Iab 22 May 2009

Overview of the UK online Kieron Matthews – Marketing Director

What I’d like to cover

Overview of the market

Thoughts on how the market might develop

Some trends

Q&A

1. Overview of the market

Market has changed dramatically

2008

Optimism

Confidence

Integrated

Collaborative

Investment

Growth

Innovation

2009

Nervousness

Cut backs

Re-evaluation

Accountability

Media vs media

Caution

Regression

Market down

Markets in crisis

Disappeared from the High Street

Shoppers find convenience and value online

Nostalgia

The term nostalgia describes a longing for the past, often in idealized form.[1] The word is made up of two Greek roots (νόστος nostos "returning home", and άλγος algos "pain"), to refer to "the pain a sick person feels because he wishes to return to his native home, and fears never to see it again".

“ In a time of anxiety, people are seeking out brands they’re comfortable with and they can trust,” said Ric Hendee, vice president for marketing services at Cotton Inc. in New York.

Looking back

Even my kids

Retrench to traditional products +41% +20% +20% +11% +18%

In uncertain times ……

… .when budgets are being slashed

… ..Marketing has to be accountable

This is the first recession

since the internet has become a

mass medium……..

Where were we this time last year?..

2007 was a landmark year for online with ad spend reaching £2.8bn

The medium grew by 38% from £2.0bn in 2006

Online overtook press classifieds and regional newspapers

Our revised 2008 forecast was £3.2 - £3.3bn …

Number of internet users in the UK Source: NRS UKOM: Jul-Dec 2008; Jul-Dec 2007 *Internet World Stats 66% UK Pop 71% UK Pop 37% Online Pop 44% Online Pop Internet users going online more than once a day Number of people online Ireland - 3.4 million internet users* NI - 1 million internet users*

2 thirds of broadband services are now above 2 MB Base: All who know speed of broadband connection at home. Q: Do you know the connection speed of your home broadband package? (Nov 06; Nov 07; Nov 08) Source: BMRB Internet Monitor Nov 2006; Nov 2007; Nov 2008 48% of home broadband users have used wireless broadband at home in the last month (Nov 2008)

Weekdays Saturdays Sundays Source: BMRB Internet Monitor, November 2008 Base: All Internet users aged 15+ Online second only to TV % of media time for all internet users

2008 adspend figure £3,349.7m market in 2008 An increase of £537.1m year-on-year Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

Total mobile advertising revenue 2008

£28.6m

Source: IAB / PwC mobile display ad spend survey 2008; search spend figure derived from modelling and industry estimates

Mobile shows similar trend to online Online ad spend £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Online audience (millions) £51m £153.1m £165.7m 1998 1999 2000 2001 9.4m* £28.6m *Source: Comscore 12 month average 2008 £19.4m Mobile audience and spend 2008

17.1 % increase New contributions in 2008 represented £88.3m 2008 vs. 2007 on a like for like basis Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

2008 market share 19.2% (15.5% in 2007)

% share of revenues for January to December 2008

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC 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 advertising market £17.5bn

The market you operate in Press 47% TV 37% Outdoor 8% Radio 6% Cinema 1% Digital 1% Northern Ireland Ad spend Source: NI IPA 2008 - excludes Search

Online only medium showing growth in 2008 Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories. Total advertising market growth = -3.5% Year on year growth for 2008

Market Share Online’s share growth accelerates to 20% Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

The digital media mix The developing mix of ad products

The digital media mix Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC 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. Full year total £3,349.7m % share of revenues for the full year 2008

Strong growth of Search continues £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

Industry categories

H1 2008: Technology leads the way Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC 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 Based on 87% of total display ad spend

H2 2008: Entertainment utilises online Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC 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 96% of online display revenues in H2 2008. NB – an immaterial amount of these figures are classifieds Based on 96% of total display ad spend

2. Thoughts on how the market might develop

Forecasts for Total 2009 advertising

Carat/Aegis Down 7%

Group M Down 11%

Enders Down 13%

Average forecast Down -10%

2009 online - Feb 09 forecasting event

Group M 2%

Enders 1%

Outlook for online in 2009 In the toughest year for advertising, online is forecast to hold steady and gain further share points while traditional media declines. In 2009, Flat is good!

3. Some trends 5 in fact

Be personal

Nike Bootcamp – click on image

Behavioural targeting

youronlinechoices.co.uk

Nike Photo ID – click image

Be integrated

Integration is not matching luggage

Topical messages

Fosters – click on image

What to do?

Be social