This document summarizes the success of online advertising in the UK. It notes that in the first half of 2009, online advertising revenues overtook TV revenues for the first time, increasing 4.6% year-over-year to £1.752 billion. Online advertising reached a record £920 million in Q1 2009 and accounted for 23.5% of total ad spending in H1 2009, up from 18.7% in H1 2008. The UK has seen continued growth in both online audiences and broadband penetration. Key factors contributing to the success of online advertising in the UK include its accountability through measurable metrics like search, its popularity among "early adopter" categories like cars and tech, the rise of video and rich

1. UK Online
Advertising The
Success Story
Guy Phillipson – CEO

2. In this presentation
• Online overtakes TV
• Audience and Broadband
• 5 reasons for success
• What next in the UK?

3. 1. Online revenues
overtake TV

4. It’s
Big
News

6. £1,752.1m
market in H1 2009
An increase of
£82m year-on-year
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

7. H1 2009 vs. H1 2008
4.6% increase
on a like for like basis
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

8. Online advertising reaches record £920m in Q1 2009
‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08
1000 Outdoor
920.0
846.1
900 Radio 847.0
822.7 834.0 832.0
800 754.2
724.1
£ millions
680.6
700 653.8
583.7
600
514.9
461.2
500 456.0
385.5
400 350.5 TV
327.0
303.5
300
254.6 Press
174.6224.1
Display
200 171.8
152.1 Direct Mail
119.7
105.2
88.0
100 47.442.836.638.936.645.251.163.8
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

9. H1 2009 market share 23.5%
(18.7% in H1 2008)
% share of revenues for January to June 2009
3.3%
Internet
1.0%
11.0% 4.8%
Television
4.4%
Press Display
11.5% Direct Mail
Press Classified
Total advertising
market 23.5% Outdoor
£7.466bn Directories
18.5%
Radio
Cinema
21.9%
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

10. Online only medium showing growth in H1 2009
Year on year growth for H1 2009
Total advertising market
growth = -16.6% 4.6%
-7.8%
-15.6% -14.5%
-16.1%
-22.0% -20.4%
-25.0%
-37.3%
Press Directories Outdoor Press TV Radio Direct Mail Cinema Internet
Classified Display
Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories.

11. The largest 6 countries make up 81% of
the total
Total by Country 2008 and 2007
€ 2,889
UK € 3,441
€ 2,501
Germany € 2,975
€ 1,537
France € 1,821
€ 729
Netherlands € 794
€ 667
Italy € 799
€ 497
Spain € 628 2007
Sweden € 442 2008
Denmark € 415
€ 282
Norway € 345
Belgium € 286 Source: IAB Europe/PwC ©

12. UK is 10 points ahead of the US
Online has established itself as a main medium with a share
of 20% and more in several countries
Spend on online as a percentage of all
media spend by country
Denmark 24.4%
UK 23.1%
Norway 21.1%
Sweden 19.5%
Netherlands 18.0% USA
France 16.1% at
Germany 15.2%
12.7%
13%
Poland
Finland 11.5%
Hungary 10.8%
Belgium 10.5%
Spain 8.9%
Italy 8.7% Source: IAB Europe/PwC, WARC
Austria 6.8%
Greece 2.1%
Note: This is based on WARC main media spend data, excluding internet with IAB ad spend added back in

13. Audience and
Broadband
infrastructure

14. Number of internet users* in the UK
36.4m 17.8m
34.7m
15.3m
73% 49%
44% 49%
71% UK Pop 44% online
online Online
UK Pop Online pop
pop Pop
Pop
Jul- Dec 2008 Jun - Jan 2009
Jul- Dec 2008 Jun - Jan 2009
Internet users going online
Number of people online
more than once a day
Source: NRS UKOM: Jul-Dec 2008; Jan – June 2009; *adults using the internet at least once in the last 12 months

15. Continuous growth in online audiences and
broadband penetration
35 34.1 100%
31.7 93% Users
90% BB
Online audience (millions)
30 29.1 80%
% Broadband access
27.7
70%
24.6
at home
25 60%
22.9
50%
20.8
20 40%
18.1
30%
15 20%
12%
10%
10 0%
Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source: BMRB Internet Monitor

16. Majority of broadband services are now above 2 MB
2009 7% 92%
< 2MB
2008 6% 24% 70%
2 MB
>2 MB
2007 19% 34% 47%
0% 20% 40% 60% 80% 100%
56% of home broadband users have used wireless broadband
at home in the last month (May 2009)
Re-Based: All Internet users aged 15+ who
Source: BMRB Internet Monitor May 2007; May 2008; May 2009
know their broadband connection speed

17. Online second only to TV
% of media time for all internet users
Weekdays
5
6
35
25
Saturdays Sundays
4
29
7 4 7
TV 18
19 47
45 Internet
Radio
Newspapers
Magazines 24
25
Source: BMRB Internet Monitor, May 2009 Base: All Internet users aged 15+

18. The broadband leaderboard
France 92%
Spain 90%
Germany 88%
United Kingdom 88%
Italy 82%
Switzerland 69%
Source: Nielsen Online, September 2009

19. 5 Reasons for
success

20. 1. Accountability
– Online’s Key
Strength

21. The digital media mix
% share of revenues for H1 2009
Display
Classifieds
18.1% Paid for search
Solus Email
19.2% Half year total
62.6%
£1,752.1m
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

22. Search is the gateway to brands
• Engagement
• Purchase
• Registration
• Retention
• Awareness
• PR

23. Search

24. More methods of accessing search
Mobile search
• Locations
• Price comparisons
• News
• Sport
• Weather
• Video
“iPhone is already driving unheard-of levels of mobile internet usage, and the
introduction of flat rate data tariffs is expected to increase this further.” Vivek
Dec, O2

25. 2. “Early Adopter”
Categories

26. Cars, Tech, Mobile, Finance, Travel…

27. Display Sector Market Shares
Technology 19.1%
Telecomms 13.3%
Finance 13.2%
Entertainment & the Media 11.8%
Travel & Transport 9.5% Based on 86% of total
display ad spend
Automotive 9.4%
revenues
Consumer Goods 8.1%
Retail 6.1%
*
Government, social, poiltical
4.0%
organisations
H1 2009
Business and Industrial 3.5%
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 85.5% of online revenues in H1 2009.
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

28. And 5 years ago….
Finance 19.4%
Technology 13.5%
Travel & Transport 11.8%
Automotive 10.8%
Entertainment & Media 8.1%
Consumer goods 4.8%
Telecoms 4.0%
Retail 2.8%
Business & Industrial 1.6%
Gardening & Agriculture 1.5%
Govt & other organisations 1.1%
Consumer-to-consumer Classifieds 0.5%
Leisure 0.4%
IAB estimates for actual ad spend by industry are based on samples of categorised revenue from key IAB members provided by PwC.
The ranking now shows Telecoms as a separate category (previously included in Business & Industrial).
Data excludes unclassified figures.
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

29. 3. Video and Rich
Media

30. Video pre-roll spend up 195%
Up 99% Up 195%
Mobile and Video are young shooting stars

31. Audiences Watching Video

32. Online Video Works!
Online Ad Effectiveness: Display vs. Video Units

33. 4. TV and Online –
Better Together

34. TV Advertising & Online Advertising
Are More Effective When Used Together

35. Impressions of Uniqueness Are Greatly Improved
% Agree: ‘This brand offers something unique from other brands’
Seen TV only or Online only Seen Both Seen Neither TV nor Online
= Significantly higher
= Significantly different to 79
group who’ve seen neither TV
nor Online 66
57
52
38
30
23
17 15
Finance category average Car category average FMCG category average
Uplift among
those exposed to +21% +27% +13% points
both TV + Online points points
:

36. TV & Online Ads Together Raise
Purchase Consideration
% Agree: ‘I am likely to buy/use this brand in the future’
Seen TV only or Online only Seen Both Seen Neither TV nor Online
= Significantly different to group
who’ve seen neither TV nor Online
77
= Significantly higher 69
56
51
45
25 25
19 18
Finance category average Car category average FMCG category average
Uplift among +20% +26% +8%
those exposed to points points points
both TV + Online
:
Base : 16-34 ads main shoppers (1,004)

37. 5. Agency
Infra-structure

38. There used to be a digital divide in media
agencies
1999 1999
The Rest!
Digital Specialist Traditional Shops

39. Now they’re all doing it!
2009

40. Creative comes from specialists
Traditional Shop Digital Agency
Art Director Creative Director
+ +
Copywriter Technologist

41. What next in the
UK?

42. The UK Industry Planning System Launches in January 2010

43. Thank you