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
Prepared by PricewaterhouseCoopers for the IAB
£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
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
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%
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.
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
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.
£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
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
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
Source: Internet Advertising Bureau / PricewaterhouseCoopers
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
Source: Internet Advertising Bureau / PricewaterhouseCoopers
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
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
+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
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
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
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
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
UK Online Adspend Study Results for January to June 2007
Prepared by PricewaterhouseCoopers for the IAB
For more [email protected] 7886 8282
Question time