As the largest search engine marketing firm, Efficient Frontier has access to tremendous amounts of search engine data. Join them for an overview of the most recent quarterly search engine performance report. Hear how the recession has affected consumer search trends and what we are likely to see in the future.

1. What’s around the corner?
Trends in SEM
Merinda Peppard
European Marketing Manager
Dr. Siddharth Shah
Director of Business Analytics

2. Global Leader in SEM
$750M+ annual spend managed
Largest Search Agency in the UK (spend)
180 employees worldwide
275 clients globally / 51 in Europe
40 million active keywords managed
Sunnyvale | NYC | London | Paris | Hamburg | India
Japan & Australia : Licensing Partners
Full Service or Technology Only
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3. Today’s Agenda
• What’s new?
• How does online compare to other advertising?
• Taking a look at Search
• Efficient Frontier UK Search Report
• Efficient Frontier U.S. Search Report
• What does it mean for the UK?
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4. What’s New?
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5. Positive news
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6. Interesting Trends
25-34 year olds
£10 more per visit
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7. 1 billion global visitors online
41 % Asia-Pacific Region
18% China
16.2% U.S.
6% Japan
3.7% Germany
3.6% UK
*Comscore, January 23, 2009
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

8. Which vertical spends the most?
23.8% Recruitment
13.5% Automotive
11.2% Technology
9.7% Property
7.6% Finance
* IAB, PwC 2008 Online Adspend Report
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

9. How does online compare to other
advertising?
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10. 2008 internet up 17% to £3.3 billion
3.2%
Television
5.4% 1.0%
11.7% 5.1% Press Display
Internet
13.1%
Press Classified
Direct Mail
Total advertising
21.9% Outdoor
market
£17.5bn Directories
Radio
19.2% Cinema
19.5%
* IAB, PwC 2008 Online Adspend Report
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

11. Taking a look at Search
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12. 2008 paid search up 22.7% to £1.98
billion
0.3% Display
Classifieds
19.0% Paid for search
Solus Email
59.3% 21.4%
* IAB, PwC 2008 Online Adspend Report
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

13. Econsultancy search survey
• Only 45 % said they were tracking paid search effectively
• Only 30% use Microsoft Live Search
• Only 44% use Yahoo
5% fewer advertisers than last year are using Yahoo for
paid search
7% fewer agencies than last year are using Yahoo for
their clients paid search

14. Efficient Frontier
UK Search Report
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15. Quarterly Reports
• SE spend reports issued each quarter
• Consistent basket of UK clients
• Travel, retail, finance and other verticals
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16. Google Maintains Dominance
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17. Search Marketing Costs Drop
• SEM is now much cheaper
CPCs decline by 20-31% YoY
• ROI is stable
showing a 2% YoY increase
• Spend is down for second consecutive quarter
• Yahoo! is less efficient at driving ROI for advertisers
may drive spend allocation to the other engines in
coming quarters
• Spending on Google Content is up 71% YoY
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18. What does the future hold?
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19. Continued trend...
17.1%
0.1%
-4.4% -3.8%
-7.0% -6.7% -6.3% -6.0%
-17.3%
Press Directories Press Radio Direct Mail TV Outdoor Cinema Internet
Classified Display
* IAB, PwC 2008 Online Adspend Report

20. What does it mean
....for Search?
“Search advertising remains among the most measurable media
available to advertisers, which we suspect with continue to allow
search to outperform other media.
Secondly, search advertising is what potential consumers tend to see
in the final moments before purchase, making search marketing less
discretionary than other forms of advertising. As a result of such
characteristics, we believe search to be relatively well positioned
heading into a recovery and we expect U.S. search advertising to
increase 16% in 2010 and at a 13% CAGR for the next five years.”
Credit Suisse, US advertising Outlook, Sept 09

21. Efficient Frontier
U.S. Search Report
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22. Insights from the US
• Small shifts in spend trends QoQ
• Bing has increased its Market Share both by spend and clicks
• Increased ROI focus specially from small advertisers
• Travel is hurting
• Automotive has seen slight recent improvement
• Finance has made a recovery
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23. US Market: Spend and ROI
140% 129%
120% 111%
117%
100% 99%
Indexed Q2 2008=100%
100%
Monthly
80%
105% 102%
100%
60% 100% 96%
96% 82%
95%
100% 81%
40% 79%
90%
Spend
20% 85% 100% 99%
94% Clicks
80%
0%
75%
Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
70%
Spend ROI June July August

24. Spend Trends by Advertiser Size
160%
140%
Small Medium Large
Indexed Q2 2008=100%
135%
120% 120% 120% 121%
108% 114%
100% 100% 97% 100% 96% 100% 96%
92% 88%
80% 79%
60%
100% 100% 100% 98% 105% 100% 99%
93%
40% 82% 80% 83% 80% 78%
72%
59%
20%
0%
Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
Spend ROI
Small Adv. Med Adv. Large Adv. Small ROI Med ROI Large ROI
• Small advertisers have drastically reduced spend to maintain ROI
• Medium advertisers have kept their spend the same as they look to
consolidate their position in the online marketplace
• The large advertisers have reduced spend along the lines of current
macro-economic conditions while gaining a higher ROI

25. US Market share by Spend
120.0%
100.0% 4.4% 4.5% 4.2% 3.8% 4.5%
19.6% 21.2% 21.5% 20.6% 20.5%
80.0%
60.0%
40.0% 76.0% 75.6% 75.0%
74.3% 74.3%
20.0%
0.0%
Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
Bing 4.4% 4.5% 4.2% 3.8% 4.5%
Yahoo Search 19.6% 21.2% 21.5% 20.6% 20.5%
Google Search 76.0% 74.3% 74.3% 75.6% 75.0%
Microsoft gained both the click and the spend share in Q2 ‘09

26. US Market share by Clicks
120%
100%
23.82% 26.98% 25.47% 24.76% 24.29%
80% 4.38% 3.67% 4.10%
4.03% 3.62%
60%
40%
71.80% 68.99% 70.91% 71.57% 71.61%
20%
0%
Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
Yahoo Search 23.82% 26.98% 25.47% 24.76% 24.29%
Bing 4.38% 4.03% 3.62% 3.67% 4.10%
Google Search 71.80% 68.99% 70.91% 71.57% 71.61%
Microsoft gained both the click and the spend share in Q2 ‘09

27. ROI Trends
160% 143%
135%
140% 124%
Indexed Q2 2008=100%
120% 124%
120% 102% 103%
100% 98% 100% 100% 98%
91% 92%
100% 88%
80%
60%
40%
20%
0%
Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009
Google Search Bing Yahoo Search
• Google and Bing at operating at a higher ROI point than they were last
year. Yahoo is 8% lower
• If this trend continues, we expect advertisers to shift their advertising
dollars away from Yahoo and towards Bing and Google

28. Bing: MarketShare Trends
Spend Share
124% 130%
140%
104% 108%
120% 100%
100%
80%
60% Bing
40%
20%
Launched
0%
Apr-09 May-09 Jun-09 Jul-09 Aug-09
Click Share
120%
118% 117%
115%
110%
105% 105%
100% 100% 101%
95%
90%
Apr-09 May-09 Jun-09 Jul-09 Aug-09
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29. Bing: Sector Trends
Bing: Spend Share
160%
140%
132% 133% 135% 131%
140%
119% 120%
Indexed May 2009=100%
120% 110% 112%
100% 100% 100%
100%
80%
60%
40%
20%
0%
May June July August May June July August May June July August
Retail Travel Finance
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30. US CPC Trends
104% 109%
120% 100% 98% 95%
94% 94%
82% 83% 85% 85%
79% 74% 79% 79%
80%
40%
110% 114%
107%
0% 100% 102%
96% 100% 94% 97% 94%
90% 87% 89% 91%
85%
80%
Indexed Jun 2008=100%
40%
107% 107% 105%
0% 100% 96% 91% 90% 87% 92% 88% 85% 84% 84%
76% 78%
80%
40%
0% 100% 100%
78%
67%
80% 62% 63%
55% 58% 57% 59% 63%
52% 52% 50% 52%
40%
0%
Apr-08 Jun-08 Jul-08 Sep-08 Oct-08 Dec-08 Feb-09 Mar-09 May-09 Jul-09 Aug-09
Finance Travel Automotive Retail
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31. Correlation with the Stock Market
Finance Vertical Spend and Stock Market
120%
102%
93%
100% 88% 95% 95%
90% 101%
85%
82%
76% 88%
Indexed Sep 08=100%
80% 93%
86% 79% 79%
74% 75%
60%
56%
40%
20%
0%
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Finance SEM Spend S and P 500
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32. How is September Looking ?
September MoM Spend Change
-13% Travel Weak Travel Sector
and Seasonality
Retail 6% Slight bump due to
“Back to school”
-13% Automotive End of Cash for
Clunkers
Finance 0%
Flat
-15% -10% -5% 0% 5% 10%
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33. What does it mean for the UK?
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34. Takeaways
• Bing represents an under levered opportunity for advertisers
• Advertisers will take a harder look at ROI and will increasingly
optimize to harder metrics
• Travel will continue to hurt while finance will be closely tied
to the state of the financial markets
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35. Efficient Frontier Q3 SE Report
- published mid October
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Merinda Peppard
European Marketing Manager
Merinda.peppard@efrontier.com
Blog: blog.efrontier.com
Twitter: efrontier
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