pwc iab webinar presentation hy2014

8/10/2019 PwC IAB Webinar Presentation HY2014

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PwC

IAB internet advertising

revenue report2014 first six-months results

www.pwc.com

www.iab.net


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PwC

PwC

Agenda

2October 2014

Survey methodology

2014 first six-months results

First six-months and quarterly trends

Advertising formatsPricing models

Industry category spending

About PwC


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PwC

PwC

Survey Methodology

3October 2014

Survey Scope

The IAB Internet Advertising Revenue Report is part of anongoing IAB mission to provide an accurate barometer ofInternet advertising growth.

To achieve differentiation from existing estimates andaccomplish industry-wide acceptance, key aspects of thesurvey include:

Obtaining historical data directly from companiesgenerating Internet/online/mobile advertisingrevenues;

Making the survey as inclusive as possible,encompassing all forms of internet/online advertising,including websites, consumer online services, ad

networks, mobile devices and e-mail providers; and

Ensuring and maintaining a confidential process, onlyreleasing aggregate data.

Methodology

Throughout the reporting process, PwC:

Compiles a database of industry participants sellinginternet/online and mobile advertising revenues.

Conducts a quantitative mailing survey with leading

industry players, including web publishers, adnetworks, commercial online service providers, mobileproviders, e-mail providers and other online mediacompanies.

Acquires supplemental data through the use of publiclydisclosed information.

Requests and compiles several specific data items,

including monthly gross commissionable advertisingrevenue by industry category and transaction.

Identifies non-participating companies and applies aconservative revenue estimate based on availablepublic sources.

Analyzes the findings, identifies and reports key trends.


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PwC

PwC

Half year revenues totaled $23.1billion in 2014

4October 2014

Onlineadvertisingrevenueincreased 15.1%in HY 2014.

Inbillions

$20.1

$23.1

HY 2013 HY 2014Source: IAB

Internet Advertising Revenue Report, HY 2014


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PwC

PwC 5October 2014

Half year revenues totaled $23.1billion in 2014

Onlineadvertisingrevenueincreased 15.1%in HY 2014.

Inbillions

$20.1

$23.1

HY 2013 HY 2014

15.1%

Source: IAB Internet Advertising Revenue Report, HY 2014


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PwC

PwC 6October 2014

Second quarter revenues totaled$11.68 billion in HY 2014

Revenue in Q22014 was 13.8%higher than inQ2 2013.

Inbillions

$10.3

$11.7

Q2 2013 Q2 2014Source: IAB Internet Advertising Revenue Report, HY 2014


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PwCPwC 7October 2014

Second quarter revenues totaled$11.68 billion in HY 2014

Revenue in Q22014 was 13.8%higher than inQ2 2013.

Inbillions

$10.3

$11.7

Q2 2013 Q2 2014

13.8%



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Strong Growth between Q1 2014and Q2 2014

Revenue in Q22014 was $264million higherthan in Q1 2014.

Inbillions

$11.4 $11.7

Q1 2014 Q2 2014Source: IAB Internet Advertising Revenue Report, HY 2014


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PwCPwC


9October 2014

Strong Growth between Q1 2014and Q2 2014

Revenue in Q22014 was $264million higher

than in Q1 2014.

Inbillions

$11.4 $11.7

Q1 2014 Q2 2014

2.3%


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PwCPwC

$0

$1

$1

$2

$2

$3


October 2014

In the early 2000s, internet advertising hit a bubbleQuarterly growth comparison, 1996-2002

Inbillions

97 98 99 00 01 0296


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PwCPwC

$0

$2

$4

$6

$8

$10

$12

$14


October 2014

Since 2003, 78% of quarters have experiencedpositive growth over the prior quarter

Quarterly growth comparison, 1996

HY 2014

Inbillions

$11

Revenues have remainedabove $11 billion for

three consecutivequarters.

97 98 99 0900 01 02 03 04 05 06 07 08 10 11 12 13 HY 1496


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PwCPwC


12October 2014

First six-months 2014 shows record revenuesHistorical revenue mix, first half vs. second half

Inbillions

$3.3 $4.6$5.8

$7.9$10.0 $11.5 $10.9

$12.1$14.9

$17.0$20.1

$23.1

$4.0$5.0

$6.8$9.0

$11.2$11.9 $11.8

$13.9

$16.8

$19.5

$22.7

?

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Last 6 months

First 6 months

* CAGR: Compound Annual Growth Rate


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PwCPwC


13October 2014

Mobile shows the strongest growthAdvertising formatsHY 2014 results and growth rates

$9.1

$1.3

$0.9

$5.3

$1.5

$3.9

$0.4 $0.7

4%

1%

7%

76%

13%

4% 4%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

$-

$1

$2

$3

$4

$5

$6

$7

$8

$9

Search Classifieds &Directories

LeadGeneration

Mobile Digital VideoCommercials

Banners Ads Sponsorship Rich Media

HY 2014 Revenue HY 2014 vs. HY 2013 % Growth

Inbillions


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PwCPwC


14October 2014

Historical trends in internet advertising formatsRevenue share by major ad formats, 2006HY 2014

0%5%

10%

15%

20%

25%30%

35%

40%

45%

50%

Search Mobile Banner Ads Rich Mediaand Digital

Video

Classifieds LeadGeneration

Sponsorship

2006 2007 2008 2009 2010 2011 2012 2013 HY 2014

%o

ftotalrevenue


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Mobile represents a significantpercentage of advertising

formats

For the halfyear in 2014,Mobile revenue

totaled $5.3billion

39%

28% 10%

51%

47%

2%

23%

Search Display Other

Mobile Search Mobile Display Mobile Other



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PwC

Search and display drive mobile advertisingMobile format ad revenue by category, Q2 2014 and HY 2014

1,42851%

1,33747%

542%

Q2 2014

Search Display-related Other

Total $2.8 Billion Total $5.3 BillionSource: IAB Internet Advertising Revenue Report, HY 2014

2,73351%

2,49847%

1032%

HY 2014

Search Display-related Other

16October 2014


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PwC

Distributing Mobile across formats demonstratesits importance to Search and Display

39%

28%

10%

23%

Search Display Other Mobile


17October 2014

51%

39%

10%

Search Display Other

Formats HY 2014(Mobile separated)

Formats HY 2014(Mobile included)


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PwCPwC

Social media demonstrates continued growthSocial media ad revenues, 2012 HY 2014


18October 2014

$1.2

$1.7$1.9

$2.6

$2.9

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

1H 2012 2H 2012 1H 2013 2H 2013 1H 2014

CAGR*54%

Inbillions

* CAGR: Compound Annual Growth Rate


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PwCPwC


19October 2014

Pricing modelsInternet ad revenues by pricing model, HY 2013 vs. HY 2014

33%

65%

2%

HY 2013

Impression-based Performance-based

Hybrid

34%

65%

1%

HY 2014

Impression-based Performance-based

Hybrid

Total $20.1 billion Total $23.1 billion


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PwC

Historical pricing model trendsInternet ad revenues by pricing model, 2005HY 2014

46% 48%

45%

39%37%

33%31% 32%

33% 34%

41%

47%

51%

57%59%

62%65% 66% 65% 65%

13%

5% 4% 4% 4% 5% 4% 2% 2% 1%

0%

10%

20%

30%

40%

50%

60%

70%

2005 2006 2007 2008 2009 2010 2011 2012 2013 HY 2014

CPM Performance Hybrid

%o

ftotalrevenue

Note: Pricing model definitions may have changed over the time period depicted both within the survey process and as interpreted by respondents


October 201420


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PwC

Internet ad revenues by major industry category$20.01 B in HY 20123 vs. $23.1 in HY 2014

21%

13%12%

9%8%

7%6%

5% 5%4%

21%

13%12%

9% 9%

7% 7%

5% 5%4%

Retail FinancialServices

Auto Telecom LeisureTravel

PackagedGoods

Tech /Computing

Media Pharma &Healthcare

Entertain-ment

1H 2013 1H 2014

%o

ftotalreve

nue

Amounts do not total to 100% as minor categories are not displayed.Source: IAB Internet Advertising Revenue Report, HY 2014

October 201421


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PwCPwC October 9, 2013

PwC New Media Group

As business, accounting, and tax advisors to many of the worlds leading Entertainment, Media, and Communications(EMC) and Technology (Tech) companies, PwC (www.pwc.com) has an insiders view of trends and developmentsdriving the industry. With approximately 1200 practitioners serving EMC and Tech clients in the United States, PwC isdeeply committed to providing clients with industry expertise and resources. In recent years, our pioneering work inEMC and Tech has included developing strategies to leverage digital technology, identifying new sources of financing,and marketplace positioning in industries characterized by consolidation and transformation. Our experience reachesacross all geographies and segments of the EMC and Tech sectors, including broadband, wireless, the Internet, music,film, television, publishing, advertising, gaming, theme parks, computers and networking, and software. With thousandsof practitioners around the world, we are always close at hand to provide deep industry expertise and resources.

PwCs New Media Group was the first practice of its kind at a Big Four firm. Currently located in New York, Los Angeles,

Boston, Seattle and the Bay Area, our New Media Group includes accounting, tax and consulting professionals who havebroad and deep experience in the three areas that converge to form new media: advanced telecommunications, enablingsoftware and content development/distribution.

Our services include:

Business assurance services

Web audience measurement and advertising delivery auditing and advisory

IAB Measurement Certification Compliance auditing

Privacy policy structuring, attestation and compliance advisory

Mergers & Acquisition assistance

Tax planning and compliance

Capital sourcing and IPO assistance

22October 2014


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PwC

www.pwc.com/e&m

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a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers

International Limited, each member firm of which is a separate legal entity. This document is

for general information purposes only, and should not be used as a substitute for consultationwith professional advisors.

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