Iab 22 May 2009

Overview of the UK online

Kieron Matthews – Marketing Director

What I’d like to cover

1. Overview of the market

2. Thoughts on how the market might develop

3. Some trends

4. Q&A

1. Overview of the market

Market has changed dramatically

2008• Optimism• Confidence• Integrated• Collaborative• Investment• Growth• Innovation

2009• Nervousness• Cut backs• Re-evaluation• Accountability• Media vs media• Caution• Regression

Market down

Markets in crisis

Disappeared from the High Street

Shoppers find convenience and value online

Nostalgia

• The term nostalgia describes a longing for the past, often in idealized form.[1] The word is made up of two Greek roots (νόστος nostos "returning home", and άλγος algos "pain"), to refer to "the pain a sick person feels because he wishes to return to his native home, and fears never to see it again".

• “In a time of anxiety, people are seeking out brands they’re comfortable with and they can trust,” said Ric Hendee, vice president for marketing services at Cotton Inc. in New York.

Looking back

Even my kids

Retrench to traditional products

+41%

+20%

+20%

+11%

+18%

In uncertain times……

….when budgets are being slashed

…..Marketing has to be accountable

This is the first recession

since the internet has become a

mass medium……..

Where were we this time last year?..

• 2007 was a landmark year for online with ad spend

reaching £2.8bn• The medium grew by 38% from £2.0bn in 2006

• Online overtook press classifieds and regional newspapers

• Our revised 2008 forecast was £3.2 - £3.3bn…

Number of internet users in the UK

Source: NRS UKOM: Jul-Dec 2008; Jul-Dec 2007 *Internet World Stats

66%

UK Pop

71%

UK Pop37%

Online

Pop

44%

Online

Pop

Internet users going online

more than once a dayNumber of people online

Ireland - 3.4 million internet users*

NI - 1 million internet users*

2 thirds of broadband services are now above 2 MB

Base: All who know speed of broadband connection at home. Q: Do you know the connection speed of your home broadband package? (Nov 06; Nov 07; Nov 08)

Source: BMRB Internet Monitor Nov 2006; Nov 2007; Nov 2008

48% of home broadband users have used wireless broadband at home in the last month (Nov 2008)

56

18

25

46TVInternetRadioNewspapersMagazines

Weekdays

Saturdays Sundays

Source: BMRB Internet Monitor, November 2008 Base: All Internet users aged 15+

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

2008 adspend figure

£3,349.7mmarket in 2008

An increase of £537.1m year-on-year

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

Total mobile advertising revenue 2008

£28.6m

Source: IAB / PwC mobile display ad spend survey 2008; search spend figure derived from modelling and industry estimates

Mobile shows similar trend to online

Onl

ine

ad s

pend

£ m

illio

ns

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

Onl

ine

audi

ence

(m

illio

ns)

£51m

£153.1m

£165.7m

1998 1999 2000 2001

9.4m* £28.6m

*Source: Comscore 12 month average 2008

£19.4m

Mobile audience

and spend 2008

17.1% increase

New contributions in 2008 represented £88.3m

2008 vs. 2007

on a like for like basis

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

21.9%

19.2%

11.7% 5.1%

3.2%

1.0%5.4%

13.1%

19.5%

TelevisionPress DisplayInternetPress ClassifiedDirect MailOutdoorDirectoriesRadioCinema

2008 market share 19.2% (15.5% in 2007)

% share of revenues for January to December 2008

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

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.

Total advertisingmarket

£17.5bn

The market you operate in

Press 47%

TV 37%Outdoor 8%

Radio 6%

Cinema 1%

Digital 1%

Northern Ireland Ad spend

Source: NI IPA 2008 - excludes Search

Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC: WARC estimate for directories.

Online only medium showing growth in 2008

Total advertising market growth = -3.5%

Year on year growth for 2008

Mar

ket

Sha

re

Online’s share growth accelerates to 20%

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

2.5% 3.3% 4.2%5.5%

7.3%8.4%

10.4%12.4%

15.0%

18.6%19.8%

16.1%

H12003

H22003

H12004

H22004

H12005

H22005

H12006

H22006

H12007

H22007

H12008

H22008

The digital media mixThe developing mix of ad products

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

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.

Full year total

£3,349.7m

% share of revenues for the full year 2008

The digital media mix

Strong growth of Search continues

181.2248.5

337.0431.4

531.3

634.3

856.8

1005.5981.4

762.3

H12004

H22004

H12005

H22005

H12006

H22006

H12007

H22007

H12008

H22008

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

Industry categories

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

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 87% of online display revenues in H1 2008. NB – an immaterial amount of these figures are classifieds

H1 2008: Technology leads the way

Based on 87% of total display ad spend

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

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 96% of online display revenues in H2 2008. NB – an immaterial amount of these figures are classifieds

H2 2008: Entertainment utilises online

Based on 96% of total display ad spend

2. Thoughts on

how the market might develop

Forecasts for Total 2009 advertising

• Carat/Aegis Down 7%

• Group M Down 11%

• Enders Down 13%

Average forecast Down -10%

2009 online - Feb 09 forecasting event

• Group M 2%

• Enders 1%

Outlook for online in 2009

In the toughest year for advertising,

online is forecast to hold steady

and gain further share points while

traditional media declines.

In 2009, Flat is good!

3. Some trends

5 in fact

Be personal

Nike Bootcamp – click on image

Behavioural targeting

youronlinechoices.co.uk

Nike Photo ID – click image

Be integrated

Integration is not matching luggage

Topical messages

Fosters – click on image

What to do?

Be social

O2

Challenging the norms of marketing

Be seen

Huggies

Google Insights

Nappies

Post natal

Nappies

React

News

Pace: Search results for “scrappage”1 week before the Budget1 day before the Budget

Be innovative

http://www.statravelblogs.com/

Mobile integration – click on image

Trends summary

1. Be less personal

2. Be integrated

3. Be social

4. Be seen

5. Be innovative

Thank you

kieron@iabuk.net