h1 2008 uk online adspend study. 1. introduction

H1 2008 UK online adspend study

1. Introduction

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

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

2. Methodology

• 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

• 130 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…

Research participants

Accelerator 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 Drive PM Dixons Double Fusion E-circle Economist EDR EMAP E-Type Euroclick Everyclick Exchange

and Mart Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Flirtomatic Friends Reunited Future Publishing GCap Radio Global Radio Interactive Google Guardian Habbo 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 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 Tacoda Teamtalk Telegraph Tesco Tiscali TMN Media Tradedoubler Trinity Mirror UK Net Guides UKTV Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Vibrant Virgin Media Virgin

Radio Wallpaper* WME Workthing Yahoo! Yell…Plus further recruitment sites, courtesy of WARC

Representing thousands of UK websites

3. Market background

and trends

Doom and Gloom!

Media scare stories..

Number of Internet Users(Used in last month)

31,604

10,859

30,143

3,457

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

4thQtr97

2ndQtr98

4thQtr98

2ndQtr99

4thQtr99

2ndQtr00

4thQtr00

2ndQtr01

4thQtr01

2ndQtr02

4thQtr02

2ndQtr03

4thQtr03

2ndQtr04

4thQtr04

2ndQtr05

4thQtr05

2ndQtr06

4thQtr06

2ndQtr07

4thQtr07

2ndQtr08

Nu

mb

er

of

us

ers

('0

00

)

All Work Home Academic

Source: BMRB’s Internet Monitor, May 2008

Large majority of broadband services are now above 2 MB

19% 34%

24% 70%6%

47%

0% 20% 40% 60% 80% 100%

May '07

May '08

< 2MB2 MB>2 MB

Base: All respondents with a broadband connection at home. Q: Do you know the connection speed of your home broadband package? (May 07 - 388; May 08 - 392)

Source: BMRB Internet Monitor May 2007; May 2008

46% have used wireless broadband at home in the last month (May 2008)

Where were we this time last year?..

• Online adspend £1.3bn in H1 2007

• The medium grew by 41.3% from £917.2m in H1 2006

• Online overtook Direct Mail

• Continuous quarter on quarter growth

4. UK Online Adspend Study

Results for the H1 2008Prepared by

PricewaterhouseCoopers for the IAB

£1,682.5mmarket in H1 2008

An increase of £348.2m year-on-year

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

21% increase

New contributions in H1 2008 represented £97.2m

H1 2008 vs. H1 2007

on a like for like basis


Online advertising reaches £853m in Q1 08

47.442.836.638.936.645.251.163.888.0105.2119.7

152.1171.8

224.1

303.5327.0

350.5

461.2

514.9

583.7

653.8680.6

724.1

829.1

754.2

853.4

385.5456.0

174.6254.6

0

100

200

300

400

500

600

700

800

900

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

£ m

illio

ns


‘01 ‘03‘02 ‘04 ‘05 ‘06 ‘07 ‘08

A seasonal “dip” in Q2 appearing?

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

21.7%

19.3%18.7%

14.6%

11.2% 5.1%5.1%

3.3%

0.9%Television

Press - Display

Internet

Press - Classifieds

Direct Mail

Directories

Outdoor

Radio

Cinema

H1 2008 market share 18.7% (14.7% in H1 2007)

% share of revenues for January to June 2008


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 advertisingmarket

£8.98bn

Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories.

Online continues to drive market

Total advertising market growth = -0.7%

Year on year growth for H1 2008

Mar

ket

Sha

re

Online’s share growth accelerates to 19%

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

2.5%3.3%

4.2%5.5%

7.3%8.4%

10.4%

12.4%

14.7%15.9%

18.7%

H12003

H22003

H12004

H22004

H12005

H22005

H12006

H22006

H12007

H22007

H12008

0

200

400

600

800

1000

1200

Q398

Q498

Q199

Q299

Q399

Q499

Q100

Q200

Q300

Q400

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Online closes in on the top two£

mill

ions

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

Online almost reaching Press Display total

81.8

294.1383.0 418.8 459.5 461.0

946.5 1,005.7

1,297.8

1,737.7

1,951.8

1,308.4

1,682.5£m

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau.

H1 2008

Directories are estimated

Summary – H1 2008

• Online advertising growth supports the entire media market

• Internet advertising reaches £1,682.5m in H1 2008

• Online achieved a share of 18.7%, up 4 points from H1 2007 (14.7%)

• The market grew on a like for like basis by 21% year-on-year, maintaining growth in a difficult climate

6. The digital media mixThe developing mix of ad products

19.8%

21.5%58.3%

Display

Solus Email

Classifieds

Paid for search



H1 2008 total

£1,682.5m

% share of revenues for the H1 2008

The digital media mix

215.9162.2

531.3

287.0 277.7

762.3

333.8 361.6

981.0

Display Classifieds Paid for search

H1 2006 H1 2007 H1 2008

£ m

illio

ns

+16.3% +30.2%

+28.7%




All online formats continue to experience growth

16.5%

11.6%

9.6%

58.3%

Banners / Embedded

Sponsorships

Interruptive formats

Display ads on email

Tenancies

Pre-post roll

Display affiliate

Other display

Solus Email

Recruiment classifieds

Further classifieds

B2B Classified

Paid-for search listings




Full year total

£1,682.5m

£277.6m

£10.8m

£5.1m

£7.6m

£7.2m

£3.9m

£14.6m

£7.1m

£6.1m

£194.8m

£161.4m

£5.4m

£981.0m

% share of revenues for the H1 2008

The digital media mix£

mill

ions


1.1

9.8

7.4

35.6

142.0

203.6

762.3

3.9

5.4

5.1

6.1

7.2

7.6

7.1

14.6

166.8

194.8

277.6

981.0

16.6

12.2

9.3

135.6

10.8

Pre-post roll

B2B Classified

Interruptive formats

Solus Email

Tenancies

Display ads on email

Sponsorships

Other display

Display affiliate

Further classifieds

Recruitment classifieds

Banners / Embedded

Paid-for search listings

H1 2008

H1 2007


Year on year comparison

*

* First time pre-post roll and display affiliates included in survey. Potentially under-reported

*

Strong growth of Search continues

181.2248.5

337.0

431.4

531.3

634.3

762.3

981.0

856.8

H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

Advertisers like accountability

“I think you’ll see some people moving their money away from marketing streams that are less accountable, and moving into digital areas – search is a great example of that… in terms of capping the dollars you spend but making sure that every dollar is absolutely accountable.”

Emma Jenkins – Head of Interactive Marketing,

Procter & Gamble

53.8 67.4 94.4 87.6 102.8 112.3142.0 144.8

194.8

14.326.0

37.0 43.359.3

104.5

135.6162.8

166.8

0

50

100

150

200

250

300

350

400

H12004

H22004

H12005

H22005

H12006

H22006

H12007

H22007

H12008

Recruiment classifieds Other classifieds

£m


Growth in all classifieds

Classifieds led by key players

Display: formats dominated by banners & rich media

73.2 91.4 105.4 119.0 138.9182.7 203.6

263.5

292.2

96.7

136.2162.1

173.8

215.9237.9

287.1305.0

0

50

100

150

200

250

300

350

400

H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008

Banners / Embedded Sponsorships Interruptive formats Display ads on email

Tenancies Pre-post roll Other display

£m


333.8

* First time pre-post roll included in survey. Potentially under-reported

*

Embedded formats growth greater than total growth£

mill

ions



+36.3%

-47.6%-11.7% -23.3%-54.0%

-79.9%

41% of gross display spend through networks

Formats summary – H1 2008

• With revenues of £981m in H1 2008, search maintained its dominant position

• YoY, display was up 16.3% to £333.8m while search increased by 28.7% and classifieds were up by 30.2% to £361.6m

• Core “embedded” display rose 36.3% YOY

• Classifieds: recruitment increased by 37.1% to £194.8m and other classifieds grew by 23.0% to £166.8m


7. Industry categories


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 37% of online revenues in H1 2008.

Recruitment continues to lead the market

0.1%0.3%

1.9%

2.5%

2.5%

2.8%

2.9%

4.2%

4.8%

5.2%

6.2%

9.4%

11.1%

13.0%

32.9%

Gardening & Agriculture

Leisure

Government & other organisations

Business & Industrial

Consumer-to-consumer Classifieds

Retail

Consumer Goods

Travel & Transport

Telecoms

Entertainment & Media

Finance

Technology

Property

Automotive

Recruitment

Based on 37% of

total ad spend –

largely display

And classifieds

Sector Market Shares

0.4%

1.0%

1.5%

3.2%

0.0%

3.1%

6.7%

0.1%

0.3%

1.9%

2.5%

2.5%

2.8%

2.9%

4.2%

4.8%

5.2%

6.2%

9.4%

11.1%

13.0%

32.9%

5.3%

6.0%

11.1%

5.7%

24.7%

12.5%

11.7%

7.2%

Gardening & Agriculture

Leisure

Government & other organisations

Business & Industrial

Consumer-to-consumer Classifieds

Retail

Consumer Goods

Travel & Transport

Telecoms

Entertainment & Media

Finance

Technology

Property

Automotive

Recruitment

H1 2008

H1 2007

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 37% of online revenues in H1 2008.


Based on 37% of

total ad spend –

largely display and classifieds

• Recruitment continues to take the highest share

and is also the share point winner (+8.2 points)

• Automotive retains second place for the third wave running

• Property overtakes Finance and Technology for the first time to take the third spot

• Other categories have lost share at the expense of core classifieds categories

Industry sectors summary – H1 2008


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 87% of online display revenues in H1 2008. NB – an immaterial amount of these figures are classifieds

Isolating display gives a different picture

0.7%

0.9%

1.9%

3.6%

4.1%

6.2%

6.3%

8.3%

8.4%

9.7%

9.9%

10.7%

11.9%

17.3%

Leisure Equipment

Classified - Consumer-to-consumer

Property

Business and Industrial

Government, social, poiltical organisations

Consumer Goods

Retail

Automotive

Travel & Transport

Telecomms

Recruitment

Entertainment & the Media

Finance

Technology

Based on 87% of total display ad spend

8. Summary

Figures make an impact once again!

Summary

• Online ad spend continues growing 21% year-on-year (on a like-for-like basis) to reach £1,682.5m in H1 2008

• Online achieved a share of 18.7%, up 4 points from H1 2007 (14.7%)

• Online closing in on Press Display

Summary

• Search (+28.7%) and display (+16.3%) both

experienced impressive growth in revenue in the current market, with embedded formats (+36.3%) performing way ahead of the total growth.

• Classified (+30.2%) performed particularly well

• Record breaking quarter in Q1 08

9. Looking ahead

Online draws level with total Press display

0

200

400

600

800

1000

1200

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Internet Press Display

£m


Could online overtake TV next year?

0

200

400

600

800

1000

1200

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Internet Television

£m


£

Our current forecast range for 2008 is…

£3.2 £3.3bn£2.81billion in 2007

All of the 130 companies taking part, representing thousands of websites

and to

Our thanks to…

Paul Rosen, Executive and

Paul Pilkington, Director

Colin Macleod, Research Director

10. Questions

For more information

[email protected]

020 7050 6953

h1 2008 uk online adspend study. 1. introduction

Documents

uk online adspend

online advertising marketwe

media scare stories

broadband connection

home broadband package

wireless broadband

advertising spend130

bmrbs internet monitor