For one thing, were not going to run on Lost,
  or Desperate Housewives. In fact, we cannot
  specify programming. Instead we must specify
  broad dayparts.
• Our units tend to be 60s, 90s, and 120s, not
  the 30s that typify awareness advertising. A
  60 is the most common and clearable unit.
• Our spots must sell with a strong call-to-action
  that directs the viewer to call an 800-number or
  visit a website.
• DRTV offers Sling Media a number of advantages,
  including sufficient time to tell a fuller sales
  story. Most important of all, it allows Sling
  Media to maximize the value of its media
  expenditure.
• This is why we believe DRTV provides a great
  solution for the Slingbox.

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How to proceed DRTV.

• Assuming we were to work together, our plan is to
  present a detailed media recommendation for your
  review.
• In the meantime, were envisioning a DRTV test
  effort that
• Would run for 3-4 weeks.
• Would focus on national cable networks, which
  efficiently delivers a lower cost per response
  than local market independents and affiliate
  stations.
• National cable also allows us to target our five
  key segments
• Business Travelers.
• Sports Enthusiasts.
• Information Junkies.
• Ex-pats.
• Mobile Moms.

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We started witha list of 19 DRTV networks.

• AE
• BBC America
• Bravo
• CNBC
• CNN
• CNN Headline news
• Comedy Central
• E!
• ESPN
• ESPN 2

• ESPN Classic
• Fox News
• Lifetime
• MSNBC
• OLN
• Oxygen
• Spike TV
• VH1
• WE

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We evaluated each network according to these
criteria.

• We want a mix of stations that appeal to all five
  targets.
• Were looking for target audience concentration.
• We want good DRTV rates, and the opportunity to
  achieve buying efficiency.
• We pay attention to historical rates for similar
  consumer electronics, high tech, and similar
  categories.
• Based on this analysis, we narrowed the list of
  preliminary group of networks most likely to
  deliver sales for the Slingbox.

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These are the 10 networks that made our tentative
list
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But this still represents an interim, for
discussion list.

• In our final media recommendation, we will narrow
  the list further to four or five high potential
  choices.
• Based on our discussions with the networks, we
  might find that some drop out, while others find
  their way in.
• In some cases, networks that dont make the
  initial round are likely to be included in
  subsequent rounds of testing.

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DRTV buy management.

• With DRTV, buy management is a big advantage.
• We will start by airing the approved buying
  schedule, exactly as planned.
• But, after two weeks of being on air, response
  rates tend to level off or decline.
• We can use the data from weeks one and two to
  adjust our buy in weeks three (and four, assuming
  four weeks).
• We can cancel underperforming networks.
• We can add new networks to the test.
• We can change dayparts to maximize results.
• We can increase or decrease frequency to improve
  performance.
• We can renegotiate rates to improve performance.

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Buying would be handledby a firm we know well.

• We recommend working with Direct Advantage, whose
  founding partners Jane Plant and Gina Buttafoco
  we know well.
• Jane and Gina are industry veterans with
  significant agency and client side experience.
• The firm was founded in 1993, and works with a
  wide range of clients in a variety of business
  categories.
• The company is particularly strong in DRTV
  buying.
• Direct Advantage also has the necessary analytic
  tools to successfully measure, evaluate, and buy
  manage our campaign.

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Handling the call volume.

• DRTV can succeed in the most unexpected ways.
  For example,
• Spots airing during morning news might fail,
  while spots airing over night might succeed.
• Some spots might cause a sudden spike in calls.
• Although our goal would be to drive traffic to
  our website, we still want to offer people the
  option to call an 800-number to order, or to get
  questions answered.
• To handle calls 24/7, and to cover unanticipated
  spikes in call volume, well need to contract
  with a in-bound call center that specializes in
  handling DRTV response.

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Identifying the right call center candidates.

• We know a number of qualified candidates that
  could handle the in-bound call volume and email
  orders to your fulfillment house. Possibilities
  include
• ACI Telecentrics in Minneapolis.
• Greenwood Hall in Santa Ana, California.
• Convergys in Cincinnati.
• West Telemarketing in Omaha.
• Assuming we proceed, we would put the assignment
  out to bid, based on the media recommendation,
  and according to the specifications we establish
  together.
• We would award the bid based on agreed-on
  criteria, then do training and testing well
  before launch.

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Big questionwhat if we dont succeed?

• If we dont pull the results we expect, we can
  cancel the media plan with 72 hours notice,
  preserving a substantial portion of your
  investment.
• But given how we plan to structure the test, and
  given the a history of product success, we dont
  anticipate needing to do this.
• The fact is, we expect to succeed, and it is more
  likely youll want to ramp up the plan.
• We can do this, usually within 72 hours of
  arriving at the decision to invest more.

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PRELIMINARY SCHEDULE.
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We can launch in late in 2Q.
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A note on the VOD air date.

• The MSOs require 30 days from submission to
  launch the program into its rotation.
• We will try to improve on this by working with
  the MSO, but for now, we should assume the
  national DRTV launch will air as scheduled, with
  the VOD following in the two test markets.

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CONCLUSION AND NEXT STEPS.
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DRTV VOD an ideal test environment

• To interested ad involved prospects, VOD gives us
  the real estate we need to tell the full
  Slingbox story.
• We buy VOD locally, but with the option to expand
  to other markets as success dictates.
• A DRTV 60 can be bought cheaply, with
  buy-management techniques leveraged to optimize
  the plan to achieve our goals.
• DRTV is a national cable buy, giving us broad
  reach to a wide audience.

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Theres a big opportunity for success.

• We believe in buyers marketing, where
  empowered consumers feel confident and
  knowledgeable enough to make informed decisions
  that improve their lives.
• Slingbox is a product that does exactly what it
  says it will do. The product is priced fairly,
  and in a way that makes evaluation simple and
  buying easy.
• But this next phase of marketing is key to
  expanding Sling Medias share of market. As
  important as results are, its equally important
  that we learn what works, then build on it to
  ensure future success.
• The team weve put together has the creativity,
  experience, and tech market savvy to help make
  this happen, and were eager to partner with you.

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How do we proceed?

• Wed schedule a kick-off teleconference, to get
  fully up-to-speed on the product and to address
  open issues.
• We would then write a creative brief that would
  drive creative development.
• We would begin developing our media plan.
• And we would contact call center candidates to
  submit proposals to us.

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A FNAL WORD THANK YOUFor asking us to
propose on your business. We look forward to
working with you!
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TEAM BIOS
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Robert Solomon Solomon Strategic

• Robert has 29 years of DM experience, most
  recently as CEO of Rapp Collins, NY.
• Before founding S2, he was President of Direct
  Interactive at Ammirati Puris Lintas, GM of FCB
  Direct West, SVP at Digitas.
• He has serious technology experience on accounts
  such as Compaq Computer, DEC, Novell, and ATT
  Wireless.
• His other major accounts include American
  Express, Cablevision, Citibank, DHL, MasterCard,
  and UPS.

Roberts is a well- known author whose books are
big sellers among ad agencies.
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Kristi Faulkner Words Pictures

• Kristi is a seasoned creative with 16 years
  experience writing and producing all forms of
  advertising from TV, print radio to emerging
  media.
• Before founding founding Words Pictures, she
  was a creative director on a variety global
  accounts at Ammirati Puris Lintas, YR, and Grey
  Advertising. Shes also done time at BBDO, DDB
  Needham and Hill, Holiday.
• Her technology experience includes the launch of
  Optimum Online, Compaq Computers, Capital
  Thinking, GTE, ATT, Toshiba, and Cablevision.
• Words Pictures is considered by many to be a
  leading branded content creator in the VOD space.
  Their first foray garnered a Jack Meyers Media
  Creativity award.

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Sandy Sabean Words Pictures

• After graduating from New Yorks School of Visual
  Arts, Sandy began her career at the legendary
  creative agency Doyle Dane Bernbach.
• Shes served as a creative director on a variety
  global accounts at Ammirati Puris Lintas, YR,
  and Grey Advertising. Previously, she worked at
  Saatchi Saatchi, and Wells Rich Green.
• Shes created campaigns for blue-chip brands in
  virtually every category from finance to tech to
  beauty to packaged goods to automotive.
• Her technology experience includes the launch of
  Optimum Online, IBM, Compaq Computers, Capital
  Thinking, and Cablevision.

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Karen Harris, Karen Harris Media Consulting

• Karen has over 20 years of direct marketing media
  planning, buying and management experience.
• Before founding her media consulting practice,
  Karen spent 13 years as Executive Vice President
  and media Director of Grey Direct.
• Prior to Grey, Karen spent 8 years at another
  well respected direct marketer, Wunderman
  Worldwide.
• Karens high tech ad consumer electronic
  experience includes Apple, IBM, and Panasonic,
  among other accounts.

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How to sell more Slingboxes through VOD and
DRTVMarch 19, 2006