2. H1 2009 UK online adspend study

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. 1. Introduction

5. 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

6. 2. Methodology

7. 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 135 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…

8. Research participants Absolute Radio Accelerator Acxiom Ad2-one Adept Scientific AdLINK Ad Pepper Ad Revenue AdSales4U Affiliate Window Affiliate Future AOL Ask Associated Northcliffe Digital Autotrader Bauer 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 Commission Junction Dennis Interactive DGM Drive PM Dixons Double Fusion E-circle Economist EDR E-Type Euroclick Everyclick Exchange and Mart.Fox Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Flirtomatic Friends Reunited Future Publishing Fox Networks GCap Radio Glam Media Global Radio Interactive Google Guardian Habbo IDS Hachette Fillpacchi Handbag Haymarket Hello IDG Independent I.E.T (Institute of Engineering and Technology) IPC Media IPT i-Points Is4Profit ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Johnston Press Last FM Loot Lycos Manchester Online Media Brokers Memedia Miva Moneyextra Monster MSN My Space National Magazines Net Communities Netrecruit News International Online Media Group Orange Oridian Overture Pigsback Platform A Prime Location Property Finder Real Media Reed Business Information Reuters Right Move Scotland Online Sift Simply Media TV Specific Media SRH Skupe Teamtalk Telegraph Tesco Tiscali TMN Media Tradedoubler Trinity Mirror UK Net Guides UKTV Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Vibrant Virgin Media Webgains Wallpaper* WME WebTV Workthing Yahoo! Yahoo! Networks Yell …Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

9. 3. Market background and trends

10. Worst since Great Depression?

11. Worst recession since the Great Depression…

12. Marketing budgets marked down again in Q1 09

13. Marketing budgets cut at slower rate in Q2 09

14. Group M+2% Enders0% Outlook for 2009 online forecasts * * As at March 2009.

15. UK economy resumes..

16. Green shoots appearing

17. Where were we this time last year?.. H1 2008 was a landmark year for online with ad spend reaching £1.669.6 billion for the half year The medium grew by 21% from £1.334 billion in 2007 Online was 18.7% market share Our 2009 H1 forecast was flat or minimal growth for online

18. Number of internet users* in the UK Source: NRS UKOM: Jul-Dec 2008; Jan – June 2009; *adults using the internet at least once in the last 12 months 71% UK Pop 73% UK Pop 44% Online Pop 49% Online Pop Internet users going online more than once a day Number of people online 44% online pop 49% online pop

19. Continuous growth in online audiences and broadband penetration % Broadband access at home Online audience (millions) Source: BMRB Internet Monitor

20. Majority of broadband services are now above 2 MB Re-Based: All Internet users aged 15+ who know their broadband connection speed Source: BMRB Internet Monitor May 2007; May 2008; May 2009 56% of home broadband users have used wireless broadband at home in the last month (May 2009)

21. Weekdays Saturdays Sundays Source: BMRB Internet Monitor, May 2009 Base: All Internet users aged 15+ Online second only to TV % of media time for all internet users

22. 4. UK Online Adspend Study Results for the half year to June 2009 Prepared by PricewaterhouseCoopers for the IAB

23. £1,759.6m market in H1 2009 An increase of £90.1m year-on-year Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

24. 4.6 % increase H1 2009 vs. H1 2008 on a like for like basis Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

25. Online advertising reaches record £924m in Q1 2009 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC ‘01 ‘03 ‘02 ‘04 ‘05 ‘06 ‘07 ‘08

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

27. The Big news in World Media is….

28. Online Spend has Overtaken TV! The UK is the first major economy to achieve this feat

29. The biggest news in media

30. % share of revenues for January to June 2009 Total advertising market £7.520bn H1 2009 market share 23.4% (18.7% in H1 2008) 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.

31. Total advertising market growth = -16.0% Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories. Online only medium showing growth in H1 2009 Year on year growth for H1 2009

32. Market Share Online’s share growth accelerates to 23.4% Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

33. From the smallest to the largest in 6 years £ 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

34. Online overtaken Press Display and TV £7.520bn Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Half year 2009 Directories are estimated

35. Summary – H1 2009 Online advertising is the only medium showing growth in H1 2009 Internet advertising reaches £1,759.6m in H1 2009 Online achieved a share of 23.4%, up nearly 5 points from H1 2008 (18.7%) The market grew on a like for like basis by 4.6% year- on-year, still maintaining strong growth Online is the largest media in the UK for H1 2009

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

37. 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 £1,759.6m % share of revenues for H1 2009 The digital media mix

38. £ millions 0.2% -2.5% +10.6% 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

39. £ 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

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

41. £m Source: Internet Advertising Bureau / PricewaterhouseCoopers Growth in further classifieds from H1 2009

42. Classifieds led by key players

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

44. The display 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. Half year display total £334.6m % share of display revenues for the half year to June 2009 £237.9m £6.7m £9.2m £7.2m £11.4m £30.8m £18.2m £13.2m

45. Formats summary – H1 2009 With revenues of £1,085.4 m in H1 2009, search maintained its dominant position YoY, display was flat (0.21%) at £334.6m while search increased by 10.6% and classifieds were down by - 2.5% to £339.7m Video pre and post roll saw growth of 196%, and display affiliate grew by 111% Classifieds: recruitment declined by -31.8% to £123.6m and other classifieds grew by 29% to £216.0m Source: Internet Advertising Bureau / PricewaterhouseCoopers

46. 7. Industry categories

47. Display 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 85.5% of online revenues in H1 2009. * Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Based on 86% of total display ad spend revenues

48. Technology is the largest category with 19%, however Telecoms has shown the largest share point growth (+3.6 points) Finance and Entertainment & Media are third and fourth respectively Consumer Goods has grown almost 2 share points to 8.1%. Industry sectors summary – H1 2009

49. 8. Summary

50. Summary Online ad spend grows by 4.6% year-on-year (on a like for like) to reach £1,759.6m in H1 2009 Online achieved a share of 23.4%, making it the largest advertising format in the UK Online now ahead of TV and Press Display 23.4% of all advertising budgets are now spent online Nearly £1 in every £4 of ad spend goes online

51. Summary Search experienced strong growth of 10.6% Classified declined slightly by -2.5% in H1 2009 (Recruitment Classifieds declined dramatically by -32%) Display (0.2%) had a very good year during difficult trading conditions Technology takes the top spot for display at 19.1% Telecoms (13.3%) and Finance (13.2%) take second and third positions.

52. 9. Looking ahead

53. 2009 and beyond Tough market in Q3, but could pick up during the run up to Christmas. 2010 set to be challenging for the media market, but online should see modest single figure growth.

54. A point in history…

55. Today’s News “It’s a point in history. It marks a point when things aren’t going to go back to the way they were. The technology and media fragmentation is not going to stop” Financial Times 30.9.09

56. All of the 135 companies who have taken part, representing thousands of websites and to Our thanks to… Paul Rosen – Senior Associate and Eva Berg-Winters - Senior Manager Colin Macleod, Research Director

57. 10. Questions For more information info@iabuk.net 020 70506953