welcome richard eyre, chairman, iab guy phillipson, chief executive, iab laurence bird, head of...

WelcomeRichard Eyre, Chairman, IABGuy Phillipson, Chief Executive, IABLaurence Bird, Head of Planning & Research, IABNicki Lynas, Manager, Entertainment and Media Practice, PwC

UK Online Adspend Study Results for January to June 2007

Prepared by PricewaterhouseCoopers for the IAB

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

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

Methodology

A brief history…• The IAB has been working with PwC since 1997 to survey the value of

the online advertising market.• We 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.

• 111 companies 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.

Research participants

Acxiom Ad2-one Adept Scientific Adlink Ad Revenue Advertising.com Adviva AOL Affiliate Window AskJeeves Associated New Media Autotrader BBC Bloomberg Blue Lithium BMJ Bolt Blue Bounty BSkyB Buy.at (Perfiliate) Channel 4 Chinwag Chrysalis Radio Classic FM CNet Condenast Confetti Dennis Interactive DGM Dixons Double

Fusion E-circle Economist EDR EMAP E-Type Euroclick Everyclick Future Publishing Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five

Friends Reunited GCap Radio Google Guardian Habbo Hachette Fillpacchi Handbag Haymarket Hello Independent 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 Overture Pigsback Property Finder Real Media Reed Business Information Reuters Right Move Scotland Online Sift SRH Skupe Teamtalk Telegraph Tesco Tiscali TMN Media Tradedoubler UK Net

Guides UKTV Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Virgin Radio Wanadoo WME Workthing Yahoo! Yell…Plus further recruitment sites, courtesy of WARC

Representing thousands of UK websites

Market background

A quick reminder of the 2006 figures…

£2,015.8bn

market in 2006

An increase of £649m year-on-year

41.2% increaseOn a like for like basis

New contributions in 2006 represented £86.4m

2006 vs. 2005

21.8%

20.9%

15.2%

13.4%

5.5%3.2% 0.9%

6.7%

TVPress DisplayPress ClassifiedDMInternetDirectoriesOutdoorRadioCinema

Internet 12.4%

Second half market share hits 12.4%A new world record

Total advertisingmarket – H2 06

£8.8bn

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Directories are estimated.

Largest share anywhere

in the world

Online adspending overtakes national press

What industry forecasts said…2007 Growth

Sources:

• Advertising Association / WARC Forecasts, 2006

• Group M forecasts, 2006

• Interdeco Ad Barometer, 2007

• PricewaterhouseCoopers Global Entertainment and Media Outlook - 2006-2010

• UBS Investment Research: UK Advertising, Oct 2006

• Zenith Expenditure Forecasts, Sep 2006

OFCOM ReportWomen take over…

Empty nesters go surfing…

One quarter of all Britons online are over 50 and 30% of total time spent on the internet is by the over 50’s.

Young women take over…

Women 25-34 now spend more time online than men in the same

age group.

The rise of social networks

Over 150m videos served daily on YouTube

Broadband fuels rise of video advertising

4.66.2

7.28.7

10.712.7

14.2

17.519.1

21.1 22.023.6 24.0 24.6 25.1

27.228.1

29.3 29.830.9

32.0

Millions of people

Over 32m people now onlineused in last 12 months

Source: Gfk NOP World, To December 2006

Dec1997

Dec1998

Dec1999

June 1997

June 1998

June 1999

June 2000

Dec 2000

June 2001

Dec 2001

June 2002

Dec 2002

June 2003

Dec 2003

June 2004

Dec 2004

June2005

Dec2005

Jun2006

Dec2006

67% used internet in last 12 months

90%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Pe

rce

nta

ge

of h

om

e u

sers

Source: BMRB Internet Monitor Nov 2006 Base: All who have used the Internet at home on a computer in the last month

Broadband access at home

Half of home broadband users services are now above 2 MB

35%

16%

37%

37% 47%

28%

0% 20% 40% 60% 80% 100%

Aug. 06

Aug. 07

< 2MB2 MB>2 MB

Base: All home broadband users who knew their speed of connection (Aug 06 - 359; Aug 07 - 396)

Source: BMRB Internet Monitor Aug 2006; Aug 2007

38% have used wireless broadband at home in the last month

Q. What is the connection speed of your home broadband?

7 6

25

27

35

47

21

23

45 TVInternetRadioNewspapersMagazines

7

22

48

5

18

Weekdays

Saturdays Sundays

Source: BMRB Internet Monitor, August 2007 Base: All Internet users aged 15+

Online second only to TV% of media time for all internet users

UK Online Adspend Study Results for the first half of 2007


£1,334.3mmarket in the first half of

2007

An increase of £417.1m year-on-year

41.3% increaseOn a like for like basis

New contributions in H1 2007 represented £53.3m

First Half 2007 vs. first half 2006

Online advertising nearly £700m in Q2

47.4 42.8 36.6 38.9 36.6 45.2 51.1 63.888.0

105.2119.7152.1

171.8

224.1

303.5327.0

350.5

461.2

514.9

583.7

653.8680.6

385.5456.0

174.6

254.6

0

100

200

300

400

500

600

700

800

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

£ m

illio

ns

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

‘01 ‘03‘02 ‘04 ‘05 ‘06 ‘07

Online in context…

Breaking market trends in the UK ad industry

21.6

19.7

16.0

6.8

5.33.3 0.8

11.8

TVPress - DisplayPress - ClassifiedInternetDirect MailDirectoriesOutdoorRadioCinema

Source: PricewaterhouseCoopers / Internet Advertising Bureau / The Advertising Association / Radio Advertising Bureau / WARC

Internet 14.7%

First half market share nears 15%January to June 2007

Total advertisingmarket

£9.1bn

Largest share anywhere

in the world

-4.4%-0.4%

4.0%8.1%

41.3%

-6.3%-0.4%-1.3%-2.3%

Direct

Mail

Press

Clas

sified

Press

Disp

lay TV

Cinem

a

Radio

Directo

ries

Outdo

or

Inte

rnet

Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC

WARC estimate for directories.

Online drives the whole marketYear on year growth for the first half 2007

Total advertising market growth = 3.1%

Mar

ket

Sha

reOnline’s share growth accelerates

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

2.5%3.3%

4.2%5.5%

7.3%8.4%

10.4%

12.4%

14.7%

H12003

H22003

H12004

H22004

H12005

H22005

H12006

H22006

H12007

0

200

400

600

800

1000

1200

Q198

Q298

Q398

Q498

Q199

Q299

Q399

Q499

Q100

Q200

Q300

Q400

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Online’s ascendancy continues£

mill

ions

Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARCN.B. WARC Recruitment data included from 2003

Radio

Outdoor

Internet

Press - Display

Television

Press - Classified

Direct Mail

Online overtakes Direct MailFirst half 2007

73.1

298.3385.4 444.9 479.7

611.6

971.71,068.4

1,334.3

1,780.11,953.6

1,430.21,452.1

Cinem

a

Radio

Consu

mer

Mag

azin

es

Busine

ss M

agaz

ines

Outdo

or

Direct

ories

Nation

al N

ewsp

aper

s

Direct

Mail

Inte

rnet

Regio

nal N

ewsp

aper

s

Press

Clas

sifie

d Tot

al

Press

Disp

lay T

otal TV

£m

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Directories are estimated

Summary – H1 2007

• Online advertising driving growth of the entire media market

• Internet advertising at £1,334.3m in the first half of 2007

• Online achieved a share of 14.7%, up 4.3 points from H1 2006 (10.4%)

• The market grew on a like for like basis by 41.3% year-on-year, maintaining the strong growth of previous waves

• Online surpasses Direct Mail (11.8%) by almost 3 share points.

The digital media mix

The developing mix of ad products

The digital media mix% share of revenues for January to June 2007

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARCIAB 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.

21.5%

57.1%

0.6%

20.8%

DisplayClassifiedsPaid for searchSolus Email

Half year total£1,334.3m

162.1131.4

337.0

215.9162.2

531.3

287.0 277.7

762.3

Display Classifieds Paid for search

H1 2005 H1 2006 H1 2007

£ m

illio

ns

+33% +72%

+44%


The digital media mixAll groups of formats have experienced strong growth

15.3%

10.6%

0.1%

57.1%

10.1%

0.7%

0.9%

1.2%

0.7%

2.7%

0.6%

Banners / EmbeddedSponsorshipsInterruptive formatsTenanciesOther displayDisplay ads on emailSolus emailRecruitment classifiedsFurther classifiedsB2B classifiedsPaid for search listings

The digital media mix% share of revenues for January to June 2007


£203.6m

£12.2m

£9.8m

£35.6m

£9.3m

£16.6m

£7.4m

£142.0m

£134.5m

£1.1m

£762.3m

The digital media mixYear on year comparison

£ m

illio

ns

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.

7.9

5.9

6.8

9.6

4.0

50.7

102.8

138.9

531.3

7.4

9.3

9.8

12.2

16.6

35.6

135.6

142.0

203.6

59.3

762.3

Solus Email

Other display

Interruptive formats

Sponsorships

Display ads on email

Tenancies

Further classifieds

Recruitment classifieds

Banners / Embedded

Paid for search listings

H1 2007

H1 2006


Strong growth of Search continues

181.2

248.5

337.0

431.4

531.3

634.3

762.3

H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

We’ve become searchaholics!

£1.4bn medium in UK

Search is the gateway to brands

• In July 2007 28m people visited a search engine and 26.2m of these clicked through onto a site.

• This equates to 90% of the internet population visiting a search engine and 83% clicking through.

• There were 1.4bn search queries carried out in the UK in July 2007.

• On average, there are 3.3 click throughs per search session.

• Search revenues in the first half of 2007 reached £762m

Source: Nielsen Net Ratings, MegaView Search UK, July 2007, Home and Work, Netview July 2007, IAB/PwC Online Ad Spend H1 2007

Growth in further classifieds

53.8 67.494.4 87.6

102.8 112.3142.0

14.326.0

37.0 43.3

59.3

104.5

135.6

0

50

100

150

200

250

300

H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007

Recruiment classifieds Further classifieds

£m


Classifieds = consumer pull + value for marketers

Display: breadth of formats

73.2 91.4 105.4 119.0 138.9182.7

203.6

287.1

237.9215.9

173.8162.1

136.2

96.7

0

50

100

150

200

250

300

350

H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007

Banners / Embedded Sponsorships Interruptive formats

Display ads on email Tenancies Other display

£m


All display formats are up apart from tenancies

£ m

illio

ns

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.

105.4

27.5

3.211.9 7.5

138.9

50.7

4.0 9.6 6.8 5.9

203.6

35.6

16.6 12.2 9.8 9.36.6

Banners /Embedded

Tenancies Display adson email

Sponsorships Interruptiveformats

Other display

H1 2005

H1 2006

H1 2007


+47%

+44%+316% +57%+27%

-30%

Formats summary – H1 2007January to June 2007

• Revenues increased across all formats, except for tenancies and solus e-mail

• With revenues of £762.3m in the first half of 2007, search maintained its dominant position

• YoY, display was up 33% to £287m while search increased by 44% and classifieds were up by 72% to £277.7m

• Classifieds: recruitment increased by 38% to £142m and other classifieds grew by 129% to £135.6m

Industry categories


Recruitment sector continues to lead the market in the first half of 2007

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 44% of online revenues in H1 2007.

0.4%

1.0%

1.5%

3.1%

3.2%

5.3%

5.7%

6.0%

6.7%

7.2%

11.1%

11.7%

12.5%

24.7%

Gardening & Agriculture

Leisure

Government & other organisations

Retail

Business & Industrial

Consumer Goods

Property

Travel & Transport

Telecoms

Entertainment & Media

Technology

Finance

Automotive

Recruitment


Sector Market Shares: Automotive overtakes Finance to rank #2

0.2%

1.3%

13.8%

0.4%

1.0%

1.5%

3.1%

3.2%

5.3%

5.7%

6.7%

0.5%

1.3%

4.7%

14.3%

15.6%

19.5%

8.9%

3.0%

4.6%

4.3%

8.1%6.0%

11.7%

12.5%

24.7%

11.1%

7.2%

Gardening & Agriculture

Leisure

Govt & other organisations

Retail

Business & Industrial

Consumer goods

Property

Travel & Transport

Telecoms

Entertainment & Media

Technology

Finance

Automotive

Recruitment

H1 2007

H1 2006

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 44% of online revenues in H1 2007.

Industry sectors summary – H1 2007

• Recruitment is the share point winner (+5.3 points) and retains the pole position, Automotive overtakes Finance for the first time

• Telecoms (+2 points), Business and Industrial (+1.9 points) and Property (+1.4 points) strengthened their positions whilst Finance (-3.9 points) and Technology (-3.2 points) showed a decline.

• Share for Consumer Goods, though still fairly small, increased by 0.7 point, while Retail remained static. There is still room for much growth in these categories.

Overall Summary

Overall summary

• Online ad spend leaps by 41.3% year-on-year (on a like-for-like basis) to reach £1,334.3m in the first half of 2007

• Almost £2.5bn (£2,433.0m) was spent across the twelve months to June 2007

• Online achieved a share of 14.7%, up 4.3 points from the first half of 2006 (10.4%)

• Online surpasses Direct Mail (11.8%) by almost 3 share points.

• Search and display and both experienced impressive growth in revenue.

• Classified performed particularly well.

• Twenty record-setting quarters in succession

• While Recruitment is the share point winner (+5.3 points) and retains the pole position, Automotive overtakes Finance for the first time

Overall summary

The next milestone

£2.75 billion• A real possibility in 2007 • Approximately the size of regional press

Martin Sorrell in the FT

“the share of UK advertising budgets spent online will rise from 14 to 18 per cent in 2007.”

PwC outlook is bullish

“The real superstar in terms of growth in the UK market is internet advertising. This will grow to US$9.9 billion in 2011, a CAGR of 20.8%, to a point where it will account for over 30% of all advertising spend.” PwC Global Outlook June 2007 Phil Stokes, UK leader Entertainment

and Media Practice PriceWaterhouseCoopers LLP

All the companies taking part, representing thousands of websites

and to

Our thanks to…

Nicki Lynas, Manager and

Paul Pilkington, Director

Colin Macleod, Research Director

http://www.warc.com/

UK Online Adspend Study Results for January to June 2007


For more [email protected] 7886 8282

Question time

welcome richard eyre, chairman, iab guy phillipson, chief executive, iab laurence bird, head of...

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