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IAB Internet Advertising Revenue Report 2011 First six-months Results

Agenda
Survey methodology
2011 First six-months results First six-months and quarterly trends

Advertising formats
Pricing models Industry category spending

About PwC

PwC

September 28, 2011 2

Survey Methodology
Survey Scope
The IAB Interactive Advertising Revenue Report is part of an ongoing IAB mission to provide an accurate barometer of Internet advertising growth. To achieve differentiation from existing estimates and accomplish industry-wide acceptance, key aspects of the survey include: Obtaining historical data directly from companies generating Internet / online advertising revenues; Making the survey as inclusive as possible, encompassing all forms of Internet / online advertising, including web sites, consumer online services, ad networks, and email providers; and Ensuring and maintaining a confidential process, only releasing aggregate data.

Methodology
Throughout the reporting process, PwC: Compiles a database of industry participants selling Internet / online advertising revenues Conducts a quantitative mailing survey with leading industry players, including Web publishers, ad networks, commercial online service providers, email providers, and other online media companies. Acquires supplemental data through the use of publicly disclosed information

Requests and compiles several specific data items, including revenue format, industry category, and pricing.
Identifies non-participating companies and applies a conservative estimates based on available public sources Analyzes the findings, identifying and reporting on key trends

PwC
Source: IAB Internet Advertising Revenue Report, 2010

September 28, 2011 3

Year-to-date revenues totaled $14.9 billion in 2011

Online advertising revenue increased 23.2%

$14.9 $12.1

HY 10
PwC
Source: IAB Internet Advertising Revenue Report, 2010

HY 11

September 28, 2011 4

Second quarter revenues totaled $7.69 billion in 2010

Revenue in Q2 2011 was 24% higher than in Q2 2010 and 5.7% higher than in Q1 2011.

$7.68

$7.26

$7.68

In billions

$6.19

2Q10

2Q11

1Q11

2Q11
September 28, 2011 5

PwC
Source: IAB Internet Advertising Revenue Report, 2010

A historical perspective of internet advertising

Quarterly growth comparison, 19992011
$9 $8 $7 $6
In billions

$5 $4 $3 $2 $1 $0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

PwC
Source: IAB Internet Advertising Revenue Report, 2010

September 28, 2011 6

First six-months 2011 shows record revenues Historical revenue mix, first half vs. second half
$30 Last 6 months $25 First 6 months

$20 In billions
$11.94 $11.76

$13.91

$15
$8.97

$11.21

$10
$5.03 $4.07

$6.76 $14.94 $9.99 $7.91 $3.29 $4.60 $5.79 $11.51 $10.90 $12.13

$5
$4.01

$3.41 $3.03 $3.72 $2.98

$3.98

$0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

PwC
Source: IAB Internet Advertising Revenue Report, 2010

September 28, 2011 7

Search shows strong growth

Advertising formats 2011 results and growth rates
$8 $7 $6 In billions $5 $4 $3 $2 $1 $Search

93.0%

100%
80%

$7.3
42.1% 26.8% -2.0% 25.4%

60%
24.4%
2.7%

40% 20%

$3.4
-34.2%

0%
-20%

$1.2

$0.8

$0.20
Email

$0.9

$0.72

-40%
$0.8

Classifieds & Lead Directories Generation

Digital Video Ad Banners / Sponsorship Rich Media Commercials Display Ads

-60%

2011

2011 vs. 2010 % growth

September 28, 2011 8

PwC
Source: IAB Internet Advertising Revenue Report, 2010

Historical trends in internet advertising formats

Revenue share by major ad formats, 20052010
60% 50% % of total revenue 40% 30% 20% 10%

0%

Search 2005

Display Banners 2006

Classifieds 2007

Rich Media and Digital Video 2008 2009

Lead Generation 2010

Sponsorship HY 2011
September 28, 2011 9

PwC
Source: IAB Internet Advertising Revenue Report, 2010

Pricing models continue shift towards performance

Internet Ad Revenues by Pricing Model, First Six-months 2011 vs. 2010

2010
4%

2011

5% 35% 31%

61%

64%

Impression-based

Performance-based

Impression-based

Performance-based

Hybrid

Hybrid

Total $12.1 billion

PwC
Source: IAB Internet Advertising Revenue Report, 2010

Total $14.9 billion

September 28, 2011 10

Historical Pricing Model Trends

Internet Ad Revenues by Pricing Model, 20052010
70% 60% % of total revenue 50%
42% 41% 46% 48% 47% 41% 57% 51% 59% 62% 64%

40%
30% 20% 10% 0%

45%
39% 37%

33%

31%

17%

13%

5%

4%

4%

4%

5%

5%

2004
CPM

2005

2006

2007
Performance

2008

2009

2010
Hybrid

1H 2011

Note: Pricing models definitions may have changed over time period depicted, both within the survey process and definitional by survey respondents. September 28, 2011 PwC 11
Source: IAB Internet Advertising Revenue Report, 2010

Internet Ad Revenues by Major Industry Category

$12.1 B in 1H 2010 vs. $14.9 B in 1H 2011
23% 20%

1H 2010 1H 2011

% of total revenue

14% 14% 13% 12% 11% 11% 10% 10% 8% 7% 6% 5% 4% 4% 4% 4% 4% 8%

PwC
Source: IAB Internet Advertising Revenue Report, 2010

September 28, 2011 12

PwC Internet Media Group

PwC (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 146,000 people in 150 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.
PwCs Internet Media Group was the first practice of its kind at a Big Four firm. Currently located in New York, Los Angeles, Boston, Seattle and the Bay Area, our Internet Media Group includes accounting, tax and consulting professionals who have broad and deep experience in the three areas that converge to form new media: advanced telecommunications, enabling software and content development/distribution. Our services include: Business assurance services Web audience measurement and advertising delivery auditing and advisory IAB Measurement Certification Compliance auditing Privacy policy structuring, attestation and compliance advisory Mergers & Acquisition assistance Tax planning and compliance Capital sourcing and IPO assistance

PwC

September 28, 2011 13

PwC Internet Media Group Contacts

For information about our Internet Media Group, contact one of the following PwC professionals:
New York

David Silverman Partner, Assurance Services 646.471.5421 david.silverman@us.pwc.com York Russ Sapienza Partner, Advisory Services 646.471.1517 russell.j.sapienza@us.pwc.com

PwC

September 28, 2011 14

www.pwc.com/technology www.pwc.com/us/em www.pwc.com

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