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Ad Revenue 2009 Future Of Online Advertising

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Presented by Jack Flanagan, EVP, comScore, at PubMatic's premium publisher conference, Ad Revenue 2009. The conference was October 8th, NYC. This presentation is about the future of publishers using …

Presented by Jack Flanagan, EVP, comScore, at PubMatic's premium publisher conference, Ad Revenue 2009. The conference was October 8th, NYC. This presentation is about the future of publishers using intermediaries (such as ad networks) to help sell their ad space.

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  • 1. The Future of Online Advertising & The Second Channel Ad Revenue 2009 Conference October 8, 2009 New York City
  • 2. Industry Snapshot © comScore, Inc. Proprietary and Confidential. 2
  • 3. The Opportunity   33% of total time spent is online   Yet only 14% of all ad dollars are online © comScore, Inc. Proprietary and Confidential. 3 3
  • 4. Online Advertising is Leaving Branding Dollars on the Table 2008 U.S. Measured Media Spend: $186 Billion Only 5% of total branding dollars are going to Online! Branding $118 B Online as 2008 U.S. Online Media Percent of Total Spend: $26 Billion 5% $6 B 30% $20 B Response Direct $68 B Source: Lehman Brothers, ThinkEquity Partners © comScore, Inc. Proprietary and Confidential. 4
  • 5. Click Rates on Ads are Minimal but Forrester Study Says 35% of Marketers Still Use Click for Evaluating Branding Campaigns Rich Media Click-Through Rates by Industry Source: DoubleClick DART for Advertisers: 2008 Industry-wide click thru rate only 0.1%! Media/ Retail Tech CPG B2B Wellness Auto Telecom Travel Financial Entertainment Services © comScore, Inc. Proprietary and Confidential. 5
  • 6. Half as Many Clickers in 2009 vs. 2007   Only 16% of internet users clicked on at least one display ad in March 2009   50% decline year over year July 2007 March 2009 Source: comScore, Inc. custom analysis, Total US Online Population, persons, July 2007 and March 2009 data periods © comScore, Inc. Proprietary and Confidential. 6
  • 7. Heavy Clickers Account for an Even Larger Proportion of Total Clicks in 2009   Heavy and Moderate clickers are only 8% of the internet population but account for 85% of all clicks July 2007 March 2009 Heavy Moderate Light Non Source: comScore, Inc. custom analysis, Total US Online Population, persons, July 2007 and March 2009 data periods © comScore, Inc. Proprietary and Confidential. 7
  • 8. Where the Clicks Come From Percent of Clicks by Percent of Clicks by Age Household Income Segment Segment March 2009 March 2009 Index Index Upper $100K or more 116 Income 45 + 96 Clickers Represent $60K – $99.9K 102 Only 4 % 35 - 44 123 of Internet Users under $60K 90 18 - 34 89 Source: comScore, Inc. custom analysis, Clicks distributions by household income segment (persons), March 2009 data period. Indices are vs. Total US Internet Population. © comScore, Inc. Proprietary and Confidential. 8
  • 9. View Thru Impact of Display Advertising © comScore, Inc. Proprietary and Confidential. 9
  • 10. OPA & comScore: “The Silent Click” Exposure to Display Ads Correlates with Significant Consumer Activity Base: 86.2MM Exposed to at least one of top 20 advertisers •  About one in five consumers searched on the advertised brand •  Separately, about one-third visited the advertiser’s site in February UVs Exposed to Advertising Search Advertised Brands 18% Visit Advertisers' Sites 29% 0% 10% 20% 30% © comScore, Inc. Proprietary and Confidential. 10
  • 11. These Advertiser Site Visitors are More Engaged than the Sites’ Usual Visitors •  Consumers exposed to the display advertising spent over 50% more time than the average visitors to these sites the next month •  This rise in time spent is matched by a similar increase in page views Advertiser Site Engagement All UVs to Advertiser Sites UVs Exposed to Advertising 62 41 34 22 Minutes/UV Pages/UV Sources: All UVs comScore MediaMetrix, 02/09 Exposed UVs comScore Marketing Solutions, 02/09 © comScore, Inc. Proprietary and Confidential. 11
  • 12. Greater Spending for Advertiser Site Visitors Exposed to Biggest Campaigns   These figures represent the average e-commerce spending in February for visitors to the 53 brands’ sites – comparing visitors exposed to these brands’ January online ad campaigns with those not exposed E-commerce $/Advertiser Site Visitor Feb ‘09 Unexposed to Top $227 Campaigns +7% Exposed to Top Campaigns $242 Bases: Unexposed 99.2MM; 86.2MM Exposed $200 $225 $250 Source: comScore Marketing Solutions, 02/09 © comScore, Inc. Proprietary and Confidential. 12
  • 13. More E-Commerce Spending by Those Exposed to Related Online Advertising Travel $/Advertiser Visitor Feb ‘09 Consumer Electronics $/Advertiser Visitor Feb ‘09 Unexposed $569 +9% Unexposed $171 +22% Exposed $623 Exposed $209 $500 $550 $600 $650 $100 $150 $200 $250 CPG $/Advertiser Visitor Feb ‘09 Unexposed $74 +14% Exposed $84 $65 $70 © comScore, Inc. Proprietary and Confidential. Source: comScore Marketing Solutions, 02/09 $75 13 $80 $85
  • 14. Ad Networks Friend or Foe? © comScore, Inc. Proprietary and Confidential. 14
  • 15. The rise of the Ad Network   An estimated 80% of a publisher’s inventory goes unsold   Today, more than 300 ad networks –  Seven years ago, only fifteen   But why? –  Analogy to stock market –  As stock market grew, many flocked to become brokers to sell stocks –  Similar trend with online advertising –  As the market grew and as number of buyers & sellers increased, so did the number of ad networks to serve them   The result … –  A fragmented market of ad networks to try and help publishers to sell up to 80% of their remnant inventory © comScore, Inc. Proprietary and Confidential. 15 15
  • 16. The Press Coverage on Ad Nets is Active and Varied ''We must not trade our advertising inventory like pork bellies.'‘ - Wenda Harris Millard, former CEO at Martha Stewart Living Omnimedia “What (publishers) should not do is allow some sort of invisible hand (or should I say hands) to price their inventory against a backdrop of objectives that can and often does change at a moment’s notice. – Jim Spanfeller, CEO Forbes.com © comScore, Inc. Proprietary and Confidential. 16 16
  • 17. The popularity of Ad Networks has skyrocketed over the past 5 years # of Ad Networks Reported by comScore 70 60 50 40 30 20 10 0 2004 2005 2006 2007 2008 © comScore, Inc. Proprietary and Confidential. 17 17
  • 18. Today’s leading Ad Networks © comScore, Inc. Proprietary and Confidential. 18 18
  • 19. Why are so many joining the ranks?   Estimated 80% of publisher inventory goes unsold   Ability to translate core expertise with content and sales   The rise of the vertical ad networks –  Attempting to gain higher CPM rates for like, quality content –  Capitalize on core expertise   Ease of monetizing inventory   Advertisers benefit from scale, cost efficiencies   It can be very profitable –  Very strong margins © comScore, Inc. Proprietary and Confidential. 19 19
  • 20. Summary   Huge advertising opportunities exist for online   We have to get away from the Click –  Dependency on clickers simply holding us back   Focus on View Thru and Sales Impact –  Display advertising has been proven to work –  Branded search, site visitation, online/offline sales lift   Educate advertisers on what’s important   Choose your partners wisely © comScore, Inc. Proprietary and Confidential. 20
  • 21. Thank you © comScore, Inc. Proprietary and Confidential. 21

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