MARKETING

DIGITAL

MARKETING & MEDIA

FACT PACK

Published April 23, 2007 ? Copyright 2007 Crain Communications Inc.

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MEDIA

COVER PHOTO BY PAUL COOKLIN

Digital Marketing & Media | Advertising Age | 3

DIGITAL

MARKETING AND MEDIA

DATA ON THE DIGITAL WORLD

LET'S FACE IT. It's becoming critical to stay atop the digital media and marketing space, but

the pace of technological change is making it increasingly difficult. That's why we've again

pulled together the important data and trends to serve as a guide to marketing in this space.

This, our second annual Digital Fact Pack, is full of fascinating numbers. Some highlights:

Big players continue to dominate online advertising, thanks to both their audience scale

and their ability to re-aggregate smaller, disparate audiences. The top 10 online properties

took in 99% of 2006 gross online ad revenue. Net online ad revenue is a slightly less stilt-

ed story, but continues to illustrate that when it comes to online ad revenue, the Long Tail

of the web has a big, fat head (Page 11).

48.3% of Americans will be hooked up to a broadband connection this year and $243.1

billion will be spent in U.S. online retail sales.

After breaking onto the scene a few years ago, social networking is flourishing. MySpace

and Facebook continue to defy gravity, growing 72.5% and 59.2% (Feb. `07 versus Feb. `06),

respectively, and, depending on what surveys you use, advertisers are set to spend between

4.7% and 7.7% of their online ad budgets on the space (Pages 20 and 46).

While new mobile applications are picking up steam, consumers they have not yet

warmed to the idea of advertising. In fact, more than half of consumers are not at all will-

ing to watch ads on their phones in return for free mobile phone applications (Page 42).

EMERGING MEDIA

That's just a taste of what's inside. We slice ad spending by category and take an indepth look at the different areas in which marketers are spending their online dollars. It's important to note the interactive realm

Data from American Advertising Federation (AAF), November 2006, via eMarketer. Shows the percentage of media budgets allocated to select emerging media according to U.S. advertising executives.

is monitored by dozens of companies, media MEDIA

% OF BUDGET

and trade groups. Since their methodologies

vary, totals do, too..

Search

27.0%

Oh, and speaking of the ever-changing Online video

14.9

digital space, since last year's Fact Pack we've

doubled the frequency of our dedicated dig- Blogs

8.4

ital section in the print version of Ad Age Podcasts

8.0

and launched a weekly newsletter that rounds up the best of our digital coverage. Social networking

7.7

So use this Digital Marketing & Media Fact RSS

5.5

Pack as a guide, but visit digital Mobile

5.2

for continuous coverage of the space.

--ABBEY KLAASSEN Video games

3.6

Digital Marketing & Media | Advertising Age | 5

CONTENTS

Overview

Online ad spending by format; behavioral targeting

Websites

The most unique visitors and the highest ad revenue by site

Blogs

Blog user stats and a case study calculating the ROI of blogs

Online display advertising

The top 25 marketers and the top categories

Consumer internet usage

Penetration, user habits and purchases, what else consumers do while online

Video online

What users watch, where and how much marketers are spending

Search

Search-engine market share and the top search terms; Google versus Yahoo

Mobile

Mobile device habits, handset share, willingness to watch ads

E-mail

What marketers are spending and e-mail volume

Games

In-game ads annoy users less than other interactive ads

Social networking

Top sites, users demographics and marketer spending

Awards & top agencies

Digital A-List awards, the top 10 interactive agencies and top ad networks

Miscellaneous

Podcast ad spending and user stats; data overload among middle managers

6 8 21 22 28 36 38 42 44 45 46 48 50

6 | Advertising Age | FactPack

OVERVIEW

U.S. ONLINE AD SPENDING BY FORMAT

Data from eMarketer, February 2007, which benchmarks its U.S. online advertising spending projections against the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers (PwC) data, for which the last full year measured was 2005; online ad data include categories as defined by IAB/PwC benchmark--display ads (such as banners), paid search ads (including contextual text-links), rich media (including video), classified ads, sponsorships, referrals/lead generation, e-mail (embedded third-party ads in emails, not email marketing) and slotting fees. Dollars in millions.

FORMAT

PROJECTED ANNUAL REVENUE 2005 2006 2007 2008 2009 2010

`06-'11 2011 % CHANGE

Paid search $5,142

Rich media/video 1,003

Display ads 2,634

Classified

2,132

Referrals

753

Sponsorships 502

E-mail

251

Slotting fees

125

Total

12,542

$6,970 1,476 3,444 2,788 902 492 164 164

16,400

$8,288 $10,234 $12,224 $14,212 $16,151

2,145 2,916 3,794 5,007 6,205

3,900 4,522 5,058 5,491 5,840

3,315 4,046 4,637 5,168 5,840

975 1,071 1,265 1,292 1,278

488

536

562

485

456

195

238

281

323

365

195

238

281

323

365

19,500 23,800 28,100 32,300 36,500

131.7 320.4

69.6 109.5

41.7 -7.3 122.6 122.6 122.6

BEHAVIORAL TARGETING: REACHING POTENTIAL BUYERS

Data from Forrester Research's NACTAS 2006 Benchmark Survey.

NEW APPLICATION VIDEO STREAMING SERVICES

MUSIC ON CELL PHONES

TECHNOLOGY OWNERSHIP TO IDENTIFY ENABLED CONSUMERS

ONLINE BEHAVIOR TO IDENTIFY POTENTIAL

BUYERS

INTENSITY OF BEHAVIOR TO IDENTIFY EARLY ADOPTERS

Has broadband and a Downloads video or Top quartile of time

home network

music today

spent with video

15% of market

8% of market

2% of market

Uses mobile data Downloads music or Does these at least

service

listens to internet radio a few times weekly

15% of market

7% of market

3% of market

ONLINE CONSUMERDIRECTED HEALTH PLAN

Has

Ever done research into a Top quartile of

broadband disease, drug or doctor time spent online

40% of market

26% of market

11% of market

8 | Advertising Age | FactPack

WEBSITES

TOP FIVE PORTAL SITE COS. BY UNIQUE VISITORS

Ranking based on data from comScore Media Metrix. Sales and earnings from public documents. Ad spending is U.S. measured media ad spending from TNS Media Intelligence. *Fiscal year ends June 30. ** Yahoo '05 net income included about $1 billion in special gains and tax benefits; '06 net income reduced $222 million by accounting change.

Yahoo ; Sunnyvale, Calif.

128.6 million unique visitors a month averaged 281.5 minutes on the sites.

NUMBERS

Revenue (billions) Net income (billions)** Ad spending (millions)

2006

$6.43 0.75 35.3

2005

$5.26 1.90 36.6

% CHG

22.2 -60.4

-3.6

EXECUTIVES

11,400 employees led by Terry S. Semel, chmn & CEO; Jerry Yang, co-founder & chief Yahoo; David Filo, co-founder & chief Yahoo; TOP MKTG EXEC: Cammie Dunaway, chief mktg officer

Time Warner , , multiple media sites; New York

117.9 million unique visitors a month averaged 269.8 minutes on the sites.

NUMBERS

2006 2005 % CHG EXECUTIVES

Revenue (billions) Net income (billions) Ad spending (millions)

$44.22 6.55

1,837.2

$42.40 2.67

2,074.4

4.3 92,700 employees led by Richard D. Parsons, chmn & CEO-Time Warner; 145.3 Randy Falco, chmn & CEO-AOL; TOP MKTG EXEC: John Partilla, pres-Time -11.4 Warner Global Mktg

Google , ; Mountain View, Calif.

114.7 million unique visitors a month averaged 79.5 minutes on the sites.

NUMBERS

2006 2005 % CHG EXECUTIVES

Revenue (billions) Net income (billions) Ad spending (millions)

$10.60 $6.14

72.8 10,674 employees led by Eric E. Schmidt, chmn & CEO; Larry Page,

3.08

1.47

110.1 co-founder & pres-products; Sergey Brin, co-founder & pres-tech;

20.5

8.1

152.8 TOP MKTG EXEC: David Lawee, VP-mktg

Microsoft Corp. , (joint venture), ; Redmond, Wash.

114.2 million unique visitors a month averaged 167.0 minutes on the sites.

NUMBERS

2006 2005 % CHG EXECUTIVES

Revenue (billions)* Net income (billions)* Ad spending (millions)

$44.28 12.60 447.0

$39.79 12.25 461.9

11.3 71,000 employees led by William H. Gates III, chmn; Steven A. 2.8 Ballmer, CEO; TOP MKTG EXEC: Mich Mathews, senior VP-central -3.2 mktg group.

eBay ; San Jose, Calif.

79.6 million unique visitors a month averaged 73.9 minutes on the site.

NUMBERS

2006 2005 % CHG EXECUTIVES

Revenue (billions) Net income (billions) Ad spending (millions)

$5.97 $4.55

1.13

1.08

144.4 158.2

31.1 13,200 employees led by Pierre M. Omidyar, chmn; Margaret C. 4.0 Whitman, pres & CEO; TOP MKTG EXEC: John Donahoe, pres-eBay -8.8 Marketplace

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