IAB/PwC mobile ad spend study

April 27th 2010

In today’s presentation

1. Introduction

2. Methodology

3. The figures

4. Implications for advertisers

5. Outlook

6. Summary

7. Questions

1. INTRODUCTION

Jon Mew, Head of Mobile, IAB

Things started to get more interesting

Look smart

Smartphones reach inflection point in UK

• 24% of the UK now have smartphones +70% YoY

• Non-smartphones -10% YoY

• RIM grows faster than Apple (RIM up 215%) vs (Apple up 196%)

• UK has the fastest growth rate in Europe

Mobile internet usage is still growing

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

MAY 2006

JUL 2006

SEP 2006

NOV 2006

JAN 2007

MAR 2007

MAY 2007

JUL 2007

SEP 2007

NOV 2007

JAN 2008

MAR 2008

MAY 2008

JUL 2008

SEP 2008

NOV 2008

JAN 2009

MAR 2009

MAY 2009

JUL 2009

SEP 2009

NOV 2009

Source: Comscore 3 month rolling average

UK GDP dives to – 6% YOY in Q2 2009

GDP GrowthEconomy grows by 0.3% in Q4 2009

IPA Marketers’ Bellwether Q4 2009

Total budgets revised down for the 9th quarter in succession

Source: WARC

The ad market was hit hard in 2009

Total advertising market growth -12.6%

Year on year growth for 2009 (TV without sponsorship)

2009 saw the biggest decline in ad spend since records began

Source: WARC – based on current prices

2. METHODOLOGY

Eva Berg-Winters, PwC

The background…

• The IAB has been working with PwC since 1997 to survey the value of the online advertising market

• These figures have become the industry standard for measuring advertising spend

• This is the second year we have surveyed the mobile market

• Display figures are based on actual revenues submitted by the survey participants

• Figures are adjusted for double counting

• Display figures are not adjusted to account for organisations that have not participated

• Like-for-like growth rates only include revenues from companies that participated in both 2008 and 2009

• The display figures are drawn up on the basis of site declaration and have not been not verified

• Search figures are estimated based on modelling, industry estimates and views from IAB members and experts including: Orange, T-Mobile, O2, 3, Enders, Mobile Commerce, Isobar, OMD, PwC, GroupM

• Total advertising revenue is reported on a gross basis

Methodology

Mobile advertising definition

• Only media spend reported to ensure fair comparison to other media including

→ Display advertisingo Bannerso Pre/post roll and in gameo Other including advertising within

sms/mms→ Search

• Figures do not include SMS / MMS production and delivery costs, and other mobile marketing revenues like app production

Banner ad

Pre/post roll

SearchIn SMS / MMS

Research participants

Thank you

3. THE FIGURES

Jon Mew, Head of Mobile, IAB

Total mobile market 2009

£37.6m

Source: IAB / PwC mobile display ad spend survey 2009; search spend figure derived from modelling and industry estimates

Total mobile market 2009 vs 2008

+32.2% (like for like)

Source: IAB / PwC mobile display ad spend survey 2009; search spend figure derived from modelling and industry estimates

2009 total mobile ad spend breakdown

Source: IAB / PwC mobile display ad spend survey 2009; search spend figure derived from modelling and industry estimates

Total market £37.6m

(50%)

(41%)

(4%)

(4%) (1%)

(2008 % share figures)

Growth for most formats

Source: IAB / PwC mobile display ad spend survey 2009; search spend figure derived from modelling and industry estimates

+ 26%

-47%+ 26%

+41%

+ 17%

2009 total mobile display breakdown

Source: IAB / PwC mobile display ad spend survey 2009

Total display £17.4m

(9%)

(82%)

(2008 % share figures)

(7%)(2%)

2009 display revenue by quarter

Source: IAB / PwC mobile display ad spend survey 2009

36%

Q4 - 36% higher than next nearest quarter

Every quarter showed growth

Source: IAB / PwC mobile display ad spend survey 2009

+28%

+10%+20%+36%

Source: PricewaterhouseCoopers / Internet Advertising Bureau

IAB estimates for industry sector shares are based on categorised net revenue from media owners provided by PwC. Data excludes unclassified, multi-advertiser and misc figures and covers 55% of mobile display revenues in 2009.

Industry sector display market shares

0.0%

0.1%

0.1%

1.2%

1.6%

1.7%

2.3%

2.5%

2.7%

3.2%

8.1%

14.7%

61.5%

Business and …

Gardening & …

Leisure Equipment

Electrical/Electronics

Retail

Travel & Transport

Computers

Motors

Government, …

Consumer goods

Finance

Telecomms

Entertainment & …

Based on 55% of total display ad spend

4. IMPLICATIONS FOR BRANDS IN 2010

Kieron Matthews, Marketing Director, IAB

“We’ve seen brands’ interest and confidence in mobile

increase rapidly over the past 6 months, we’re making it a

cornerstone of our activity as the time of mobile has already

arrived”

Oliver NewtonHead of Emerging Platforms

I-Level

“Despite the tough economic climate in 2009, we have seen many brands spending on mobile for the first time indicating the growing importance of

this channel in reaching a large engaged consumer audience with

the right message in the right place and at the right time”

  Ed Laws

Director Yahoo! mobile marketplace, EMEA

Source: Comscore GSMA/MMM

£

Summary

1. Ensure that you have adequate, optimised content for the time users ‘could’ spend with you

2. Begin to develop m-commerce solutions – NOW

3. Ensure that your site/content is optimised for mobile

4. Think beyond the app

5. Ensure that your search is optimised for mobile, but make sure the content is there to click to

5. OUTLOOK

Outlook – continued growth expected

IABResults

+33%

6. SUMMARY

Already hitting the headlines

Key headlines

• Total market grows 32% despite worst year on record for advertising

• Entertainment and media spend dominates

• Consistent growth in every quarter year on year

• Very strong finish to year Q4 up 36%

• Positive indications for 2010 and still plenty of room for growth

7. QUESTIONS

For more information

jon@iabuk.net

020 7050 6960

Disclaimer

The IAB retained PricewaterhouseCoopers LLP (the UK firm) (‘PwC’) to compile the mobile adspend figures collected by the IAB from its members in January through April 2009 and to deliver to the IAB the topline figures collated from this review; PwC has not verified the

information which it received from the IAB, and provides no opinion or other form of assurance with respect to such information.

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or

completeness of the information contained in this publication, and, to the extent permitted by law, neither the Interactive Advertising Bureau UK (the ‘IAB’) nor any of the IAB’s contributors/subcontractors accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance

on the information contained in this publication or for any decision based on it.