2009 Internet Advertising Revenue Report

Rethinking the Market Opportunity

April 7, 2010

Terence Kawaja

GCA Savvian Advisors

$8.1 $7.1 $6.0$7.3

$9.6$12.5

$16.9

$21.2$23.4 $22.7

$0

$5

$10

$15

$20

$25

$30

$35

$40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$ B

illio

ns

Online Ad Spend ($Bn)

CAGR = 12%

Notes:Source: IAB / PricewaterhouseCoopers internet advertising revenue reports.

Interactive Advertising is on a Long Term Growth Pa th…

0% 10% 20% 30% 40% 50%

Online

Magazines

Radio

Newspapers

TV

% ad spending by media % of time households spend by media

Media Consumption vs. Ad Spend, 2009

Notes:Source: Wall Street research, 2010.(1) As a percentage of ad spending on the media channels indicated above only: TV, Newspaper, Radio, Magazines and Online.

…But Has Much More Upside Potential

The Crowded Display Ad Tech Landscape

Targeted

Video / Rich Media

Horizontal

Yield Optimization

Ad Networks

Vertical

Performance

Mobile

PUBLISHERS

PUBLISHERS

Data Exchanges / Aggregators

Creative Optimization

Data Optimization

AUDIENCE

ADVERTISERS

ADVERTISERS

Ad Exchanges

DSPsMedia Buying Platforms

Agencies

Publisher Tools

Data Suppliers

Ad Ops / Infrastructure

Ad Servers Ad Servers

Verification / Attribution

Sharing Data / Social Tools

Analytics

Trading Desk

Deals are Back and Consolidation is Coming

RecentDigital MediaAcquisitions:

$10 $9 $10

$4 $3$4

$7$8

50 4954

3034

45

20

30

$0

$4

$8

$12

$16

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009

Tra

nsac

tion

Vol

ume

($B

n)

0

10

20

30

40

50

60

Num

ber

of T

rans

actio

ns

Global Tech Transactions $10MM - $1.0Bn (1)

Notes:(1) Source: FactSet as of 2/28/10; Includes global announced acquisitions in the specified range of transaction sizes; excludes minority investments, JVs etc.; includes all transactionswith target in Electronic Technology, Technology Services, and Communications sectors as defined by FactSet.

Transaction Volume ($Bn) Number of Transactions

Convergence in the Purchase Funnel

Purchase Funnel Metric Example Companies

CPM

CPC

CPL

CPA

Transaction

Customer

Search

Lead

Impression

Sale

Data

Going After the Elephant in the Room: TV

• Online video is currently a fraction of total TV and online spending

• The holy grail is achieved when digital video is part of the television budget

• Much of the media optimization techniques honed in online can be applied to TV audiences

• Shift in agency dynamic and marketer mindset is key

Notes:Source: VSS Communications, August 2009; eMarketer, December 2009.

$0.5$6.7

$73.2

Television

Display & In-Page Video

In-Stream Video

US Video & Display Advertising, 2009 ($MM)

Achieving the Holy Grail: Solving for Attribution

� Several links in the attribution chain are missing:– Online to online (the last click phenomenon)– Online to offline– Offline to online

� Technology is improving data collection and analysi s which will allow for the discovery of “digital foot prints”

� Once attribution is achieved, there is no reason al l media cannot be optimized

� Already, several interesting technologies have been deployed:

– TV set top box measurement– Mobile location-based services

TELEVISION

DIGITAL

RETAIL

Rethinking the Market Opportunity

� Forecasts show the interactive channel growing to $ 50+ billion in 5 years

– Represents an linear, evolutionary approach– The challenge is to think revolution, not evolution– How does interactive get to a $100 billion marketpl ace?– Think new definition for “interactive” to go beyond online

• Digitally-addressable video (aka TV)• Offline commerce enablement• Mobile

� Several reasons for a revolution– Innovation (eg. media optimization, real time pheno menon)– Simplification (less point solutions)– Consolidation (entry of larger players)– Attribution (eg. TV, offline retail)

Putting $100 Billion in Perspective

� Healthcare reform for one year

� War in Iraq and Afghanistan for a year

� Cost of recent bank failures to the FDIC

� A controlling stake in Google (at market)

GCA Savvian’s Digital Media Advisory Business

� Leading investment banking firm with over 200 professionals worldwide

� Services include advice on mergers and acquisitions , private capital finance and restructurings

� Advised on over $60 billion in transactions since 2 006

� Advisor to media companies new and old

TOKYO • SAN FRANCISCO • CHICAGO • NEW YORK • LONDON

Terence KawajaManaging Director+1 212.999.7082tkawaja@gcasavvian.com

John LambrosManaging Director+1 212.999.7083 jlambros@gcasavvian.com

Steven FletcherManaging Director+1 415.318.3661sfletcher@gcasavvian.com