1. UK Online Adspend Study Results for January to June 2006 Prepared by PricewaterhouseCoopers for the IAB

2. 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

3. Agenda Study methodology Market background and trends UK online adspend – headline results Online in context The digital media mix Industry categories In summary Questions & answers

4. Methodology

5. A brief history … The IAB has been working with PwC since 1997 to survey the value of the online advertising market. PwC 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 and in the UK are now used by the Advertising Association. 90 companies have participated in the survey representing thousands of websites. 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.

6. Research participants Acxiom Ad2-one Adept Scientific Adlink AdRevenue Advertising.com Adviva AOL AskJeeves Associated Northcliffe Digital Autotrader BBC BlueLithium BMJ Bolt Blue BSkyB Channel 4 Chrysalis Radio Classic FM CNet Condenast Confetti Dennis Interactive Dixons DGM eCircle Economist EDR EMAP eType Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited GCap Media Google Guardian Habbo Handbag Haymarket Independent IPC Media iPoints IPT ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Loot Lycos Manchester Online Media Brokers Memedia Miva Moneyextra Monster MSN National Magazines Net Communities Netrecruit News International Orange Real Media Reed Business Information Reuters Rightmove Scotland Online Sift SRH Telegraph Tesco Tiscali TMN Tradedoubler UK Net Guides Unanimis Upmystreet Utarget Valueclick Virgin Radio WME Workthing Yahoo! Yell …Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

7. Market background and trends

8. Nearly 30m people now online Used in last 12 months Source: NOP World, 2005 Millions of people 63%

9. 10m households with Broadband in Britain

10. Source: BMRB Internet Monitor, Q4 2005Base: All who have used the Internet at home on a computer in the last month Broadband access at home

11. Average 23 hours a week online

12. Online sales hit 30bn

13. Online helps High Street

14. Tesco’s £1bn online sales

15. P&G increases digital spend?

16. UK Online Adspend Study Results for the first half of 2006 Prepared by PricewaterhouseCoopers for the IAB

17. £917.2m market in the first half of 2006 (up from £630.5m a year ago)

18. 40.3% increase On a like for like basis Including new contributors £286.7m was added to the market value, giving a 45.5% increase First Half 2006 vs. first half 2005

19. Online advertising almost £½ billion a quarter £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC ‘01‘03‘02‘04‘05‘06

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

21. Source: PricewaterhouseCoopers / Internet Advertising Bureau / The Advertising Association / Radio Advertising Bureau / WARC Internet 10.5% Online Breaks 10% barrier January to June 2006 Total advertising market £8.7bn

22. Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC Online drives the whole market Year on year growth for the first half 2006 Total advertising market growth = 1.4%

23. Market Share Online’s share growth accelerates Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

24. Online’s ascendancy continues £ 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

25. Online in context First half 2006 £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau

26. Online advertising market for the year to June 2006 …

27. £1653.1m July 2005-June 2006

28. Summary – First half 2006 Online advertising driving growth of the entire media market Internet advertising approaches £1bn in the first half of 2006 (£917.2m) Online achieved a share of 10.5%, up 3.2 points from the first half of 2005 (7.3%) The market grew 40.3% year on year from a high base Online now closing the gap on national press

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

30. The digital media mix % share of revenues for January to June 2006 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. Half year total £917.2m

31. The digital media mix All format groups have experienced actual growth £ millions +33% +23% +58% 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.

32. The digital media mix % share of revenues for January to June 2006 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. £138.9m £9.6m £6.8m £50.7m £5.9m £4.0m £7.9m £102.8m £59.3m £531.3m

33. The digital media mix Year on year comparison £ 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

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

35. Search is the gateway to brands People use search as a stepping stone to find the advertiser’s brand site 88% of those on broadband use a search engine every week More than 8 out of 10 users rely on a search engine after partially remembering a website address Search is now bigger than outdoor media Source: Ipsos Insight conducted for Isobar and Yahoo! Search, May 2006 Yahoo! Search Marketing, ISOBAR, UDA research 2005

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

37. Display: breadth of formats £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

38. Formats summary January to June 2006 With revenues of £531.3m, search maintained its dominant position over the six month period Year on year, display was up 33.2% to £138.9m while search increased by 57.7% and classifieds grew by 23.4% to £162.2m The growth of recruitment classifieds is slowing, up 9% to £102.8m. Other classifieds continue to enjoy strong growth, up 60.4% to £59.3m for the half year

39. Industry categories

40. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Recruitment sector leads the market in the first half of 2006 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 48% of online revenues in H1 2006. Recruitment & Finance continue to dominate the online advertising market

41. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC 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 48% of online revenues in H1 2006.

42. Industry sectors summary January to June 2006 The top 3 categories accounted for almost half of online ad spend (49.4%) and continued to be led by the Recruitment sector Growth in the Consumer goods and Retail categories is a positive sign, but there is still a lot of potential

43. Spotlight on Automotive Automotive’s market share shows steady growth Online is effectively used as both a branding medium and a direct response driver Investment is made across all 3 format categories – search, display and classified Market Share

44. Renault Clio

45. Overall Summary

46. Overall summary Online ad spend leaps by 40.3% on a like for like basis in a relatively flat media market. £1,653.2m spent across the twelve months ending June 2006. Market share breaks the double digit barrier as online reaches 10.5% of advertising revenues in H1 2006.

47. Online sustaining healthy growth in face of a depressed advertising market Strong growth continues even from a high base Search, display and classifieds have all experienced impressive increases Overall summary

48. The next milestone £2 billion A real possibility by the end of the year This would make online bigger than national press

49. Online closes on national press £m

50. Online is half the size of TV £917m £1,979m

52. All the companies taking part, representing thousands of websites and to Our thanks to… Paul Pilkington Director Colin Macleod Research Director Paul Taylor Production Editor &

53. UK Online Adspend Study Results for January to June 2006 Prepared by PricewaterhouseCoopers for the IAB For more information info@iabuk.net 020 7886 8282