Interactive Advertising Outlook 2009
A Report to the JP Morgan Chase Virtual
Advertising Summit
Cyberspace, New York
January 26, 2009

IAB’s Mission Remains…
GROWTH
The Interactive Advertising
Bureau is dedicated to the
growth of the interactive
advertising marketplace, of
interactive’s share of total
marketing spend, and of
our members’ share of
total marketing spend.
2

Our ~400 Members Represent 86% of
Measured U.S. Interactive Advertising
Revenues
Membership Sample

2009 Themes
• Interactive continues to grow despite strong economic
headwinds
• Medium girded by its breadth of options, from above-the-
line to below-the-line
• Consumers increasingly embracing digital media in all
forms
• Share shift by marketers from offline to online to tap into
the variety, reach, targetability, and effectiveness of
interactive media
• Emerging platforms provide new opportunities for
marketers to engage and learn from their customers

2008 First Nine-Month Revenues Totaled
Over $17 Billion
First Nine‐Month Revenues — 2007 vs. 2008
$ millions
Source: IAB Internet Advertising Revenue Report, 2008 Second-Quarter
and First Six-Month Results October 2008, and Q3 November 2008 combined

Historical Quarterly Revenue Trends
Since the third quarter of 2002, revenues have increased 21 of the past 24 consecutive quarters.
Quarterly Revenue growth remains strong on a cumulative year-over-year percentage and dollar
basis.
Quarterly $ Revenue Growth Comparisons — 2000‐2008 YTD
$ millions
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: IAB Internet Advertising Revenue Report, 2008 Second-Quarter
and First Six-Month Results, October 2008

Seasonal Trends Relatively Strong
Through First 9 months
$21.2B
28%
$16.9B
28%
$12.5B
$ millions
29%
$9.6B
$8.1B
28%
$7.1B $7.3B
72%
26% $6.0B
23% 30%
72%
$4.6B
26%
71%
38% 72%
74% 77%
70%
74%
62%
Source: IAB Internet Advertising Revenue Report, 2008 Second-Quarter
and First Six-Month Results, October 2008

YOY % Search & Display Spend Grow
Lead Gen
7%
Classifieds
Email
14%
2%
Search
44%
(41% in ’07)
Display*
33%
(32% in ’07)
2008 First Six-Month Revenues: $11.5 Billion
Source: IAB Internet Advertising Revenue Report, 2008 Second-Quarter and First Six-Month Results, October 2007, 2008
* Display-related advertising includes Display Banner Ads, Rich Media, Digital Video and Sponsorship

Interactive is the fastest-growing display
medium
Percentage Change in Measured Ad Spending:
Jan‐Sept 2008 vs. Jan‐Sept. 2007.
Media Sector Percentage Change
Television Media 2.1%
Magazine Media -3.9%
Newspaper Media -10.0%
Internet (Display Ads Only) 7.0%
Radio Media -8.8%
Outdoor -0.5%
FSIs 0.9%
Total -1.7%
Source: “TNS Media Intelligence Reports U.S. Advertising Expenditures Declined 1.7 Percent in First Nine Months of 2008 ,” TNS Media Intelligence
Press Release, Dec. 11, 2008. Note TNS does not track search advertising revenue. URL: http://www.tns‐mi.com/news/12112008.htm

US Online Social Network Ad Spending
Projected to Grow
$ millions
Source: eMarketer, December 2008

Key Growth Drivers

Drivers of Interactive Ad Growth Include
Rising Broadband Penetration…
US Broadband Households
(in millions)
Source: JupiterResearch Internet Access Model, 3/07 (US Only)

Consumers Time Spent Online Keeps
Increasing
18.0
15.3
16.0
14
13.5
Average Weekly Hours Online
14.0 12.5
11.1
12.0
9.8
9.4
10.0
8.0
6.0
4.0
2.0
0.0
2001 2002 2003 2004 2005 2006 2007
Source: USC Annenberg School Center for the Digital Future, The 2008 Digital Future Report, and previous Digital Future Report releases.

Search Is Now Habitual
100%
91% 91%
90% 89% 89%
90%
85%
Percentage of US Online Adults
88%
84%
80%
Using Search Engines
70%
60%
50% 49%
42%
41% 41%
40%
38%
31%
30% 30%
29%
20%
10%
0%
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
May-02
May-03
May-04
May-05
May-06
May-07
May-08
Used Search Engine Ever Used Search Engine Yesterday
Source: “Almost Half of All Internet Users Now Use Search Engines on a Typical Day,” Pew Internet & American Life Project Data Memo,
August 6, 2008 Link: http://www.pewinternet.org/PPF/r/258/report_display.asp

During 2008, US Search Volumes Grew
by 15-26% Each Month
30% US Core Search Growth Rates, Year‐On‐Year
Percentage Growth Rate of US Core Searches,
26%
25% 23% 22%
20%
19% 19% 19%
18% 19%
20% 17%
Year-on-Year
15%
15%
10%
5%
0%
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08
Source: comScore qSearch, quoted in “ComScore: YouTube Now 25 Percent of All Google Searches,” TechCrunch, Dec. 18, 2008,
http://www.techcrunch.com/2008/12/18/comscore‐youtube‐now‐25‐percent‐of‐all‐google‐searches/

Digital Video Is Now a Mainstream
Medium
US Monthly Video Streams Served
9.50
10.00
9.00
8.00
7.00 6.20
(Billions)
6.00
5.00
4.00
3.00
2.00
1.00
0.00
December-07 November-08
Key November 2008 Data (Nielsen):
Streams Served: 9.5 billion
Unique Viewers: 124.3 million
Streams/Viewer: 76.8 streams
Time per Viewer: 177.9 minutes
Source: “Nielsen: 9.5B Video Streams in November,” NewTeeVee.com, Dec. 30, 2008; “Nielsen Online's VideoCensus: Networks Failing To Reach
Men Online,” MediaPost Onlline Media Daily, Feb. 15, 2008.

Smartphones Are Unleashing Mobile’s
Potential
As of 2Q 2008, in the US:
• More than 26 million mobile subscribers use a
smartphone device
• Smartphones represent 16% of recent mobile device
acquisitions
• 57% of smartphones are acquired by personal users
• 30% of smartphone users are likely to upgrade their
device in the coming year
Source: “Nielsen Proivdes iPhone 3G and Smartphone Statistics,” Nielsen Mobile Press Release, October 16, 2008. URL:
http://www.nielsenmobile.com/html/press%20releases/iPhone3GandSmartphoneStats.html

Social Media Sites Already Exceed
Television’s Reach
Worldwide Audience for Top 10 Social Media Sites, November 2008
250 221.5
Monthly Global Unique Visitors
•Total Social Media Audience: 691M, or 69.4% reach
200.2 •Facebook’s audience grew 116% from Nov 07‐Nov 08
200
(in Millions)
150 126.2
113.7
100 86.8
69.2 63.9 58.1
46.4 45.6
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Source: comScore as reported in “Top Social Media Sites of 2008 (Facebook Still Rising),” TechCrunch, Dec. 31, 2008.

Consumers want the Internet to be
ad-supported
• For both mobile and PC video, 70% of consumers prefer
ad-supported models over consumer-paid models.
(IBM study across 6 major international markets)
• 67% of US consumers ages 25-34 and 75% of
consumers aged 13-24 would “be willing to be exposed
to online ads in exchange for free content.” 66% of all
Internet users would click on more online ads if they
were better targeted to them. (Deloitte)
Source: “IBM Study Shows Consumers Will Accept New Forms of Advertising If Companies Follow Their Rules,” IBM Press Release, Nov. 17, 2008, URL: http://www‐
03.ibm.com/press/us/en/pressrelease/26077.wss; Deloitte Study quoted in “Survey: More online ads, free content,” Forbes, December 26, 2007, link:
http://techland.blogs.fortune.cnn.com/2007/12/26/survey‐more‐online‐ads‐free‐content/

Challenges
• Measurement standardization/simplification
• Cross-media measurement
• Antiquated media-mix modeling
• Overuse/misapplication of DR standards and
methodologies
• Creative shabbiness