IAB / PwC UK Digital Adspend Study H1 2012

1. INTRODUCTION

Background

Census of major

UK media owners

Digital adspend includes online and mobile

Official Advertising Association figures since 1997 Information collected each half year Data shown by

Category (display, search & classified)

Format (banners, pre-roll / post-roll)

Advertiser sector (consumer goods, finance)

2. METHODOLOGY

Reported and estimated revenue

Reported Revenue

Estimated Revenue

Survey includes revenues submitted by 100 + participants plus additional online recruitment sites reported by WARC The figures are drawn up on the basis of site declaration and have not been not verified Google revenues included in total figures are based on published financials

Study includes estimation of Facebook, Spotify, Millennial, Apple and Mojiva revenues by the IAB / PwC Advisory Board

Except for above, reported figures have not been adjusted for organisations that did not participate in survey

> 96% of H1 2012 total adspend

< 4% of H1 2012 total adspend

IAB / PwC Advisory Board

Online
Mobile

First Partner

Adjustments and like-for-like growth reporting

Adjustments

Figures are adjusted for double-counting, based on information provided by survey participants

Google display revenues and Google mobile revenues (search and display) are also estimated by the PwC Advisory Board. This is not incremental spend as already included in Google total revenues what we estimate is how this revenue splits between different formats and platforms
Total advertising revenue is reported on a gross basis

Like for like growth reporting

This study reports like-for-like growth figures not only for total spend but also for categories (display, search, classifieds) Only companies which submitted in both H1 2011 and H1 2012 have been included in the like-for-like growth calculations A total of 21 companies figures are excluded from the like-for-like comparisons because they did not report in both H1 2011 and H1 2012

Digital Adspend
Digital includes online advertising, mobile and tablet advertising: Online
Traditional online advertising viewed on a desktop PC or laptop, accessed via the Internet connection Only media spend reported to ensure fair comparison to other media including Display advertising Search Classified Other (e.g. Lead Generation, Email, Audio) Advertising that has been specifically tailored and served on a mobile device, accessed via 3G or wifi Only media spend reported to ensure fair comparison to other media including Display advertising (including SMS/MMS)

Mobile

Search
Advertising that has been specifically tailored and served on a tablet device, accessed via 3G or wifi Only media spend reported to ensure fair comparison to other media including

Tablet

Display advertising

2012 research participants

4th Screen, Absolute Radio, Ad2-one, Adconion, Adfonic, AdPepper, Advantage Media, Affiliate Window, Affilinet, AN Media, AOL Advertising, Autotrader, Bauer, BMJ, BSkyB, CBS Interactive, Channel 4, Collective Media, Commission Junction, Condenast, Crimtan, Dennis Interactive, Dianomi, Disney, Educate Direct, Electronic Arts, ESPN, Everything Everywhere, Expedia, Faversham House Group, Financial Times, Fox Networks, Future Publishing, Game House, Gamespot, Global Radio Interactive, Google, Go Viral, Guardian, Gumtree, Haymarket, Hearst Digital, IGN, The Institution of Engineering and Technology, Incisive Media, Inmobi, Inskinmedia, Independent News, Intela, Interactive Prospect Targeting, IPC Media, iPoints, ITV, iVillage, Jemm Media, Jobsite, Johnston Press, Lead Point, Linking, Magnetise Group, Microsoft, Mobsta, MTV Digital Networks, News International, Net Communities, O2, Online Media Group, Perform Group, Quidco, R.O Eye, Racing Post, Real Media, Reed Business Information, Reuters, Rightmove, Rubber Republic, Savoo, Specific Media, Spil Games, Strikead, Ten Thousand Hours, The Student Room, Three, Telegraph Media Group, Tradedoubler, Treamor Media, Tribal Fusion, Trinity Mirror, Unanimis, Unruly Media, Valueclick, Vevo, Vibrant Media, Videogamer, Videojug, Virgin Media, w00t!, We7, Webgains, Yahoo!, Yell, Yoc, Yume, Zoopla and online recruitment sites through WARC

3. UK ADSPEND HEADLINE RESULTS

Source: IAB / PwC Digital Adspend

Source: IAB / PwC Digital Adspend

Digital shows continued growth through the recession

Digital Ad Spend ( Billions)
2.8
2.6 2.4 2.2 2.0 1.8 1.6

H1 2008

H2 2008

H1 2009

H2 2009

H1 2010

H2 2010

H1 2011

H2 2011

H1 2012

Source: IAB / PwC Digital Adspend

4. THE DIGITAL MEDIA MIX

Which formats go where?

* Includes mobile

The digital media mix

% share of revenues for the H1 2012
Category Search Display H1 2011 Share 58% 23%

Classified

17%

NB: Other includes Lead Generation, Search Affiliate, Solus E-mail, Mobile SMS/MMS Source: : IAB / PwC Digital Adspend H1 2012

The digital media mix

On a like-for-like basis all formats showed an increase
H1:

Source: IAB / PwC Digital Adspend

H1 2012 search figures up year on year

Source: IAB / PwC Digital Adspend

Largest ever half year for classifieds

Source: IAB / PwC Digital Adspend / WARC

The display digital media mix

% share of display revenues for H1 2012

Source: IAB / PwC Digital Adspend

Social media display up dramatically year on year

Social Media Advertising
180,000,000 160,000,000 140,000,000 120,000,000

100,000,000 80,000,000 60,000,000

40,000,000 20,000,000 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012

Source: IAB / PwC Digital Adspend

Video continues to grow

Source: IAB / PwC Digital Adspend NB: Video includes pre/mid/post-roll, social video and other video. Social Video and other video included for the first time in H1 2011

The digital media mix

Year on year comparison

Source: IAB / PwC Digital Adspend

Everything else - broken out H1 Year on year comparison

Pre-post roll Display affiliate Sponsorships Affiliate search listing Lead generation Social video Display ads on email Tenancies Solus email Dynamic in-game ad Display other Dedicated tablet Video other Interruptive formats
4 3 4 6 8 8 15 26 19 20 24 23 60 44 41 47 ( millions)

6
5 7

H1 2012 H1 2011

3 3 2.4 0.7 2.2 0.1

2 12

Source: IAB / PwC Digital Adspend

5. INDUSTRY CATEGORIES

Top 20 online display advertisers

Source: Nielsen Media Research Jan June 2011

H1 2012 Industry Sector display market shares

Source: IAB / PwC Digital Adspend IAB estimates for industry sector shares are based on categorised net revenue from media owners provided by PwC. Data excludes unclassified, multi-advertiser, recruitment and misc figures and covers 56% of online & mobile display revenues in H1 2012.

Consumer Goods and Finance Photo Finish

Consumer Goods

15.78%

Finance

15.75%

Source: IAB / PwC Digital Adspend IAB estimates for industry sector shares are based on categorised net revenue from media owners provided by PwC. Data excludes unclassified, multi-advertiser, recruitment and misc figures and covers 56% of online & mobile display revenues in H1

Consumer goods % share of display spend

Source: IAB / PwC Digital Adspend

H2 2012 CPM continues to grow

60%

Percentage of revenue generated by

51% 50%

40%

31% 30%

20%

18%

10%

Fixed Fees
CPM CPC/CPA/CPE/CPL

0%

H1 2010

H2 2010

H1 2011

H2 2011

H1 2012

Source: IAB / PwC Digital Adspend H1 2012 Estimate only based on 37% of measured revenue

6. MOBILE

47 submissions up from 28 in 2011

77.9m Total Mobile Market H1 2011

Source: IAB / PwC Digital ad spend survey H1 2012

Strong like for like growth H1 2011 to H1 2012

Source: IAB / PwC Digital ad spend survey H1 2012

H1 2012 total mobile ad spend breakdown

Source: IAB / PwC Digital ad spend survey H1 2012

Mobile search continues to boom

Source: IAB / PwC Digital ad spend survey H1 2012

Mobile display formats enjoy 91% growth

Total display 49.9m

Source: IAB / PwC Digital ad spend survey H1 2012

Mobile display revenue growth by quarter

12

Source: IAB / PwC Digital ad spend survey H1 2012

H1 2012 mobile rich media spend

H1 2011 18%
Source: IAB / PwC Digital ad spend survey H1 2012

*Based on a sample of 26 participants and 2 estimated companies, accounting together for c.95% of total standard display revenue

H1 2012 mobile display in app vs browser

Source: IAB / PwC Digital ad spend survey H1 2012

*Note: Based on sample of 20 participants and 2 estimated companies, accounting for c. 84% of total standard display revenue

H1 2012 industry sector mobile display market shares

Source: IAB / PwC Digital ad spend survey H1 2012

*Based on participants who submitted breakdown of the total Entertainment & the Media spend into above sub-categories, together accounting for c. 87% of the Entertainment & the Media category spend

Change in industry sector mobile display market shares 2011 to H1 2012

Top 5 Digital Advertisers H1 2012

Source: IAB / PwC Digital ad spend survey H1 2012

Consumer Goods Finance Entertainment & the media Retail Travel & transport

16% 16% 13% 11% 10%

H1 tablet display adspend

* This figure relates to tablet specific advertising only (ie not including internet advertising displayed on a tablet by default). It is based on revenues reported by companies participating in the online and mobile surveys who were able to report this figure separately, and can thus underestimate the overall size of the table dedicated advertising spend
Source: IAB / PwC Digital ad spend survey H1 2012

7. Looking ahead and summary

Forecasts for 2012 & 2013

Full year 2012 forecast GroupM Enders Analysis Average

Advertising Market
Online

+3.4%
+14.2%

n/a
+12.6%

+3.4%
+13.4%

Display
Search

+13%
+17%

+15.7%
+15.0% Full year 2013 forecast

+14.4%
+16.0% Enders Analysis n/a +10.9% +13.2% +12.5%

GroupM
+3.2% +10.9% +11% +12%

Average
+3.2% +10.9% +12.1% +12.3%

Advertising Market Online Display Search

FirstPartner Mobile Forecast 2012-2016

UK Mobile Advertising Spend Forecast 2012-2016
1,800.0 Total 1599.2m 1,600.0 Total 1434.0m Total 1189.0m 1,200.0 51.8 49.3 67.1 64.9 92.3 83.8

1,400.0

1,000.0
millions 800.0 Total 511.4m 16.2 15.0 348.4 200.0

Total 831.3m
33.2 31.5

866.7 785.0

Mobile Content (Video and In Game)

Messaging
Search

678.5

Display (Banners& Text Links)

600.0

503.4

400.0

409.5 263.2 131.8

516.9

556.4

0.0 2012 2013 2014 2015 2016

Source: FirstPartner Western European Mobile Ad Spend Forecast 2012-2016 Oct 2012

Summary for H1 2012

Digital Ad Spend grows to 2012 Up

2.591 billion in first half of

12.6% on a Like for Like basis

Display up 10.6% on a Like for Like basis - 591 million Classified up 7.2% on a Like for Like basis - 427 million Search up 15.9% on a Like for Like basis - 1,527 million

Video, Social and Mobile continue to power display

Consumer Goods and Finance are the top spending display sectors, Entertainment and the Media now third
Mobile spend soars by 132% to reach 181.5m
Source: IAB / PwC Digital Adspend H1 2012

Big thank you

and all contributing media owners

research@iabuk.net 0207 050 6969

Disclaimer

The IAB retained PricewaterhouseCoopers LLP (the UK firm) (PwC) to compile the online adspend figures collected by the IAB from its members in H1 2012 and to deliver to the IAB the topline figures collated from this review; PwC has not verified the information which it received from the IAB, and provides no opinion or other form of assurance with respect to such information. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, neither the Internet Advertising Bureau UK (the IAB) nor any of the IABs contributors/subcontractors accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.