This document summarizes research from the Internet Advertising Bureau (IAB) on how brands spend online and the impact of digital advertising. Some key findings include: - Brands are spending more online, with a 10% year-over-year increase in the first half of 2010. Display advertising and online video have seen strong growth. - Exposure to multiple online advertising formats, such as display and search, increases the likelihood users will visit brand websites and progress in the customer journey, such as obtaining a quote. - Display advertising alone can drive up to 6.7% of exposed users to brand websites within a month or two, much higher than typical clickthrough rates, demonstrating its latent effect on users.

1. Introduction & Brand Planning Online Tim Elkington Director of Research and Strategy

2. Upcoming IAB events and research Events & Training Mobile Planning Seminar – 18th January – 9am – FREE Research Breakfast – 19th January – 9am – FREE Research Launching a brand online – Starbucks VIA – Q1 2010 Students Online – Q1 2010 The benefits of behavioural advertising – Q1 2010 www.iabuk.net

3. Brand planning online

4. Brands spending more online

5. £1,968.6mmarket in H1 2010Anincreaseof£209m year-on-year10% increaseon a like-for-like basis Source: PwC / Internet Advertising Bureau, The Advertising Association / WARC

6. The digital media mix % share of revenues for the H1 2010 H1 2010 total £1,968.6 NB: Other includes Lead Generation and Solus E-mail Source: PwC / Internet Advertising Bureau / WARC

7. The display digital media mix % share of display revenues for H1 2010 H1 2010 display total £380.9m Source: PwC / Internet Advertising Bureau / WARC

8. Video shows market beating growth Pre/mid/post roll grown X 5 in 2 years Source: PwC / Internet Advertising Bureau

9. IAB estimates for industry sector shares are based on categorised net revenue from media owners provided by PwC. Data excludes unclassified, multi-advertiser and misc figures and covers 72% of online display revenues in H1 2010. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Share of spend by Consumer Goods advertisers has grown

10. Top 20 online display advertisers Source: Nielsen Media Research Jan – Jun 2010

11. Brand = 5% in 2008

12. Brand = 12% in 2010

13. Why? 1 - The rise of large brand friendly display formats

17. Why? 2 – Increased use of online video ads

18. Online video audience 35.1 million unique viewers 6.65 billion videos viewed 561.7 million hours of video viewed 16 hours per person per month Source: ComScore September 2010

19. Mindset influences recall State of mind: Expectant Attention: Higher Ad Recall: 44% Completion: 61% State of mind: Reflective Attention: Lower Ad Recall: 37% Completion: 42% Pre-Roll Video Clip Post-Roll BASE: 4459. All exposed to advertising

20. Significance of daypart and location State of mind: Distracted Behaviour: Exploratory State of mind: Attentive Behaviour: Restricted Evening Daytime Willing to explore Focused attention RESPONSE CAMPAIGN BRANDING CAMPAIGN

21. Why? 3 – It’s easier to plan & buy online media

23. 31,000 People at home

24. 4,000 People at work

25. UKOM demographic information Gender & age (2+) Region Household size & Income Social grade & Acorn groups Main shopper Life plans – new car, home improvements

26. November 2010 stats Source: UKOM November 2010 Apr 2010: Digital Universe 46.9m aged 2+ Active Universe 40.5m aged 2+ Average 2424 pages/user

27. Top 10 sites for reach – no surprises Source: UKOM November 2010

28. Example UKOM data AB Women aged 45+ Source: UKOM September 2010

29. Example UKOM data ABC1 Men earning over £50K that intend major home improvement in next 6 months Source: UKOM September 2010

30. Initiative Mobile Landscape Update Jon Mew Director of Mobile and Operations

31. In today’s presentation A few stats Advertising spend Recent research Advertising trends Outlook Summary

32. 1. A FEW STATS

33. Things are getting interesting

36. Pricing - has got simpler Unlimited data plans quadruple in last 2 years Source: Comscore Source: comScore GSMA MMM; comScore Media Metrix, December 2009

37. Mobile internet usage is still growing Source: Comscore 3 month rolling average

38. 23% of online time is spent on mobile Source: Comscore GSMA/MMM

39. 2. Advertising spend

40. 2009 total mobile ad spend breakdown Total market £37.6m +32.2% yr / yr Source: IAB / PwC mobile display ad spend survey 2009; search spend figure derived from modelling and industry estimates

41. Based on 55% of total display ad spend IAB estimates for industry sector shares are based on categorised net revenue from media owners provided by PwC. Data excludes unclassified, multi-advertiser and misc figures and covers 55% of mobile display revenues in 2009. Source: PricewaterhouseCoopers / Internet Advertising Bureau Industry sector display market shares

42. 3. RECENT RESEARCH

43. Experience in mobile advertising grows What experience do you have with mobile advertising? Difficult to sell in to our clients Less respondents have NO experience of mobile advertising in 2010

44. Mobile specialist responsibility in planning campaign grows Who is responsible for the planning of mobile campaigns within your agency? Specialist mobile team easily accessible to planners and our online specialists and known/used by them. 2 years on, the proportion of mobile specialists in 2010 responsible for planning mobile campaigns has practically doubled

45. Mobile specialist responsibility also increases within media buying Who is responsible for the buying of mobile campaigns within your agency? We are aligned with a mobile specialist

46. Mobile commerce research Consumers moving faster than retailers – 4.2m visitors to retail sites every month 41% of UK retail brands expect to have transactional mobile presence in next year 59% expect mobile revenues to increase next year – 94% see it as an opportunity 74% want more training – only 1 in 10 retailers think they are experts in the area Source: IAB / AIME / IMRG / Orange Mobile Commerce research

47. Mobile commerce consumer wave People do it – 51% of the UK engage in M-Commerce, spending up to £14.50 on an average transaction People like it – 42% say they use their mobile because it is the easiest way to research/buy M-Commerce will continue to grow- 49% of non M-Commerce users say they will purchase in the future 35% can’t on their current handset Smartphone users are 63% more likely to engage in M-Commerce only 9% mention security issues Source: IAB Consumer M-Commerce Study October 2010

49. When consumers are opted in, they are over 200% more likely to agree that messaging is the best medium to grab attention and receive information

50. Messaging achieves huge stand out

51. Almost 100%of the M&S base remembered the SMS & MMS, the MMS in particular cuts through

52. 74% of non opted-in consumers would do so given the right incentive

53. Brands must overcome 5 key barriers awareness, perceived cost, relevance, control and privacy

54. When brands are communicating via messaging, be relevant with valuable content, a relevant time of day and fair level of frequency Source: IAB / DMA Messaging study September 2010

55. 5. CURRENT TRENDS

56. Current trends Innovative Useful Personalised

57. Current trends Innovative Useful Personalised

58. Personalised services Hello, Jon

59. Natwest and O2 More zero wastage 26% click through

60. Gifi

61. Current trends Innovative Useful Personalised

62. Fanta Stealth Sound

63. Museum of London

64. Google Goggles

65. O2 - Shopcasts

66. Current trends Innovative Useful Personalised

67. USAA- Banking from your phone

68. Tron

69. Pinpoint

70. Nigella

71. 5. OUTLOOK

74. 6. SUMMARY

77. Contents Background and methodology What we measured – Brands and their activity Results – Web site visitors and behaviour Results – Affect on online activity Results – Latency of display advertising Summary

78. Background and methodology

79. Background The IAB wanted to investigate The role all forms of online media play in the customer conversion journey How online media work most efficiently when integrated The non-linear nature of the customer journey and the way that different formats interact with each other on the journey in the build up to conversion The real impact of display advertising on site visits and user behaviour

80. Methodology Nielsen NetView panel monitors activity of 40,000 representative UK internet users at home and work Software installed on panelists' PCs records their online activity – each URL visited and search made is recorded The online activity of three brands – BMI, British Airways, Virgin Atlantic and is tagged to allow identification of those that have been exposed to the activity – for example online display advertising The three brands are identified as Brands ‘A’, ‘B’ and ‘C’ in the research results – some details (e.g. sample size, visitor numbers) have been masked to preserve the anonymity of the brands The URLs within the sites of the three brands are categorised into one of three areas – ‘general visit’, ‘obtaining a quote’ or ‘making a purchase’ This enables us to answer two key questions Which users were exposed to which elements of the online campaigns? What activities users conducted during visits to the brands’ websites?

81. What we measured – brands and their activity

82. What we measured – time periods, activity and sample size Brand C Brand A Brand B Two months Period One month Two months Activity Display Sponsored Search Organic Search Referrals incl. Affiliates Email Display Sponsored Search Organic Search Referrals incl. Affiliates Email Display Sponsored Search Organic Search Referrals incl. Affiliates Sample Size 500 – 1,000 500 – 1,000 1,000+ Source: Nielsen NetView

83. What we measured – levels of activity online and offline Medium Medium Small Small Paid Search Click Thrus Display/ Email Offline Activity Large Large Medium Brand A Small Brand B Medium Brand C Source: Nielsen NetView & Nielsen NMR

84. Results – web site visitors and their behaviour

85. An average of one in four visitors at least obtained a quote Brand A Brand B Visit - 72% Brand C Average of Brands A, B & C Quote - 25% Purchase - 3% Source: Nielsen NetView – Average of three brands

86. Purchasers are more likely to have been exposed to activity Brand A Brand B Brand C Total Site Visitors Total Site Visitors Total Site Visitors 86% 69% 69% Exposed to activity Exposed to activity Exposed to activity Quote/Purchase Pages Visitors Quote/Purchase Pages Visitors Quote/Purchase Pages Visitors 94% 75% 78% Exposed to activity Exposed to activity Exposed to activity Source: Nielsen NetView

87. Example user journey - one Quote Visit Purchase Brand related search x 2 SEARCH TERMS 1 15 43 16 3 DAY Direct Sponsored Click Display Display Display EXPOSURE Visit Visit Sponsored Click Quote Source: Nielsen NetView

88. Example user journey - two Quote Visit Purchase Destination related search Brand related search SEARCH TERMS 1 22 29 DAY Display Exp: x4 Sponsored Click Organic Click EXPOSURE Visit Visit Direct Purchase Source: Nielsen NetView

89. Display more likely to drive first steps Three Most Likely First Touch Points Three Most Likely Last Touch Points WWWWWWWWWW 1st 1st Organic Click Organic Click 2nd 2nd Sponsored Click Sponsored Click Brand A 3rd 3rd Display Referral Brand B Brand C Source: Nielsen NetView – Average of three brands, excluding direct visits without any prior exposure to activity

90. Average customer conversion journey across all three brands 3.1 0.2 0.7 1.0 Brand A, B and C average + + + = Organic Click Sponsored Click Display Emails Quote/Purchase (over 7.8 days) Brand A Brand B Brand C Source: Nielsen NetView, period from first event to first Quote / Purchase NB: excludes journey’s that began with an organic click through

91. Results – the impact of online activity on users

92. Exposure to different campaign elements – visitors Source: Nielsen NetView

93. Working together Users are more likely to make a purchase if they use Display AND Paid for Search

94. Purchasers use search in conjunction with display Purchasers Visitors 29% also used Sponsored Search 22% also used Sponsored Search Brand A Brand A + 7% Display Only Display Only 35% also used Sponsored Search 16% also used Sponsored Search Brand B Brand B + 19% Display Only Display Only 35% also used Sponsored Search 26% also used Sponsored Search Brand C Brand C + 9% Display Only Display Only Purchasers Visitors Source: Nielsen NetView

95. Relationship between display exposures and number of visits Site Visits per Exposed Person Brand A Brand B Brand C Number of Site Visits Number of Display Exposures Source: Nielsen NetView

96. Results – the latency of online display advertising

97. Display advertising – how many people visit after exposure? Brand C Brand A Brand B 6.7% 6.6% 3.4% of those exposed to the display campaign went on to visit Brand A’s site post exposure of those exposed to the display campaign went on to visit Brand B’s site post exposure of those exposed to the display campaign went on to visit Brand C’s site post exposure Source: Nielsen NetView, Average Display CTR = 0.18%, Source AdTech 2009

98. Brand A 40% of the people who were exposed to the display campaign AND visited the site within a week of exposure did not see or do anything else online

99. Display advertising – how long does it take exposed people to visit? Brand A Have not been exposed/ to conducted any other activity 40% Brand C 46% Have not been exposed/ to conducted any other activity 5 Seconds Less than a week Same session Brand B 12% Have not been exposed/ to conducted any other activity 5 Seconds Less than a week Same session Source: Nielsen NetView

100. summary

101. Summary £ Online activity is working - Individuals who make purchases on websites are more likely to have been exposed to online advertising The customer conversion journey is not a simple linear path– users come into contact with multiple campaign elements on multiple occasions – up to 6 display ads, 1 organic click thru, 2 sponsored click thrus and 1 email over a period of up to 13 days to make their 1st purchase Different online elements work together – they play different roles at different stages of the journey – it’s not only the last step or click in the journey that matters Source: Nielsen NetView

102. Summary Click thru metrics may not be an adequate way of assessing the impact of display advertising– up to 6.7% of users exposed to display advertising will visit the advertisers website within one or two months – approximately 40 times the average click thru rate of 0.18% Display advertising performs better than is widely perceived – display advertising has a positive latent effect – up to 46% of people that visit a web site a week after being exposed to a display advertisement have not been exposed to any other online elements www