UK Online Adspend Study Results for January to June 2006

1. UK Online Adspend StudyResults for January to June 2006 Prepared by PricewaterhouseCoopers for the IAB

2. Background • Census of all major UK online media owners • Official Advertising Association figures since 1997 • Information collected each half year • Analysis available by • Format • Industry category

3. Agenda • Study methodology • Market background and trends • UK online adspend – headline results • Online in context • The digital media mix • Industry categories • In summary • Questions & answers

4. Methodology

5. A brief history… • The IAB has been working with PwC since 1997 to survey the value of the online advertising market. • PwC have run projects in Europe and North America to assess the size of the interactive media markets. • These figures have become the industry standard for measuring advertising spend and in the UK are now used by the Advertising Association. • 90companies have participated in the survey representing thousands of websites. • Reported figures are not adjusted to account for other organisations that have not participated. • Total advertising revenue is reported on a gross basis. • The figures are drawn up on the basis of site declaration. They cover thousands of UK websites, but by no means all.

6. Research participants Acxiom Ad2-one Adept Scientific Adlink AdRevenue Advertising.com Adviva AOL AskJeevesAssociated Northcliffe DigitalAutotrader BBC BlueLithium BMJ Bolt Blue BSkyB Channel 4 Chrysalis Radio Classic FM CNet Condenast Confetti Dennis Interactive Dixons DGM eCircle Economist EDR EMAP eType Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited GCap Media Google Guardian Habbo Handbag Haymarket Independent IPC Media iPoints IPT ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Loot Lycos Manchester Online Media Brokers Memedia Miva Moneyextra Monster MSN National Magazines Net Communities Netrecruit News International Orange Real Media Reed Business Information Reuters Rightmove Scotland Online Sift SRH Telegraph Tesco Tiscali TMN Tradedoubler UK Net Guides Unanimis Upmystreet Utarget Valueclick Virgin Radio WME Workthing Yahoo! Yell …Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

7. Market background and trends

8. Nearly 30m people now onlineUsed in last 12 months Millions of people 63% Source: NOP World, 2005

9. 10m households with Broadband in Britain

10. Broadband access at home Source: BMRB Internet Monitor, Q4 2005 Base: All who have used the Internet at home on a computer in the last month

11. Average 23 hours a week online

12. Online sales hit 30bn

13. Online helps High Street

14. Tesco’s £1bn online sales

15. P&G increases digital spend?

16. UK Online Adspend StudyResults for the first half of 2006 Prepared by PricewaterhouseCoopers for the IAB

17. £917.2mmarket in the first half of 2006(up from £630.5m a year ago)

18. First Half 2006 vs. first half 2005 40.3% increase On a like for like basis Including new contributors £286.7m was added to the market value, giving a 45.5% increase

19. Online advertising almost £½ billion a quarter ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

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

21. Online Breaks 10% barrier January to June 2006 Internet 10.5% Total advertisingmarket £8.7bn Source: PricewaterhouseCoopers / Internet Advertising Bureau / The Advertising Association / Radio Advertising Bureau / WARC

22. Online drives the whole marketYear on year growth for the first half 2006 Total advertising market growth = 1.4% Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC

23. Online’s share growth accelerates Market Share Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

24. Direct Mail Press - Classified Online’s ascendancy continues Television Press - Display £ millions Internet Outdoor Radio N.B. WARC Recruitment data included from 2003 Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARC

25. Online in contextFirst half 2006 £m Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau

26. Online advertising market for the year to June 2006…

27. £1653.1mJuly 2005-June 2006

28. Summary – First half 2006 • Online advertising driving growth of the entire media market • Internet advertising approaches £1bn in the first half of 2006 (£917.2m) • Online achieved a share of 10.5%, up 3.2 points from the first half of 2005 (7.3%) • The market grew 40.3% year on year from a high base • Online now closing the gap on national press

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

30. The digital media mix% share of revenues for January to June 2006 Half year total £917.2m 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

31. The digital media mixAll format groups have experienced actual growth +58% +33% +23% £ 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

32. The digital media mix% share of revenues for January to June 2006 £138.9m £9.6m £6.8m £50.7m £5.9m £4.0m £7.9m £102.8m £59.3m £531.3m 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

33. The digital media mixYear on year comparison £ 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

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

35. Search is the gateway to brands • People use search as a stepping stone to find the advertiser’s brand site • 88% of those on broadband use a search engine every week • More than 8 out of 10 users rely on a search engine after partially remembering a website address • Search is now bigger than outdoor media Source: Ipsos Insight conducted for Isobar and Yahoo! Search, May 2006 Yahoo! Search Marketing, ISOBAR, UDA research 2005

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

37. Display: breadth of formats £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

38. Formats summaryJanuary to June 2006 • With revenues of £531.3m, search maintained its dominant position over the six month period • Year on year, display was up 33.2% to £138.9m while search increased by 57.7% and classifieds grew by 23.4% to £162.2m • The growth of recruitment classifieds is slowing, up 9% to £102.8m. Other classifieds continue to enjoy strong growth, up 60.4% to £59.3m for the half year

39. Industry categories

40. Recruitment sector leads the market in the first half of 2006 Recruitment & Finance continue to dominate the online advertising market 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 48% of online revenues in H1 2006. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

41. 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 48% of online revenues in H1 2006. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

42. Industry sectors summaryJanuary to June 2006 • The top 3 categories accounted for almost half of online ad spend (49.4%) and continued to be led by the Recruitment sector • Growth in the Consumer goods and Retail categories is a positive sign, but there is still a lot of potential

43. Spotlight on Automotive • Automotive’s market share shows steady growth • Online is effectively used as both a branding medium and a direct response driver • Investment is made across all 3 format categories – search, display and classified Market Share

44. Renault Clio

45. Overall Summary

46. Overall summary • Online ad spend leaps by 40.3% on a like for like basis in a relatively flat media market. • £1,653.2m spent across the twelve months ending June 2006. • Market share breaks the double digit barrier as online reaches 10.5% of advertising revenues in H1 2006.

47. Overall summary • Online sustaining healthy growth in face of a depressed advertising market • Strong growth continues even from a high base • Search, display and classifieds have all experienced impressive increases

48. The next milestone £2 billion • A real possibility by the end of the year • This would make online bigger than national press

49. Online closes on national press £m

50. £1,979m Online is half the size of TV £917m