IAB Adex Benchmark 2012 Daniel Knapp, IHS Electronics & Media

ABOUT THE STUDY 2

3 A meta-analysis of online ad spend in Europe GROSS NET RATECARD Revenue Billed Revenue Billed No Agency commissions Campaigns x Ratecard

4 Horizontal expansion: country coverage 2008:19 countries 2012: 26 countries 2006: 13 countries

26 countries in 2012 Austria Belgium Bulgaria Czech Republic Croatia Denmark Finland France Germany Greece Hungary Ireland Italy Netherlands Norway Poland Russia Romania Serbia Slovenia Slovakia Spain Sweden Switzerland Turkey UK 5

Vertical expansion: format granularity & context 6

BIG PICTURE & CONTEXT 7

8 The value of the European online ad market 2012 24.3bn

2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 Eurozone volatility casts spell on media economy GDP growth in Europe 6% 4% 2% 0% -2% -4% -6% -8% Eurozone GDP Growth y-o-y Italy GDP Growth y-o-y France GDP Growth y-o-y Germany GDP Growth y-o-y 9 Source: IHS

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 industrial production & household consumption are good indictators for advertising market prospects 15% UK advertising revenue growth 10% 5% 0% -5% -10% -15% Actual NAR growth (yoy) 10 Projected NAR growth (yoy) Source: IHS Electronics & Media

tectonic shifts are characterizing ad markets 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% CAGR of Total Media Ad Revenue (2011-2017) Indonesia Argentina China Brazil Russia Mexico UK Germany France Spain Italy 11 Source: IHS Electronics & Media

12 but European online ad growth continues at a double-digit rate 30 Total online advertising ( bn) 25 21.8 11.5% 24.3 20 15 10 5 0 2011 2012

Indeed, online is more resilient to macro-pressure than other media 30% 25% 2012: economic & advertising growth 26.6% 20% 15% 10% 5% 2.5% 9.5% 9.4% 2.9% 7.2% 3.8% 11.5% 0% -5% -10% WE CEE Total -1.7% -4.0% -5.2% GDP Total excl. Online Online Total -0.4% 13 Source: IAB Europe & IHS Electronics & Media

Overall ad spend shows volatility, TV is resilient, online shows linear growth trajectory 140 Ad spend per capita by medium 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 2012 Online ad spend per capita TV ad spend per capita Total ad spend per capita 14 Source: IAB Europe & IHS Electronics & Media

There is no single factor for print decline & online does not absorb all print revenue, but budgets do migrate 70 60 Ad spend per capita 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 Online ad spend per capita Print ad spend per capita 15 Source: IAB Europe & IHS Electronics & Media

16 In 6 years online more than doubled its share of all media revenue: 1 in 4 ad s go to online in 2012 30% 25% 20% Online market share of ad budgets: total Europe 19.0% 25.6% 15% 10% 10.3% 5% 0% 2006 2009 2012

Online for the first time overtakes print newspaper ad spend & becomes 2 nd biggest media category in Europe 2012: European advertising market share by medium TV 28.1 Online 24.3 Newspapers 19.3 Magazines 8.7 OOH 6.3 Radio 4.6 Cinema 0.6 0 5 10 15 20 25 30 Note: Source for non-online ad revenue is IHS. Print ad spend excludes direct mail. 17 Source: IAB Europe & IHS Electronics & Media

18 Small number of markets make largest contribution to European ad spend 100% 80% 60% 40% Share of European online ad revenue by market 86.7% 78.3% 69.5% 46.0% 95.5% 20% 0% Top 2 Top5 Top 7 Top 10 Top 15

19 Russia climbs up to 4 th largest spender as remaining top 10 maintain their position in the European ranking 7,000 6,000 6,642 Total online ad spend ( m) 5,000 4,551 4,000 3,000 2,770 2,000 1,000 1,536 1,418 1,207 920 841 617 591 0

What is driving growth? Both emerging markets growing from low basis and established markets that demonstrate sustainability of online ad momentum Video Mobile RTB has the potential to be a driver Social networking sites Europeanisation and consolidation of classifieds & directories Localisation & individualisation of search, mobile search 20

21 CEE leads growth, but remarkable is the sustainability of growth in mature markets 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% Online ad growth 12%

Online ad market growth 40% 35% 30% Turkey Russia Note: country bubbles represent market size 25% Bulgaria 20% Serbia 15% 10% Romania 5% Hungary Poland Czech Republic Italy Ireland Austria Finland France Germany Belgium Switzerland Netherlands Sweden UK Denmark 0% Spain 0 20 40 60 80 100 120 Croatia -5% Slovenia Online ad spend per capita ( ) Greece 22-10% Norway

FORMATS 24

25 Search outperforms, display still high single digit, classifieds & directories pick up pace 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 17.9% 15.5% Year-on-year growth by format 15.3% 14.5% 11.5% 9.1% 5.7% 6.3% Search Display Classifieds & directories Grand total 2011 2012

Search remains strongest segment in 2012 Format shares of online 100% 80% 60% 19.6% 18.5% 32.7% 32.4% 40% 20% 47.1% 48.8% 0% 2011 2012 Others Classifieds and directories Display Search 26

27 Display growth shows few strong outliers above average rate, yet more outliers below average rate 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20%

28 Online video is now 13% of all online display 25% Online video share of display 20% 15% 13% 10% 5% 0% Italy Spain European average Poland UK Finland Russia Sweden Turkey

29 but range of growth varies tremendously 250% Online video growth 200% 150% 100% 50% 50.6% 0% -50%

30 and so do absolute video market sizes 180 160 140 120 100 80 60 40 20 0 2012: size of online video advertising by market

31 Mobile revenues are becoming significant, but are still lagging behind consumption 14% 12% 10% Mobile display share of total online display 2011 2012 8% 6% 5% 4% 2% 0%

32 Just how crucial video and mobile are becomes clear if factoring them out of display 40% 30% display display excl. video display excl. video and mobile 20% 10% 0% -10% -20% -30%

33 Classifieds & Directories sees group of countries with strong positive outliers above average rate 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20%

34 Majority of markets outperform average search growth, largest search market just shy of average 60% 50% 40% 30% 20% 10% 0% -10% -20%

OUTLOOK 35

What may the future hold? Addressable market is not only growing in mobile, but fixed-line as well 90 Fixed Broadband penetration of households (%) 80 70 60 50 40 30 20 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 France Germany Italy Spain UK Nordics total Western Europe 36 Source: IHS Electronics & Media

yet the emerging multi-device landscape creates new opportunities Smartphones Tablets and ereaders STBs Western Europe: Connected Devices (m) Blu-ray disc players Games consoles 2016 2012 Connected TV sets PC 0 100 200 300 400 500 37 Source: IHS Elecronics & Media

Thank you! daniel.knapp@ihs.com @_dknapp 38