The document summarizes a 2007 UK online advertising spend study. Some key findings include: - UK online ad spend reached £2.8 billion in 2007, a 38% increase year-over-year. Online's share of total ad spending was 15.3%. - All major online ad formats experienced strong growth, led by search (up 39%) and display (up 31%). Embedded formats grew 45%. - Recruitment remained the largest industry category, though property saw the biggest share gain. Technology surpassed finance to become the third largest category. - The study predicts online ad spending will surpass newspapers and may overtake television to become the largest ad medium in the UK by 2008

1. 2007 UK online adspend study

2. 1. Introduction

5. 2. Methodology

7. Research participants Acxiom Ad2-one Adept Scientific Adlink Ad Revenue AdSales4U Advertising.com Adviva AOL Affiliate Window Ask Associated Northcliffe Digital Autotrader BBC Worldwide Bloomberg Blue Lithium BMJ Bolt Blue Bounty BSkyB Buy Association Buy.at (Perfiliate) Channel 4 Chinwag Chrysalis Radio Classic FM CNET Conde Nast Confetti Dennis Interactive DGM Dixons Double Fusion E-circle Economist EDR EMAP E-Type Euroclick Everyclick Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited Future Publishing GCap Radio Google Guardian Habbo Hachette Fillpacchi Handbag Haymarket Hello IDG Independent I.E.T (Institute of Engineering and Technology) IPC Media IPT i-Points ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Johnston Press Loot Lycos Manchester Online Media Brokers Memedia Miva Monetise Moneyextra Monster MSN My Space National Magazines Net Communities Netrecruit News International Orange Oridian Overture Pigsback Prime Location Property Finder Real Media Reed Business Information Reuters Right Move Scotland Online Sift Simply Media TV SRH Skupe Teamtalk Telegraph Tesco Tiscali TMN Media Tradedoubler UK Net Guides UKTV Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Virgin Radio WME Workthing Yahoo ! Yell … Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

8. 3. Market background and trends

9. At the height of the “boom” online was worth £166m! £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

11. Meanwhile the audience is still growing Source: Gfk NOP World, To July 2007 Have you used the Internet in the last 12 months? 3.6m June 96 32.5m July 07

12. Over half of home broadband services are now above 2 MB Base: All home broadband users who knew their speed of connection (Nov 06 - 396; Nov 07 - 388) Source: BMRB Internet Monitor Nov 2006; Nov 2007 50% have used wireless broadband at home in the last month (February 2007) Q . What is the connection speed of your home broadband?

15. It’s never been easier to get online £4.50 Toshiba Tecra 8100 £250 inc VAT $100 Wind Up 50p per hour Free at libraries Bars, Hotels, Coffee shops, parks…

16. 4. UK Online Adspend Study Results for the full year of 2007 Prepared by PricewaterhouseCoopers for the IAB

17. Have I got news for you…?

18. £2,812.6m market in 2007 An increase of £797m year-on-year Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

19. 38% increase New contributions in 2007 represented £64.9m 2007 vs. 2006 on a like for like basis Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

20. Online advertising reaches £750m in Q4 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC ‘ 01 ‘ 03 ‘ 02 ‘ 04 ‘ 05 ‘ 06 ‘ 07 Up £2bn in 3 years!

21. 5. Online in context… Breaking market trends in the UK ad industry

23. Online drives the whole market Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories. Total advertising market growth = 4.3% Year on year growth for 2007

24. Market Share Online’s share growth accelerates to 16% Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

25. Online slices through the media market £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARC N.B. WARC Recruitment data included from 2003 Radio Outdoor Internet Press - Display Television Press - Classified Direct Mail

26. Online overtakes Press Classifieds (Just!) £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Full year 2007 Directories are estimated

29. 6. The digital media mix The developing mix of ad products

30. 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 £2,812.6m % share of revenues for the full year 2007

31. The digital media mix £ millions +31% +54% +39% 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. All online formats have experienced strong growth

32. 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 £2,812.6m £467.1m £23.1m £15.1m £23.4m £44.1m £19.2m £16.2m £286.8m £296.5m £1.9m £1,619.1m % share of revenues for the full year 2007

33. The digital media mix £ millions 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. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Year on year comparison

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

36. Growth in further classifieds £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

37. Classifieds led by key players

38. Display: formats dominated by banners & rich media £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

39. Embedded formats up over 100% in the last two years £ millions 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. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC +45% +8% +15% +22% +159% -40%

40. 40% of display spend through networks IASH sales houses represent thousands of sites Source: Internet Advertising Bureau

42. 7. Industry categories

43. Recruitment continues to lead the market 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 41% of online revenues in H2 2007 .

45. Sector Market Shares 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 41% of online revenues in H2 2007 . Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC Retail gains share !

47. Are Finance and travel maturing? H2 2007 H2 2004 * Finance and Travel spend has increased over time, but share of categories has declined

49. 8. Summary

50. Have I got news for you…

53. 9. Looking ahead

54. Online poised to draw level with total Press display £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

55. Could online overtake TV next year? £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

56. …And be the single biggest medium!? YOU BET! !

58. Our thanks to… All of the 118 companies taking part, representing thousands of websites and to Nicki Lynas, Senior Manager and Paul Pilkington, Director Colin Macleod, Research Director

59. 10. Questions For more information [email_address] 020 7886 8282