1. 2007 UK online adspend study

2. 1. Introduction

3. Agenda 1.Introduction 2.Study methodology 3.Market background and trends 4.UK online adspend – headline results 5.Online in context 6.The digital media mix 7.Industry categories 8.Summary 9.Looking ahead… 10.Questions

4. Background Census of all major UK online media owners Official Advertising Association figures since 1997 Information collected each half year Analysis available by ‒ Format ‒ Industry category

5. 2. Methodology

6. The IAB has been working with PwC since 1997 to survey the value of the online advertising market We have run projects in Europe and North America to assess the size of the interactive media markets These figures have become the industry standard for measuring advertising spend 118 companies have participated in the survey Reported figures are not adjusted to account for other organisations that have not participated Total advertising revenue is reported on a gross basis The figures are drawn up on the basis of site declaration They cover thousands of UK websites, but by no means all A brief history…

7. Research participants Acxiom Ad2-one Adept Scientific Adlink Ad Revenue AdSales4U Advertising.com Adviva AOL Affiliate Window Ask Associated Northcliffe Digital Autotrader BBC Worldwide Bloomberg Blue Lithium BMJ Bolt Blue Bounty BSkyB Buy Association Buy.at (Perfiliate) Channel 4 Chinwag Chrysalis Radio Classic FM CNET Conde Nast Confetti Dennis Interactive DGM Dixons Double Fusion E-circle Economist EDR EMAP E-Type Euroclick Everyclick Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited Future Publishing GCap Radio Google Guardian Habbo Hachette Fillpacchi Handbag Haymarket Hello IDG Independent I.E.T (Institute of Engineering and Technology) IPC Media IPT i-Points ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Johnston Press Loot Lycos Manchester Online Media Brokers Memedia Miva Monetise Moneyextra Monster MSN My Space National Magazines Net Communities Netrecruit News International Orange Oridian Overture Pigsback Prime Location Property Finder Real Media Reed Business Information Reuters Right Move Scotland Online Sift Simply Media TV SRH Skupe Teamtalk Telegraph Tesco Tiscali TMN Media Tradedoubler UK Net Guides UKTV Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Virgin Radio WME Workthing Yahoo! Yell …Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

8. 3. Market background and trends

9. At the height of the “boom” online was worth £166m! £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

10. Where were we this time last year?.. Online broke through the £2bn barrier in 2006 The medium grew by 41% from £1.4bn in 2005 Online overtook National Press Our initial forecast for 2007 was £2.6bn … …but we revised that up to £2.75bn (and Prayed!)

11. 3.6m June 96 Source: Gfk NOP World, To July 2007 Have you used the Internet in the last 12 months? 32.5m July 07 Meanwhile the audience is still growing

12. Over half of home broadband services are now above 2 MB Base: All home broadband users who knew their speed of connection (Nov 06 - 396; Nov 07 - 388) Source: BMRB Internet Monitor Nov 2006; Nov 2007 50% have used wireless broadband at home in the last month (February 2007) Q. What is the connection speed of your home broadband?

13. Young women take over… Women 25-34 now spend more time online than men in the same age group. Source: Ofcom Communications Report 2007

14. Empty nesters go surfing… One quarter of all Britons online are over 50 and 30% of total time spent on the internet is by the over 50’s Source: Ofcom Communications Report 2007

15. It’s never been easier to get online £4.50 Toshiba Tecra 8100 £250 inc VAT $100 Wind Up 50p per hour Free at libraries Bars, Hotels, Coffee shops, parks…

16. 4. UK Online Adspend Study Results for the full year of 2007 Prepared by PricewaterhouseCoopers for the IAB

17. Have I got news for you…?

18. £2,812.6m market in 2007 An increase of £797m year-on-year Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

19. 38% increase New contributions in 2007 represented £64.9m 2007 vs. 2006 on a like for like basis Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

20. Online advertising reaches £750m in Q4 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC ‘01 ‘03 ‘02 ‘04‘05‘06 ‘07 Up £2bn in 3 years!

21. 5. Online in context… Breaking market trends in the UK ad industry

22. 2007 market share 15.3% (11.4% in 2006) % share of revenues for January to December 2007 Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. Total advertising market £18.4bn

23. Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories. Online drives the whole market Total advertising market growth = 4.3% Year on year growth for 2007

24. Market Share Online’s share growth accelerates to 16% Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

25. Online slices through the media market £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARC N.B. WARC Recruitment data included from 2003 Radio Outdoor Internet Press - Display Television Press - Classified Direct Mail

26. Online overtakes Press Classifieds (Just!) £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Full year 2007 Directories are estimated

27. Summary – Full year 2007 Online advertising driving growth of the entire media market Internet advertising reaches £2,812.6m in 2007 Online achieved a share of 15.3%, up nearly 4 points from 2006 (11.4%) The market grew on a like for like basis by 38% year- on-year, maintaining the strong growth of previous waves Online overtakes Regional Newspapers and press classifieds (15% and 15.1% respectively)

28. Summary – H2 2007 In the second half of the year, online advertising was worth £1,478.2m The internet’s share of all advertising expenditure actually reached 15.9% Revenues for Q4 over £750m

29. 6. The digital media mix The developing mix of ad products

30. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. Full year total £2,812.6m % share of revenues for the full year 2007 The digital media mix

31. £ millions +31%+54% +39% Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. The digital media mix All online formats have experienced strong growth

32. The digital media mix Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. Full year total £2,812.6m £467.1m £23.1m £15.1m £23.4m £44.1m £19.2m £16.2m £286.8m £296.5m £1.9m £1,619.1m % share of revenues for the full year 2007

33. The digital media mix £ millions IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Year on year comparison

34. Strong growth of Search continues £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

35. Almost 90% use search every month Source: Nielsen Online, MegaView Search UK, January 2008, Home and Work, Netview January 2008, IAB/PwC Online Ad Spend H2 2007 In January 2008, 29m people visited a search engine and 27.7m of these clicked through onto a site. This equates to 89% of the internet population visiting a search engine and 84% clicking through. There were 1.7bn search queries carried out in the UK in January 2008. On average, there are 3.4 click throughs per search session. PPC Search revenues in 2007 reached £1,619.1m. In H2 2007 this was £856.8

36. £m Source: Internet Advertising Bureau / PricewaterhouseCoopers Growth in further classifieds

37. Classifieds led by key players

38. Display: formats dominated by banners & rich media £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

39. Embedded formats up over 100% in the last two years £ millions IAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC +45% +8% +15% +22% +159% -40%

40. IASH sales houses represent thousands of sites Source: Internet Advertising Bureau 40% of display spend through networks

41. Formats summary – 2007 Revenues increased across all formats, except for tenancies and solus e-mail With revenues of £1619.1m in 2007, search maintained its dominant position YoY, display was up 31% to £592m while search increased by 39% and classifieds were up by 54% to £585.3m Core “embedded” display rose 45% YOY Classifieds: recruitment increased by 33% to £286.8m and other classifieds grew by 82% to £298.4m Source: Internet Advertising Bureau / PricewaterhouseCoopers

42. 7. Industry categories

43. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC IAB estimates for industry sector shares are based on samples of categorised net revenue from key IAB members provided by PwC. Data excludes unclassified figures and covers 41% of online revenues in H2 2007. Recruitment continues to lead the market

44. Sector Market Shares IAB estimates for industry sector shares are based on samples of categorised net revenue from key IAB members provided by PwC. Data excludes unclassified figures and covers 41% of online revenues in H2 2007. * Technology overtakes Finance Property enters top 5 Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

45. Sector Market Shares IAB estimates for industry sector shares are based on samples of categorised net revenue from key IAB members provided by PwC. Data excludes unclassified figures and covers 41% of online revenues in H2 2007. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Retail gains share !

46. Spotlight on Retail Online spend beginning to grow, reflecting a buoyant and competitive e-commerce market (46.6bn 2007) 46.6bn ecommerce spend up 54% on the £30.2bn recorded for 2006

47. Are Finance and travel maturing? * Finance and Travel spend has increased over time, but share of categories has declined H2 2007 H2 2004

48. Property is the share point winner (+3.3 points) however, recruitment retains the pole position and Technology overtakes Finance for the first time to take the third spot. Retail (+1.7), Business and Industrial (+2.1) and Telecoms (+0.7 points) strengthened their positions whilst Finance (-3.8 points) and Technology (-3 points) continued to showed a decline. Share for Consumer Goods, though remains mid tier, increased by 0.9 point - there is still room for growth in this sector. Industry sectors summary – H2 2007

49. 8. Summary

50. Have I got news for you…

51. Summary Online ad spend leaps by 38% year-on-year (on a like-for-like basis) to reach £2,812.6m in 2007 Online achieved a share of 15.3%, up 3.9 points from 2006 (11.4%) Online overtakes Press Classifieds and Regional Newspapers Online has grown by £2bn in just 3 years

52. Summary Search (+39%) and display (+31%) both experienced impressive growth in revenue, with embedded formats (+45%) performing ahead of the total growth. Classified (+54%) performed particularly well Twenty two record-setting quarters in succession Recruitment retains the pole position, however the greatest share point winners are in Property, Business and Industrial and Retail

53. 9. Looking ahead

54. Online poised to draw level with total Press display £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

55. Could online overtake TV next year? £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

56. …And be the single biggest medium!? YOU BET! !

57. £ Our current forecast for 2008 is… £3.6 billion

58. All of the 118 companies taking part, representing thousands of websites and to Our thanks to… Nicki Lynas, Senior Manager and Paul Pilkington, Director Colin Macleod, Research Director

59. 10. Questions For more information info@iabuk.net 020 7886 8282