Ad Revenue 2009 Conference

The Future of Online Advertising & The Second Channel

October 8, 2009 New York City

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Industry Snapshot

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The Opportunity

 33% of total time spent is online

 Yet only 14% of all ad dollars are online

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2008 U.S. Measured Media Spend: $186 Billion

Dire

ct

Res

pons

e B

rand

ing

$118 B

$68 B

2008 U.S. Online Media Spend:

$26 Billion

5% 30%

$6 B

$20 B

Source: Lehman Brothers, ThinkEquity Partners

Online as Percent of Total

Online Advertising is Leaving Branding Dollars on the Table

Only 5% of total branding dollars are going to Online!

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Source: DoubleClick DART for Advertisers: 2008

Media/ Entertainment

Retail Tech CPG B2B Wellness Auto Telecom Travel Financial Services

Rich Media Click-Through Rates by Industry

Click Rates on Ads are Minimal but Forrester Study Says 35% of Marketers Still Use Click for Evaluating Branding Campaigns

Industry-wide click thru rate only 0.1%!

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Half as Many Clickers in 2009 vs. 2007

  Only 16% of internet users clicked on at least one display ad in March 2009

  50% decline year over year July 2007 March 2009

Source: comScore, Inc. custom analysis, Total US Online Population, persons, July 2007 and March 2009 data periods

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Heavy Clickers Account for an Even Larger Proportion of Total Clicks in 2009

  Heavy and Moderate clickers are only 8% of the internet population but account for 85% of all clicks

Heavy Moderate Light Non

July 2007 March 2009

Source: comScore, Inc. custom analysis, Total US Online Population, persons, July 2007 and March 2009 data periods

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$100K or more

$60K – $99.9K

under $60K

Percent of Clicks by Household Income Segment

March 2009

Index

116

102

90

Source: comScore, Inc. custom analysis, Clicks distributions by household income segment (persons), March 2009 data period. Indices are vs. Total US Internet Population.

Where the Clicks Come From

Upper Income Clickers Represent Only 4 % of Internet Users

45 +

35 - 44

18 - 34

March 2009

Index

96

123

89

Percent of Clicks by Age Segment

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View Thru Impact of Display Advertising

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OPA & comScore: “The Silent Click” Exposure to Display Ads Correlates with Significant Consumer Activity

29%

18%

0% 10% 20% 30%

Visit Advertisers' Sites

Search Advertised Brands

UVs Exposed to Advertising

Base: 86.2MM Exposed to at least one of top 20 advertisers

•  About one in five consumers searched on the advertised brand

•  Separately, about one-third visited the advertiser’s site in February

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These Advertiser Site Visitors are More Engaged than the Sites’ Usual Visitors

22

41 34

62

Minutes/UV Pages/UV

Advertiser Site Engagement All UVs to Advertiser Sites UVs Exposed to Advertising

•  Consumers exposed to the display advertising spent over 50% more time than the average visitors to these sites the next month

•  This rise in time spent is matched by a similar increase in page views

Sources: All UVs comScore MediaMetrix, 02/09 Exposed UVs comScore Marketing Solutions, 02/09

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Greater Spending for Advertiser Site Visitors Exposed to Biggest Campaigns

  These figures represent the average e-commerce spending in February for visitors to the 53 brands’ sites – comparing visitors exposed to these brands’ January online ad campaigns with those not exposed

$242

$227

$200 $225 $250

Exposed to Top Campaigns

Unexposed to Top Campaigns

E-commerce $/Advertiser Site Visitor Feb ‘09

+7%

Bases: Unexposed 99.2MM; 86.2MM Exposed Source: comScore Marketing Solutions, 02/09

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More E-Commerce Spending by Those Exposed to Related Online Advertising

$623

$569

$500 $550 $600 $650

Exposed

Unexposed

Travel $/Advertiser Visitor Feb ‘09

$209

$171

$100 $150 $200 $250

Exposed

Unexposed

Consumer Electronics $/Advertiser Visitor Feb ‘09

$84

$74

$65 $70 $75 $80 $85

Exposed

Unexposed

CPG $/Advertiser Visitor Feb ‘09

+9% +22%

+14%

Source: comScore Marketing Solutions, 02/09

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Ad Networks Friend or Foe?

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The rise of the Ad Network

  An estimated 80% of a publisher’s inventory goes unsold

  Today, more than 300 ad networks –  Seven years ago, only fifteen

  But why? –  Analogy to stock market –  As stock market grew, many flocked to become brokers to sell stocks –  Similar trend with online advertising –  As the market grew and as number of buyers & sellers increased, so did the

number of ad networks to serve them

  The result … –  A fragmented market of ad networks to try and help publishers to sell up to

80% of their remnant inventory

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The Press Coverage on Ad Nets is Active and Varied

''We must not trade our advertising inventory like pork bellies.'‘ - Wenda Harris Millard, former CEO at Martha Stewart Living Omnimedia

“What (publishers) should not do is allow some sort of invisible hand (or should I say hands) to price their inventory against a backdrop of objectives that can and often does change at a moment’s notice. – Jim Spanfeller, CEO Forbes.com

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The popularity of Ad Networks has skyrocketed over the past 5 years

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008

# of Ad Networks Reported by comScore

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Today’s leading Ad Networks

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Why are so many joining the ranks?

  Estimated 80% of publisher inventory goes unsold

  Ability to translate core expertise with content and sales

  The rise of the vertical ad networks –  Attempting to gain higher CPM rates for like, quality content –  Capitalize on core expertise

  Ease of monetizing inventory

  Advertisers benefit from scale, cost efficiencies

  It can be very profitable –  Very strong margins

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Summary

  Huge advertising opportunities exist for online

  We have to get away from the Click –  Dependency on clickers simply holding us back

  Focus on View Thru and Sales Impact –  Display advertising has been proven to work –  Branded search, site visitation, online/offline sales lift

  Educate advertisers on what’s important

  Choose your partners wisely

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Thank you