UK Digital Advertising and Marketing-Spending and Trends (2011)

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Digital Intelligence Copyright ©2011 eMarketer, Inc. All rights reserved. The eMarketer View 2 Total Media Ad Spending 3 Online Ad Spending 5 Mobile Ad Spending 15 Consumer Attitudes Toward Digital Advertising 17 Conclusions 21 Related eMarketer Reports 21 Related Links 21 About eMarketer 22 November 2011 Executive Summary: Overall ad spending growth in the UK is slowing in 2011, as continuing economic turbulence dents business and consumer confidence and squeezes budgets. Spending on all measured media will rise just 3% this year, eMarketer estimates. But if any media channel can show healthy growth and returns in these tough times, digital can. 133411 Online ad spending, including mobile, is projected to rise by 11% this year, to £4.55 billion ($7 billion), and by a further 12% in 2012. Double-digit gains will continue through 2014. Search continues to claim over half of all online ad spending in the UK, but its share is gradually shrinking, as display— especially video advertising—grows in popularity. Mobile advertising is also experiencing a boom. UK advertisers’ spending in mobile channels more than doubled in 2010, and is set to rise by another 51% in 2011. For their part, many UK web users find online and mobile ads intrusive, but digital marketing gets a thumbs-up from consumers when it delivers timely, relevant information or helps them save money. Key Questions How does the trajectory of digital ad spending in the UK compare to other media? Which online ad formats claim the largest spending shares? Which types of digital advertising are growing fastest in the UK? How much are UK marketers spending on mobile ads? How do UK consumers view online and mobile advertising? billions and % change UK Online Ad Spending, 2010-2015 2010 2011 2012 2013 2014 2015 £ Online ad spending £4.10 £4.55 £5.09 £5.60 £6.22 £6.72 % change 15.7% 11.0% 12.0% 10.0% 11.0% 8.0% $ Online ad spending* $6.30 $7.00 $7.84 $8.62 $9.57 $10.33 Note: eMarketer benchmarks its UK online ad spending projections against the IAB UK/PwC/Warc data for which the last full year measured was 2010; includes categories as defined by IAB UK/PwC/Warc—banners, classifieds, email (embedded ads only), lead generation, rich media, search, sponsorships and video; includes mobile ads within the existing formats; *converted at the exchange rate of US$1=£0.65 Source: eMarketer, Nov 2011 133411 www.eMarketer.com Karin von Abrams [email protected] Contributors Hilary Rengert, Monica Peart, Natalie Marin-Sharp UK Digital Advertising and Marketing: Spending and Trends

description

Overall ad spending growth in the UK is slowing in 2011, as continuing economic turbulence dents business and consumer confidence and squeezes budgets. Spending on all measured media will rise just 3% this year, eMarketer estimates. But if any media channel can show healthy growth and returns in these tough times, digital can.

Transcript of UK Digital Advertising and Marketing-Spending and Trends (2011)

Page 1: UK Digital Advertising and Marketing-Spending and Trends (2011)

Digital Intelligence Copyright ©2011 eMarketer, Inc. All rights reserved.

The eMarketer View 2

Total Media Ad Spending 3

Online Ad Spending 5

Mobile Ad Spending 15

Consumer Attitudes Toward Digital Advertising 17

Conclusions 21

Related eMarketer Reports 21

Related Links 21

About eMarketer 22

November 2011

Executive Summary: Overall ad spending growth in the UK is slowing in 2011, as continuing economic turbulence dents business and consumer confidence and squeezes budgets. Spending on all measured media will rise just 3% this year, eMarketer estimates. But if any media channel can show healthy growth and returns in these tough times, digital can. 133411

Online ad spending, including mobile, is projected to rise by 11% this year, to £4.55 billion ($7 billion), and by a further 12% in 2012. Double-digit gains will continue through 2014.

Search continues to claim over half of all online ad spending in the UK, but its share is gradually shrinking, as display—especially video advertising—grows in popularity.

Mobile advertising is also experiencing a boom. UK advertisers’ spending in mobile channels more than doubled in 2010, and is set to rise by another 51% in 2011.

For their part, many UK web users find online and mobile ads intrusive, but digital marketing gets a thumbs-up from consumers when it delivers timely, relevant information or helps them save money.

Key Questions

■■ How does the trajectory of digital ad spending in the UK compare to other media?

■■ Which online ad formats claim the largest spending shares?

■■ Which types of digital advertising are growing fastest in the UK?

■■ How much are UK marketers spending on mobile ads?

■■ How do UK consumers view online and mobile advertising?

billions and % changeUK Online Ad Spending, 2010-2015

2010 2011 2012 2013 2014 2015

£Online ad spending £4.10 £4.55 £5.09 £5.60 £6.22 £6.72

% change 15.7% 11.0% 12.0% 10.0% 11.0% 8.0%

$Online ad spending* $6.30 $7.00 $7.84 $8.62 $9.57 $10.33

Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes categories as defined by IAB UK/PwC/Warc—banners, classifieds,email (embedded ads only), lead generation, rich media, search,sponsorships and video; includes mobile ads within the existing formats;*converted at the exchange rate of US$1=£0.65Source: eMarketer, Nov 2011133411 www.eMarketer.com

Karin von Abrams [email protected]

Contributors Hilary Rengert, Monica Peart, Natalie Marin-Sharp

UK Digital Advertising and Marketing: Spending and Trends

Page 2: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 2

The eMarketer View

The UK’s digital credentials are well established. eMarketer estimates that over 45 million UK residents are online in 2011, representing nearly 73% of the population. UK web users spend more time online and view more pages, on average, than those in most other European nations. The penetration of ecommerce is among the highest in the world, at 78.2% of internet users, and online buyers will spend an average of over $3,100 in 2011—more than in any other country.

In digital advertising too, the UK has played a pioneering role. After all, this is the only market where online ad spending already exceeds spending on television ads by a significant margin.

In 2011, several trends in UK digital ad spending and consumer responses to advertising are evident.

The revival of display is gaining momentum, thanks chiefly to video. Online video advertising is on a steep upward trajectory, as brands take advantage of what is, in essence, TV advertising viewed on smaller screens. In some cases, advertisers that have struggled to understand and reap rewards from other forms of digital ads feel comfortable with video because it seems a familiar currency.

Consumers also find video more engaging than many other types of marketing. The science of online video advertising is still at an early stage: Witness the long-running discussions about the ideal length for online video ads and the comparative virtues of pre-roll, mid-roll and post-roll placements. But greater expertise will inevitably confirm video as a key option in the marketer’s arsenal.

The way online display spending is distributed across top industries says a lot about the changing moods of advertisers—and their audiences. The Interactive Advertising Bureau UK (IAB UK) has cited larger digital budgets from consumer packaged goods (CPG) brands as a key factor in rising ad spending during the first half of this year. Most CPG firms seem more committed to digital platforms than ever before. Interestingly, though, this development comes at a time when several industries—technology and telecoms, for example—have actually trimmed online display spending, according to IAB UK. Advertisers in several other sectors, such as entertainment and media, have kept display budget increases to a minimum.

Both upward and downward shifts in online budgets clearly reflect the current economic squeeze. They also signal marketers’ awareness that most consumers are focused on essential purchases, not nice-to-haves.

Social media is well established as an advertising platform, but its evolution is far from complete. UK advertisers are divided into two camps:

■■ The first group sees social media as absolutely essential to brand values, consumer dialogue, lead generation and fulfillment.

■■ The second group considers social media useful and even necessary, but not crucial to business success.

Brands such as Domino’s Pizza, Nike sportswear, Smirnoff vodka and Skittles candies have had resounding success appealing to UK consumers via Facebook or other social sites, and are driving up ad spending in social networks.

Yet a significant minority of UK companies are not fully committed to social media in 2011. In fact, recent research indicates some brands are paying less attention to online conversations than they did in 2010, suggesting many senior executives are not yet real believers in the utility and value of an active social media presence.

Email deserves more headlines than it gets. Email remains a key ingredient in the marketing plans of most UK advertisers, and rightly so. Costs for email campaigns are typically lower than for many other formats. Efficiency is rising as delivery technology improves and marketers hone their content strategies, writing and segmentation skills. Email open and clickthrough rates have risen in the UK this year, according to the Direct Marketing Association (DMA). Web users also welcome email messages they have opted to receive from known brands.

Mobile is a powerful, highly targeted channel for addressing individual consumers, but mobile marketing has a long way to go. In the UK, mobile and smartphone usage, mobile web access and exposure to mobile ads all show substantial growth in 2011. But mobile advertising is proving a tricky proposition for many brands. Mobile display ads and SMS marketing messages irritate most consumers, partly because the mobile phone is so personal. A few well-known retailers—among them Amazon, Asos, Tesco and Waitrose—have blazed the mobile trail with user-friendly apps and other mobile services. This should be a sign to advertisers to review their mobile strategies and concentrate on the basics: delivering relevant, helpful information and functionality for customers on the go.

eMarketer’s UK Digital Ad Spending Forecasts: Scope and Definitions

eMarketer estimates of UK online ad spending include banners, classified ads, email (embedded ads only), lead generation, rich media, search, sponsorship and video. They also include mobile ad spending within these formats as defined by the IAB UK. UK mobile ad spending is therefore a subset of online ad spending and does not include spending on mobile-specific formats such as SMS, MMS or in-app ads. As a result, the UK mobile ad spending forecast is not directly comparable to eMarketer’s US mobile ad spending forecast, which does include these formats.

Page 3: UK Digital Advertising and Marketing-Spending and Trends (2011)

After a disappointing 2009, UK ad spending bounced back strongly in 2010. Spending on all measured media climbed 7.9% to $21.7 billion, eMarketer estimates. However, economic turmoil has dashed hopes of similar growth this year.

According to GroupM, “Measured advertising [as of June 2011] is the same as 1999 in real terms, and as a share of the economy…the lowest since 1971.” Total UK ad spending fell by 1.1% in Q2 2011, according to the Advertising Association (AA) and the World Advertising Research Center (Warc). It was the first quarterly decline since 2009.

More recently, an IPA Bellwether survey painted a mixed picture of the industry. It reported that most UK marketing budgets were revised upward in Q3 2011—the first positive result after three quarters of decline. More than 20% of companies reported raising their marketing spend during the quarter, while 17% said their budgets had been cut. But the level of confidence among marketing executives fell to its lowest level in two and a half years. When marketers were asked how confident they were of seeing progress in their business in the coming year, the number of those who said they were not confident (39%) was more than double the number of those who were confident (16%).

The Bellwether survey did indicate a major boost for digital marketers, however. The net balance of firms revising their online budgets upward was 16.6% in Q3 2011, the greatest quarterly gain in the report’s history. Search budgets recorded a net positive balance of 9.3%.

Paradoxically, overall ad spending may actually benefit from prevailing economic trends. As WPP CEO Sir Martin Sorrell noted in an interview with Campaign magazine on September 16, 2011, the ad market continues to be driven largely by firms choosing to spend on advertising and marketing in these tough times, rather than on capital investment. That is a pattern many advertisers will likely follow for the foreseeable future—and one that tends to favor digital platforms over more traditional ones.

“Given the uncertain times, clients are more comfortable and confident with allocating their budgets to those areas that are more trackable and can be optimized accordingly.” —Pete Robbins, chairman of IPA Digital Media Group and managing partner of Agenda 21, in a press release, October 13, 2011

Total Media Ad Spending

billions and % changeUK Total Media Ad Spending, 2010-2015

2010

$21.7

2011

$22.4

2012

$23.4

2013

$24.3

2014

$25.6

2015

$26.2

Total media ad spending % change

Note: includes directories, internet, magazines, newspapers, outdoor, radioand TVSource: eMarketer, June 2011128628 www.eMarketer.com

7.9%

3.0%4.8% 3.9%

5.2%

2.6%

128628

Highlights

■■ eMarketer predicts that total media ad spending will increase by just 3% in 2011, to $22.4 billion, as UK consumers continue to tighten their belts and many marketers also rein in expenditures.

■■ An expected rise in ad spending during the holidays will contribute to this year’s annual gain. Advertising budgets should pick up further next year, when London hosts the 2012 Summer Olympic Games.

■■ UK ad spending will rise by about $1 billion each year through 2014, but will slow markedly in 2015.

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 3

Page 4: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 4

Overall estimates of UK ad spending this year range from $18.0 billion (Barclays Capital, September 2011) to $22.5 billion (PricewaterhouseCoopers, June 2011). A similar range is expected through 2015.

billions

Comparative Estimates: UK Total Media Ad Spending,2010-2015

£Advertising Association (AA), Aug 2011(1)

Barclays Capital, Sep 2011(2)

eMarketer,Nov 2011(3)

GroupM, July 2011(4)

MAGNAGLOBAL,June 2011(4)

PwC, June 2011(5)

ZenithOptimedia,Oct 2011(6)

$Advertising Association (AA), Aug 2011(1)

Barclays Capital, Sep 2011(2)

eMarketer,Nov 2011(3)

GroupM, July 2011(4)

MAGNAGLOBAL,June 2011(4)

PwC, June 2011(5)

ZenithOptimedia,Oct 2011(6)

2010

£15.70

£11.53

£14.11

£12.32

£11.72

£14.04

£11.76

$24.15

$17.74

$21.70

$20.10

$18.60

$21.60

$18.09

2011

-

£11.71

£14.52

£12.51

£12.03

£14.63

-

-

$18.01

$22.35

$20.40

$19.10

$22.50

-

2012

-

£11.94

£15.22

£12.93

£12.60

£15.47

-

-

$18.36

$23.41

$21.10

$20.00

$23.80

-

2013

-

-

£15.81

-

£12.98

£16.25

£12.78

-

-

$24.32

-

$20.60

$25.00

$19.66

2014

-

-

£16.62

-

£13.42

£16.97

-

-

-

$25.57

-

$21.30

$26.10

-

2015

-

-

£17.05

-

£13.80

£17.75

-

-

-

$26.24

-

$21.90

$27.30

-

Note: (1) includes cinema, direct mail, internet, magazines, newspapers,outdoor, radio and TV; (2) includes cinema, internet, outdoor, press, radio,TV; (3) includes directories, internet, magazines, newspapers, outdoor, radioand TV; (4) includes internet, magazines, newspapers, outdoor, radio and TV;(5) includes cinema, directories, internet, magazines, newspapers,out-of-home, radio, TV and video games; (6) includes cinema, internet,magazines, newspapers, outdoor, radio and TVSource: eMarketer, Nov 2011; various, as noted, 2011133419 www.eMarketer.com

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Just as eMarketer’s spending estimate is toward the higher end of the forecasts, we also anticipate higher growth this year (3%) than some other firms. ZenithOptimedia, for example, has predicted that total ad spending in the UK would rise by a meager 0.9% in 2011. eMarketer remains more optimistic because digital ad spending figures from the first half of 2011 were very healthy, and digital will be the largest single component of total ad spending this year. Estimates from most other sources were issued before these recent figures became available.

% change

Comparative Estimates: UK Total Media Ad SpendingGrowth, 2010-2015

Carat, March 2011(1)

eMarketer, Nov 2011(2)

MAGNAGLOBAL, June 2011(4)

Warc, Nov 2011(3)

Barclays Capital, Sep 2011(5)

GroupM, July 2011(4)

Advertising Association(AA)/Warc, Oct 2011(6)

ZenithOptimedia, Oct 2011(3)

2010

6.2%7.9%7.5%

-6.9%

8.9%

-

-

2011

4.1%3.0%2.7%

1.7%1.5%

1.5%

1.6%

0.9%

2012

4.0%4.8%4.4%

5.2%2.0%

3.3%

4.7%

4.5%

2013

-3.9%3.3%

--

-

-

-

2014

-5.2%3.0%

--

-

-

-

2015

-2.6%3.0%

--

-

-

-Note: (1) includes cinema, internet (display and paid search), magazines,newspapers, outdoor, radio and TV; (2) includes directories, internet,magazines, newspapers, outdoor, radio and TV; (3) includes cinema,internet (display, classified and search), magazines, newspapers, outdoor,radio and TV; (4) includes internet, magazines, newspapers, outdoor, radioand TV; (5) includes cinema, internet, outdoor, press, radio, TV; (6) includescinema, direct mail, internet, magazines, newspapers, outdoor, radio and TVSource: eMarketer, Nov 2011; various, as noted, 2011134145 www.eMarketer.com

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Despite the 2011 dip in growth, the UK will remain among the leading countries in terms of total ad spending during the next two years. ZenithOptimedia projections show the list of top spenders mostly unchanged between 2010 and 2013, with the UK maintaining its fifth-place position.

billionsTop 10 Countries, Ranked by Ad Spending, 2010 & 2013

1. US

2. Japan

3. China

4. Germany

5. UK6. Brazil

7. France

8. Australia

9. Italy

10. Canada

2010

$151.67

$46.15

$26.12

$23.79

$18.09$14.72

$12.56

$11.25

$10.30

$10.04

1. US

2. Japan

3. China

4. Germany

5. UK6. Brazil

7. France

8. Australia

9. Canada

10. Russia

2013

$165.98

$47.63

$38.85

$25.43

$19.66$17.59

$13.47

$12.31

$12.10

$11.41

Note: includes cinema, internet, magazines, newspapers, outdoor, radioand TV; currency conversion at 2010 average ratesSource: ZenithOptimedia as cited in press release, Oct 3, 2011133111 www.eMarketer.com

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Total media ad spending per person in the UK will continue to be the second-highest in the world, rising from $356 in 2011 to $409 in 2015, eMarketer estimates. Only the US outranks the UK by this measure.

Total Media Ad Spending

Page 5: UK Digital Advertising and Marketing-Spending and Trends (2011)

Mid-year figures from IAB UK/PricewaterhouseCoopers (PwC)/Warc—eMarketer’s benchmark source—support our predictions for 2011. In the first half of the year, online ad spending rose to an estimated £2.26 billion ($3.48 billion), 50% of the projected yearly total.

Other projections of online ad spending in the UK in 2011 range between $5.80 billion (MAGNAGLOBAL, June 2011; Barclays Capital, September 2011) and $7.27 billion (GroupM, July 2011). All sources predict significant gains in 2012, although eMarketer spending estimates are higher than those of most sources throughout the forecast period.

billions

Comparative Estimates: UK Online Ad Spending,2010-2015

2010 2011 2012 2013 2014 2015

£Barclays Capital, Sep 2011 £3.29 £3.77 £4.20 - - -

eMarketer, Nov 2011 (1) £4.10 £4.55 £5.09 £5.60 £6.22 £6.72GroupM, July 2011 (2) £4.03 £4.46 £4.84 - - -

IDC, Oct 2011 £3.31 £4.04 £4,70 £5.14 £5.92 £6.70

MAGNAGLOBAL, June 2011 (3) £3.40 £3.65 £3.97 £4.28 £4.60 £4.91

PwC, June 2011 (4) £4.10 £4.62 £5.20 £5.79 £6.37 £7.02

$Barclays Capital, Sep 2011 $5.06 $5.80 $6.46 - - -

eMarketer, Nov 2011 (1) $6.30 $7.00 $7.84 $8.62 $9.57$10.33GroupM, July 2011 (2) $6.58 $7.27 $7.89 - - -

IDC, Oct 2011 $5.09 $6.21 $7.23 $8.33 $9.10 $10.31

MAGNAGLOBAL, June 2011 (3) $5.40 $5.80 $6.30 $6.80 $7.30 $7.80

PwC, June 2011 (4) $6.30 $7.10 $8.00 $8.90 $9.80 $10.80

Note: (1) eMarketer benchmarks its UK online ad spending projectionsagainst the IAB UK/PwC/Warc data for which the last full year measuredwas 2010; includes banners, classifieds, email (embedded ads only), leadgeneration, rich media, search, sponsorships and video; includes mobileads within the existing formats; (2) includes search, display, email,classifieds and mobile; (3) includes paid search, online video, mobile andother; (4) includes wired formats—classifieds, display, email, leadgeneration, rich media, search, video and other; and mobileSource: eMarketer, Nov 2011; various, as noted, 2011133418 www.eMarketer.com

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Estimates of 2011 online ad spending growth from other sources cover a substantial range, between 7.3% (MAGNAGLOBAL, June 2011) and 22.1% (IDC, October 2011). This broad spectrum clearly reflects the uncertainty caused by general economic turbulence in the UK and globally. eMarketer’s estimate of 11% growth steers a middle course between the extremes. Half-year figures released by IAB UK/PwC/Warc in October 2011 showed 13.5% year-on-year growth and put online spending well on track to meet double-digit expectations for full-year 2011. Moreover, eMarketer anticipates similar forces will govern the market in 2012, and ensure further robust levels of digital spending. All research firms agree that annual rates of growth between 2013 and 2015 will not match those of 2012.

% change

Comparative Estimates: UK Online Ad SpendingGrowth, 2010-2015

2014 2015

IDC, Oct 2011

Barclays Capital, Sep 2011

PwC, June 2011(1)

eMarketer, Nov 2011(2)

GroupM, July 2011(3)

MAGNAGLOBAL, June 2011(4)

ZenithOptimedia, Oct 2011

2010

3.0%

9.4%

15.2%

15.7%15.3%

12.6%

-

2011

22.1%

14.8%

12.0%

11.0%10.5%

7.3%

-

2012

16.3%

11.3%

13.5%

12.0%8.5%

8.9%

10.4%

2013

15.2%

-

11.1%

10.0%-

8.2%

-

9.3%

-

10.2%

11.0%-

7.1%

-

13.2%

-

9.4%

8.0%-

7.5%

-

Note: (1) includes wired formats—classifieds, display, email, leadgeneration, rich media, search, video and other; and mobile; (2) eMarketerbenchmarks its UK online ad spending projections against the IABUK/PwC/Warc data for which the last full year measured was 2010;includes banners, classifieds, email (embedded ads only), lead generation,rich media, search, sponsorships and video; includes mobile ads within theexisting formats; (3) includes search, display, email, classifieds and mobile;(4) includes paid search, online video, mobile and otherSource: eMarketer, Nov 2011; various, as noted, 2011134173 www.eMarketer.com

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Whatever the precise rate of growth in online ad spending, the UK will likely continue to have the world’s highest online ad spend per web user. According to eMarketer figures, advertisers will spend an average of $156 per UK internet user in 2011, four times the global average of $39.

Online Ad Spending

billions and % changeUK Online Ad Spending, 2010-2015

2010 2011 2012 2013 2014 2015

£Online ad spending £4.10 £4.55 £5.09 £5.60 £6.22 £6.72

% change 15.7% 11.0% 12.0% 10.0% 11.0% 8.0%

$Online ad spending* $6.30 $7.00 $7.84 $8.62 $9.57 $10.33

Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes categories as defined by IAB UK/PwC/Warc—banners, classifieds,email (embedded ads only), lead generation, rich media, search,sponsorships and video; includes mobile ads within the existing formats;*converted at the exchange rate of US$1=£0.65Source: eMarketer, Nov 2011133411 www.eMarketer.com

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Highlights

■■ UK online ad spending will reach an estimated £4.55 billion ($7.0 billion) in 2011, and pass £6.72 billion ($10.33 billion) in 2015.

■■ Digital ad spending will rise 11% this year—almost four times the expected growth rate for total media ad spending (3%).

■■ The digital advertising market will see double-digit growth through 2014.

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 5

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UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 6

By contrast, spending in traditional media such as TV, newspapers and radio is growing at a far slower pace. According to IAB UK/PwC, it rose by 1.4% in the first half of 2011, to £8.27 billion ($5.38 billion).

The amount spent on online advertising (excluding mobile) overtook that spent on TV for the first time since early 2009, IAB UK/PwC/Warc reported. Digital accounted for 27% of all ad spending in the first half of 2011, compared to TV’s 26%.

Internet ad spend growth is also stronger than it has been in several years. The 13.5% uplift in 2011’s first half compares with 11% in the first six months of last year and 4.6% registered in the first half of 2009.

The IAB attributed digital advertising growth to two factors: the meteoric rise in online video marketing (though from a small base) and a surge in CPG companies embracing digital display ads.

For its part, GroupM has predicted a rise of 10.5% in UK online ad spending this year. No other major media channel will grow more than 2%, and total ad spending will increase by just 1.5%. Print media will continue to see serious market erosion.

billions, % change and % shareUK Ad Spending, by Media, 2010-2012

Internet (1)

% change

% share

TV (2)

% change

% share

Newspapers (3)

% change

% share

Magazines (4)

% change

% share

Outdoor% change

% share

Radio% change

% share

Cinema% change

% share

Total% change

2010

$6.5815.3%

32.6%

$5.5914.8%

27.7%

$4.48-0.5%

22.2%

$1.49-5.9%

7.4%

$1.1512.5%

5.7%

$0.583.9%

2.9%

$0.284.1%

1.4%

$20.158.9%

2011

$7.2710.5%

35.6%

$5.651.1%

27.6%

$4.11-8.3%

20.1%

$1.38-7.2%

6.8%

$1.172.0%

5.7%

$0.580.0%

2.9%

$0.280.0%

1.4%

$20.451.5%

2012

$7.898.5%

37.3%

$5.843.3%

27.6%

$3.94-4.0%

18.7%

$1.33-4.0%

6.3%

$1.235.0%

5.8%

$0.615.0%

2.9%

$0.293.0%

1.4%

$21.123.3%

Note: converted at the 2011 average annual exchange rate of US$1=£0.613;numbers may not add up to total due to rounding; (1) includes classifieds, display, email, mobile and paid search; (2) includes free-to-air and pay TV; (3) includes national and regional; (4) includes B2B and consumerSource: GroupM, "This Year, Next Year Summer 2011," July 5, 2011130232 www.eMarketer.com

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ZenithOptimedia has also forecast a top year for UK internet ad spending, with a projected gain of 8.7% in 2011. By contrast, spending on TV ads is expected to remain flat, and creep up by just 1% in 2012. Newspaper ad spending will fall an estimated 5.2% this year, and magazine ad spend will drop 4.4%.

Online Ad Spending

Page 7: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 7

Online Ad Spending as a Share of Total Ad Spending

billions and % shareUK Online and Total Ad Spending, 2010-2015

2010 2011 2012 2013 2014 2015

Online ad spendingTotal ad spending

Online % of total

$6.30$21.70

29.0%

$7.00$22.35

31.3%

$7.84$23.41

33.5%

$8.62$24.32

35.4%

$9.57$25.57

37.4%

$10.33$26.24

39.4%Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes categories as defined by IAB UK/PwC/Warc—banners, classifieds,email (embedded ads only), lead generation, rich media, search,sponsorships and video; includes mobile ads within the existing formats;total ad includes directories, internet, magazines, newspapers, outdoor,radio and TV; converted at the exchange rate of US$1=£0.65Source: eMarketer, Nov 2011133417 www.eMarketer.com

133417

Highlights

■■ Digital channels represent a higher share of total ad spending in the UK than in any other country.

■■ Online and mobile ads will account for an estimated 31.3% of all ad spending in 2011.

■■ By 2015, nearly 40% of ad spending will go to digital media.

eMarketer’s projection of UK online ad spending, at 31.3% of total ad spending, is close to estimates from other sources. For example, ZenithOptimedia puts the web’s share of UK ad spending at 31.2% in 2011, giving online the largest segment of the country’s ad spending by media, surpassing even TV (27.6%).

Figures from Barclays Capital similarly show the internet claiming the top spot, tallying £3.77 billion ($5.80 billion) of a total £11.71 billion ($18.01 billion), or 32.2% of all ad spending in 2011.

millions of £ and % changeUK Ad Spending, by Media, 2009-2012

2009 2010 2011 2012

Internet £3,005 £3,287 £3,772% change 5.5% 9.4% 14.8%

Press £3,715 £3,676 £3,309% change -23.2% -1.1% -10.0%

TV £2,858 £3,258 £3,307% change -11.0% 14.0% 1.5%

Outdoor £665 £748 £767% change -16.7% 12.5% 2.5%

Radio £390 £405 £397% change -9.9% 3.8% -2.0%

Cinema £152 £155 £155% change 4.8% 1.7% 0.0%

Total £10,786 £11,529 £11,708% change -12.1% 6.9% 1.5%

£4,19911.3%

£3,012-9.0%

£3,3561.5%

£8217.0%

£393-1.0%

£1550.0%

£11,9372.0%

Note: numbers may not add to total due to roundingSource: Barclays Capital, "European Media: Ad Watch V – heading into lowgrowth," Sep 22, 2011132909 www.eMarketer.com

132909

GroupM’s “This Year Next Year Summer 2011” report gives digital platforms (including mobile) an even larger, 35.6% share of the total, outpacing TV (27.6%) and the combination of newspapers and magazines (26.9%) this year.

Other estimates of online’s share of total UK ad revenues vary slightly, but all research firms agree that the UK leads the world by this measure. In Europe, only Denmark and Norway have come close to the UK tally, according to IAB Europe and Screen Digest AdEx. Both registered more than a quarter of ad revenue from the web in 2010.

% of total

Online Ad Revenue Share in Select Countries inEurope, 2010

UK 28.7%

Denmark 28.0%

Norway 25.3%

Czech Republic 22.3%

Netherlands 22.3%

Sweden 20.7%

Germany 19.8%

Poland 17.5%

Finland 17.2%

France 15.6%

Source: IAB Europe and Screen Digest AdEx, June 8, 2011128620 www.eMarketer.com

128620

Online Ad Spending

Page 8: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 8

Online Ad Spending by Format

billions and CAGRUK Online Ad Spending, by Format, 2010-2015

Search

Display

—Video

Classifieds and directoriesLead generation

Email*

Total

2010

$3.61

$1.45

$0.07

$1.15

$0.06

$0.02

$6.30

2011

$4.00

$1.66

$0.15

$1.24

$0.07

$0.03

$7.00

2012

$4.45

$1.94

$0.25

$1.34

$0.07

$0.03

$7.84

2013

$4.86

$2.18

$0.40

$1.47

$0.07

$0.03

$8.62

2014

$5.37

$2.45

$0.58

$1.64

$0.07

$0.04

$9.57

2015

$5.74

$2.75

$0.85

$1.73

$0.08

$0.04

$10.33

CAGR

9.7%

13.6%

65.0%

8.4%

3.5%

11.2%

10.4%Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes mobile ads within the existing formats; converted at the exchangerate of US$1=£0.65; *embedded ads onlySource: eMarketer, Nov 2011133413 www.eMarketer.com

133413

Highlights

■■ Paid search spending in the UK will reach $4 billion in 2011, rising to $5.74 billion in 2015.

■■ This year’s spending on online video ads will be more than double 2010’s total.

■■ Between 2011 and 2015, display ad spending will demonstrate a compound annual growth rate (CAGR) of 13.6%, outpacing that of online ad spending as a whole (10.4%).

■■ Investment in classified advertising, email and lead generation will climb steadily, but more slowly than spending on display.

With the rise of video advertising spend, and a general revival in the fortunes of display, search’s share of online ad spending will slide to 57.2% in 2011. Search will continue to lose share over the next few years, though it will still account for more than 55% of all UK online ad spending in 2015. Video will see the greatest gains throughout the forecast period.

% of totalUK Online Ad Spending Share, by Format, 2010-2015

Search

Display

—Video

Classifieds and directories

Lead generation

Email*

2010

57.3%

23.1%

1.1%

18.3%

1.0%

0.3%

2011

57.2%

23.7%

2.1%

17.7%

1.0%

0.4%

2012

56.8%

24.8%

3.2%

17.1%

0.9%

0.4%

2013

56.4%

25.3%

4.6%

17.1%

0.9%

0.4%

2014

56.1%

25.6%

6.1%

17.2%

0.8%

0.4%

2015

55.5%

26.6%

8.2%

16.8%

0.7%

0.4%

Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes mobile ads within the existing formats; *embedded ads onlySource: eMarketer, Nov 2011133415 www.eMarketer.com

133415

These projections take into account IAB UK/PwC/Warc ad spending figures from the first half of 2011. According to these data, paid search grew 12.6% year over year, to £1.31 billion ($2.02 billion), or 58% of all online advertising.

Display advertising rose 18.5% to £510 million ($785 million), representing 23% of online spending in the first half of 2011 (compared to a 22% share in H1 2010).

Classified advertising expanded by 3% to £385 million ($592 million), and claimed an estimated 17% of online spending in the first six months of 2011.

Beyond these main categories, spending on performance-based lead generation grew by 20%, to £26 million ($40 million).

millions of £ and % shareUK Online Ad Spending, by Format, H1 2011

Spending % share

Paid search £1,313 58%

Display £510 23%

Classifieds £385 17%

Total £2,256 100%Note: numbers may not add up to total due to exclusion of "other"Source: Interactive Advertising Bureau UK (IAB UK),PricewaterhouseCoopers (PwC) and World Advertising Research Center(Warc), "UK Online Adspend Study H1 2011," Oct 5, 2011133561 www.eMarketer.com

133561

Estimates by GroupM are similar to eMarketer’s. According to its figures, paid search will claim $4.18 billion, or 57.5% of UK online ad spending in 2011. Display and email together will amount to $1.55 billion (21.3%), and classifieds $1.3 billion (18%).

millions and % changeUK Online Ad Spending, by Format, 2010-2012

Paid search% change

Display/email% change

Classified% change

Mobile% change

Total% change

2010

$3,8279.2%

$1,38734.6%

$1,22510.8%

$135120.7%

$6,57715.3%

2011

$4,1789.2%

$1,55111.9%

$1,3056.6%

$23069.9%

$7,27010.5%

2012

$4,4807.2%

$1,6647.3%

$1,4098.0%

$32641.8%

$7,8868.5%

Note: converted at the 2011 average annual exchange rate of US$1=£0.613; numbers may not add up to total due to roundingSource: GroupM, "This Year, Next Year Summer 2011;" eMarketer calculations, July 5, 2011130234 www.eMarketer.com

130234

Online Ad Spending

Page 9: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 9

Several major trends will continue to govern online ad spending patterns for the next few years:

■■ After a peak in 2012, growth in spending on paid search will slow, though search will continue to account for more than half of online ad spending.

■■ Display—especially video advertising—will see the highest growth rates by far.

■■ After 2012, email spending growth will decline, but this format will remain a trusted marketing tactic for most advertisers.

■■ Classified ad spending will recover momentum as overall economic conditions improve, but fall back once more after 2014.

% changeUK Online Ad Spending Growth, by Format, 2010-2015

Email*

Display

—Video

Search

Classifieds and directories

Lead generation

Total

2010

111.9%

33.2%

100.0%

9.2%

10.9%

**

15.7%

2011

21.7%

14.2%

112.2%

10.9%

7.3%

4.8%

11.0%

2012

17.9%

17.0%

70.7%

11.3%

8.0%

3.2%

12.0%

2013

10.0%

12.1%

58.1%

9.1%

9.9%

6.3%

10.0%

2014

5.5%

12.4%

47.2%

10.4%

11.6%

0.7%

11.0%

2015

2.3%

12.2%

45.2%

7.0%

5.5%

2.3%

8.0%Note: eMarketer benchmarks its UK online ad spending projections againstthe IAB UK/PwC/Warc data for which the last full year measured was 2010;includes mobile ads within the existing formats; *embedded ads only;**lead generation not reported separately until 2010Source: eMarketer, Nov 2011133416 www.eMarketer.com

133416

Search

Despite the efforts of both Bing and Yahoo!, Google retained a near-monopoly on paid search advertising by UK companies between Q3 2010 and Q3 2011. Efficient Frontier reported that nearly 95% of search ad spending went to Google at the end of that period.

% of total

Search Ad Spending Share by UK Companies, by Search Engine, Q3 2010-Q3 2011

Q32011

Google

Yahoo!

Bing

Q32010

92.1%

5.1%

2.8%

Q42010

92.8%

4.8%

2.3%

Q12011

92.9%

4.3%

2.8%

Q22011

93.6%

3.9%

2.4%

94.6%

3.1%

2.3%

Note: numbers may not add up to 100% due to roundingSource: Efficient Frontier, "Q3 2011 Digital Marketing Performance Report,"Oct 11, 2011133334 www.eMarketer.com

133334

This is hardly surprising when the overwhelming majority of UK internet users are also wedded to Google. The search engine’s UK and US sites accounted for nearly 91% of UK search volume during September 2011, according to Experian Hitwise.

Leading Search Engines Among UK Internet Users,Ranked by Market Share of Search Volume, 4 weeksending Oct 1, 2011

www.google.co.uk84.82%

www.google.com6.09%

www.bing.com3.63%

uk.search.yahoo.com2.50%

www.uk.ask.com1.55%

Source: Experian Hitwise, "UK Data Center," Oct 6, 2011133567 www.eMarketer.com

133567

Display

Average UK clickthrough rates for display ads were among the lowest in Europe in 2010—just 0.07%, according to DoubleClick for Advertisers. There is no reason to think this situation has changed much in 2011.

Average Clickthrough Rate of Display Ads in SelectCountries in Europe, 2010

Greece 0.17%

Netherlands 0.15%

Belgium 0.11%

Denmark 0.11%

France 0.11%

Germany 0.11%

Italy 0.11%

Ireland 0.10%

Luxembourg 0.10%

Spain 0.09%

Switzerland 0.09%

UK 0.07%

Austria 0.05%

Finland 0.05%

Note: includes image, simple flash and rich mediaSource: DoubleClick for Advertisers, "Display Benchmarks," Aug 16, 2011131848 www.eMarketer.com

131848

Nonetheless, banner ads still attract the bulk of online display spending in the UK. In the first half of 2011, that amounted to almost £375 million ($577 million), or 17% of all online ad spending, according to IAB UK/PwC/Warc.

Online Ad Spending

Page 10: UK Digital Advertising and Marketing-Spending and Trends (2011)

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 10

Beyond the headline figures on banners, this report reveals illuminating details of the current display marketplace. For example, the relatively small £0.4 million ($0.6 million) spent on tablet advertising suggests that for all the excitement about these devices, they have yet to stake any significant claim to advertising budgets for most brands.

By contrast, dynamic in-game advertising attracted £3.4 million ($5.2 million) in revenues during the first half of 2011. Sponsorships and display affiliations were also responsible for sizeable chunks of spending, while interruptive formats appeared to be falling out of favor.

Online video ads are a much bigger story, however. Of all online display formats, video clearly has the greatest potential to engage viewers. According to the UK Online Measurement (UKOM) service and Nielsen Video Census, 26 million people in the UK watched 2.3 billion videos online in June 2011. On average, each viewer saw 87 videos that month, totaling 4.1 hours in all.

In the same month, the reach of video ads exceeded 63% of the online video audience, according to comScore Video Metrix. Among online video viewers ages 15 to 24, nearly 70% were exposed to video ads.

Online Video Advertising Reach Among UK OnlineVideo Viewers, by Age, June 2011

15-24

25-34

35-44

45-54

55+

Total online video audience 6+

Total uniqueviewers

(millions)

4.3

4.1

3.7

3.6

3.7

21.2

% reach amongonline videopopulation

69.4%

65.6%

62.8%

64.3%

61.0%

63.1%

Index*

110

104

100

102

97

100

Note: *where 100=average representationSource: comScore Video Metrix as cited in press release, Sep 1, 2011132350 www.eMarketer.com

132350

Advertisers clearly recognize consumers’ enthusiasm for video. In a February 2011 survey by Web TV Enterprise, over 30% of UK media buyers said half of the media plans they were working on included online video ads. A similar percentage said 75% or more of their plans included video advertising.

“Non-intrusive doesn’t mean brands should hide their light under a bushel. It’s the ads that are biggest, boldest and last the longest that seem to be winning the day.” —Morag Cuddeford-Jones, journalist, writing in new media age magazine, July 8, 2011

At the same time, one of the main reasons marketers support video seems to be the familiarity of the experience; in essence, online video is like TV. In fact, more than half of UK media buyers polled by Web TV Enterprise said their primary objective with online video ads was to deliver incremental reach to TV. By comparison, 42.1% said they were aiming for brand awareness.

% of respondents

Primary Objective for Online Video AdvertisingAccording to UK Media Buyers, Feb 2011

Delivering incremental reach to TV 52.8%

Brand awareness 42.1%

Direct response5.0%

Note: numbers may not add up to 100% due to roundingSource: Web TV Enterprise, "The UK Online Video Advertising MarketReport," March 10, 2011126999 www.eMarketer.com

126999

The surge of interest in video explains the significant sums going to online video ad budgets. In the February 2011 survey, around 60% of media buyers said they spent £35,000 ($53,850) or more, on average, per online video ad campaign, with 10.7% spending more than £100,000 ($154,000) on average per campaign.

% of respondents

Average Online Video Ad Campaign Budget Accordingto UK Media Buyers, Feb 2011

Source: Web TV Enterprise, "The UK Online Video Advertising Market Report," March 10, 2011127001 www.eMarketer.com

£100,000+ 10.7%

£100,000 3.1%

£75,000 6.3%

£50,000 22.6%

£35,000 17.0%

£25,000 17.0%

£10,000 12.6%

<£10,000 10.7%

127001

“What’s interesting about these figures is that the fastest-growing type of advertising on the internet is online TV advertising. It underlines how the internet is a technology that’s helping TV advertising to expand.” —Lindsey Clay, managing director of TV marketing body Thinkbox, cited in new media age magazine, October 5, 2011

Online Ad Spending

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UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 11

Not all advertisers are happy with the cost of online video ads, however. BrightRoll’s “2011 UK Video Advertising Report” indicated 37% of UK agencies saw the expense of video campaigns inhibiting market growth. In addition, 20% of agencies cited the inability to target video ads as a problem. Other perceived obstacles to growth included the poor quality of inventory (cited by 11%) and limited reach (10%).

Over time, technological advances should improve the targeting of online video advertising. But cost is always likely to be higher than for many other formats. In that respect, online video ads will retain a marked similarity to TV ads.

Real-Time Bidding: Making Display More Like Search

UK ad sales based on real-time bidding (RTB), which enables brands to bid in real time for ad impressions served to individual web users, are expected to rise by a phenomenal 552% in 2011 and 147% in 2012, according to forecasts from the International Data Corporation (IDC). If these figures are borne out, real-time ad sales will account for 12% of the UK’s online display market next year.

millions and % change

UK Total Online, Online Display andReal-Time-Bidding-Based Online Display Ad Spending,2010-2015

Source: International Data Corporation (IDC) as cited in PubMatic, "AdRevenue Report: Controlling Your Brand's Future," Oct 13, 2011133476 www.eMarketer.com

Total online ad sales

% change

Online display ad sales

% change

RTB-based online display ad sales

% change

$5,088.7

3.0%

$1,533.7

3.7%

$15.3

-

2010

$6,214.4

22.1%

$1,818.1

18.5%

$100.0

552.0%

2011

$7,227.6

16.3%

$2,051.3

12.8%

$246.7

146.7%

2012

$8,328.6

15.2%

$2,308.9

12.6%

$395.9

60.5%

2013

$9,103.5

9.3%

$2,488.0

7.8%

$534.8

35.1%

2014

$10,305.0

13.2%

$2,762.3

11.0%

$680.6

27.3%

2015

133476

Pay-TV broadcaster BSkyB has been an early adopter of RTB. In July 2010, RTB accounted for around 2% of Sky’s online display ad spend, according to the company. By January 2011, that had grown to 18%. Sky hopes RTB will represent 50% of its online display spending by 2013.

RTB is already working in mobile, too. Some retailers are using it to offer tailored promotions to a variety of m-commerce users, for example.

RTB does require increased commitment to data gathering, storage and analysis. Moreover, real-time activity implies a different approach to creative executions in many cases, as advertisers need to plan in advance for a range of potential placements. Ideally, the ad served should reflect the context in which the viewer sees it.

Ultimately, best practices in RTB will also involve dynamic pricing, based on user data as well as the context of the ad.

Email

Though it constitutes less than 0.5% of UK online ad spending, email continues to prove its worth.

The Marketing Week “Email Attitudes Research” survey, carried out by ExactTarget in August 2011, asked a number of UK marketers and brand managers about their current use of email.

■■ 70% of respondents said they had sent more emails in the past 12 months than they did previously.

■■ 44% had seen an increase in open rates, and 45% an increase in clickthrough rates.

■■ 49% said they typically used two to three demographic segments in their email marketing.

■■ Email was aimed at all age groups, though the demographic most often targeted were those ages 35 to 44, addressed by 88.9% of marketers. Only half that number (45.8%) sent email to consumers ages 16 to 24.

■■ 60.7% said they used social sharing options in their email campaigns, to take advantage of consumers’ social networking habits.

■■ Over half of respondents said they planned to increase email marketing spend in the next 12 months.

One motivation for increased email spending is the clear potential for expanding brand personality and deepening consumer engagement. In August 2011, Mini cars launched a 10th anniversary campaign aiming to do just that.

Mini already had an email-based CRM strategy, but used email addresses from its contact database to ask drivers to get involved with the brand on a different level, by becoming a “Mini Lunatic” and entering an outer-space-themed website. Drivers could register their car’s model and mileage on the site and discover whether that mileage had won them a prize. Social media, including Facebook, Twitter and blogs, helped drive traffic to the Mini Lunatic site, but email remains the foundation of the marketing effort. As of late October 2011, a total of over 98 million Mini-driven miles had been registered at the site.

Online Ad Spending

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UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 12

Online Marketing Spending in Social Networks

On the whole, UK advertisers have been slower to stake a claim in social networks than those in the US, where participation in social networking is higher. eMarketer estimates that just under 50% of all UK web users visited a social network at least once monthly in 2010, compared to 60% of US internet users.

In 2011, UK usage of social networks has continued to rise. According to data from UKOM/Nielsen, social media accounted for 25% of all time spent online in the UK in June 2011.

A 2011 McKinsey study of 5,000 internet users in eight markets reported very similar results. UK respondents spent over 280 minutes each day, on average, using a PC. (Those in the US logged 308 minutes.) Of that time, 61 minutes per day, on average, were devoted to social networking.

UK web users’ growing engagement with social media is now driving substantial growth in advertising spend. eMarketer estimates that display ads in UK social networks will account for 5% of all online ad spending this year, compared to 3% in 2010. Social network ad spending will reach an estimated £3.98 million ($6.1 million) in 2011, and pass £4.3 million ($6.6 million) in 2012.

Almost without exception, UK advertisers already committed to social media intend to maintain or increase those investments. In July 2011, Microsoft surveyed a group of 103 “high-spending” marketers in the UK that had a presence on Facebook or Twitter and planned to spend at least $100,000 on social media advertising and $100,000 on social media marketing in the next 12 months. Fully 98% of these respondents said their social media budgets would stay the same or increase in the year to come. However, the proportion of UK marketers planning to increase their social media ad budget was 42%, well below the average of 55% across all countries polled by Microsoft.

% of respondents

Change in Social Media Advertising Budget in theNext 12 Months According to Social MediaMarketers* in Select Countries, July 2011

Singapore47% 45% 8%

France47% 43% 10%

Canada38% 57% 5%

Increase Stay the same Decrease

Note: numbers may not add up to 100% due to rounding; *who areclassified as "high spenders" by meeting minimum social media marketingand advertising spending levelsSource: Microsoft Advertising and Advertiser Perceptions, "SocialAdvertising and Driving Word of Mouth: The Social Advertiser's View," Sep 26, 2011133015 www.eMarketer.com

Brazil81% 18% 1%

US64% 34% 3%

UK42% 56% 2%

Total55% 41% 4%

133015

Facebook, which attracts much of this spending, reported a 54% lift in UK revenues for 2010. In 2011, advertisers continue to be encouraged by the exposure and response that Facebook delivers. Clickthrough rates for Facebook ads in the UK and four other mature markets increased by 18.5%, on average, in Q3 2011, according to the “Global Facebook Advertising Report” by marketing agency TBG Digital.

Enders Analysis, using data from agencies and advertisers in conjunction with industry figures, predicted in October 2011 that Facebook’s gross revenue in the UK—its fifth-largest market globally—will grow 80% this year, to £180 million ($277 million), and pass £250 million ($385 million) in 2012.

Interestingly, many industries seem to have maintained social network ad spending at the expense of other budget items. UK retail brands had the highest share of impressions (27%) on Facebook during Q3 2011, according to TBG Digital. Entertainment brands increased their share of total impressions from less than 1% to 8% in just one quarter.

Online Ad Spending

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UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 13

Marketing Beyond Display Ads

More than half of Facebook’s UK 2011 revenue will likely come from ad sales but, of course, not all spending devoted to Facebook goes to display ads. Facebook pages are also an important tool for brands, and often work hand-in-hand with display ads. This reinforcement can be especially effective in certain industry sectors, according to recent data.

Between May and July 2011, research firm Compete investigated the browsing habits of 200,000 UK web users to compare the number of unique visitors to a brand’s Facebook page with those going to its website. Of the four industry sectors analyzed, CPG brands had by far the highest percentage (35.7% on average) of total web traffic going to their Facebook pages. For brands in the travel, retail and telecoms sectors, the corresponding proportions were 3.3%, 0.8% and 0.4%, respectively.

Compete speculated that because few CPG brands have transactional websites, most consumers have little incentive to visit those sites, especially if they can get information, promotions and other benefits at a Facebook page. Brands that did offer sales on their sites had much less reason to send visitors to Facebook.

Spending on social networks may be equally beneficial to brands that do not sell online, or—like CPG brands—sell only through third parties, such as supermarkets. Alcoholic beverage brands are a case in point.

In October 2011, Bacardi launched a new Facebook page for Bombay Sapphire gin. This presence contains content on the brand and product that viewers might expect to see on a brand website, but it also reflects recent global campaign activity and invites user feedback. Bacardi is on record as saying it plans to shift as much as 90% of its UK digital marketing spend to Facebook in the next two years.

In a similar move, the Varsity chain of bars in the UK announced in October 2011 it was dismantling its brand website entirely and transferring all online activity to Facebook, where an estimated 96% of students, its core audience, check in each day.

A 2011 study of 50 senior UK marketers by ISBA and Havas Media Social also pointed to the central role social media now plays in many sectors. All those surveyed were involved in social media, and two-thirds said they had a social media strategy. Almost 80% said social media was a long-term investment for their company, and 86% said that social media was the best marketing channel for building brands.

UK advertisers’ active involvement with social media remains patchy and variable, however. The 2011 “Ipsos Mori Reputation Council” report found that, overall, companies actually monitored social media conversations about their brands less than they had done in 2010. When Ipsos Mori polled UK communications directors at leading firms, including Barclays, BP, Coca-Cola, Shell, Visa and Unilever, just 59% said they reviewed every day what was said about them in social media, compared to 73% in 2010.

This apparent change in practice may be prompted in part by rumors that Facebook is no longer cutting-edge or by awareness that other kinds of marketing are still delivering value. Or some firms may be generally confident that comments made by consumers on social networks are favorable and that daily reviews are not needed. In such cases, brands may also be tempted to divert budget from social media monitoring to other functions.

Online Ad Spending by Industry

Some industries have been hit especially hard by the most recent advertising downturn. For example, UK government ad spending was slashed by a third shortly after the coalition of Conservatives and Liberal Democrats came to power in May 2010. On the business side, many retailers have scaled back expenditure on marketing in the face of plunging consumer confidence and buying power.

At the same time, global CPG companies such as Procter & Gamble and Unilever have pumped more investment into online display ads aimed at the UK audience. Figures from IAB UK/PwC indicated that the share of display spending attributable to CPG brands rose by 6 percentage points between the first half of 2009 and the first half of 2011. One reason is that online video formats enable brands in this sector to draw on their long tradition and expertise in TV advertising.

“Because of the new range of formats in video and social, we are seeing brands doing more interesting stuff who would have previously shied away from the digital space.” —Jason Carter, managing partner, digital, at UM London, cited in Campaign magazine, October 5, 2011

Arguably, CPG companies have been slower to embrace online advertising in the UK than in the US, where the much larger audience ensures economies of scale. But another factor plays a role here, too. As other industries—including retail, automotive, telecoms, government and property—modify their UK ad budgets in response to financial pressures, CPG brands have inevitably claimed a larger share of the total.

Online Ad Spending

Page 14: UK Digital Advertising and Marketing-Spending and Trends (2011)

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Such shifts have helped to rearrange the industry spending rankings to some extent. According to IAB UK/PwC, financial services took over from the entertainment sector as the top spender in display for the first half of 2011, accounting for 15.6% of all spending, followed by consumer goods, which claimed 14.5%. Other industries with major shares of display included entertainment & media (12.4%), travel & transport (10.3%) and retail (9.7%).

% of total

UK Online Display Ad Revenue Share, by Industry, H1 2011

Finance15.6%

Consumer goods14.5%

Entertainment & the media12.4%

Travel & transport10.3%

Retail9.7%

Motors8.8%

Business & industrial8.1%

Telecom7.6%

Technology7.4%

Government, social, political organizations2.9%

Property1.4%

Leisure equipment0.7%

Gardening & agriculture0.5%

Note: excludes unclassified, multi-advertiser, recruitment andmiscellaneous figures; numbers may not add up to 100% due to roundingSource: Interactive Advertising Bureau UK (IAB UK),PricewaterhouseCoopers (PwC) and World Advertising Research Center(Warc), "UK Online Adspend Study H1 2011," Oct 5, 2011133566 www.eMarketer.com

133566

For travel firms, investment in online marketing has paid off despite the general decline in consumer spending. Research carried out by Toluna for Econsultancy revealed 85% of UK web users went online to research or buy their holiday travel in early 2011. And according to the “Global Digital Marketing Performance Report” by Efficient Frontier, in Q3 2011, the UK travel industry logged a 15% year-on-year increase in search spending and a 5% increase in ROI, largely due to consumers waiting for late bookings to bag a bargain. Travel firms’ impressions on Google rose by 22% and clickthroughs increased by 6.5% when compared with figures from Q3 2010.

Online Ad Spending

Page 15: UK Digital Advertising and Marketing-Spending and Trends (2011)

According to IAB UK/PwC, eMarketer’s benchmark source, UK mobile advertising experienced a staggering 116% year-on-year growth in 2010, following 32% expansion in 2009. UK advertisers spent some £83 million ($128 million) on the mobile platform last year. eMarketer estimates that UK mobile ad spending will leap by a further 51% in 2011, to £125 million ($192.3 million), and rise to a projected £792 million ($1.22 billion) in 2015.

Estimating the size of the UK mobile advertising market is a relatively new activity. Yet most estimates of mobile ad spending in 2010 were very similar, ranging between eMarketer’s figure of $127.7 million and $135 million (GroupM, July 2011). Projections for 2011 and beyond diverge much more widely, however. All sources recognize that growth will be remarkable, but there is no consensus on just how quickly it will take off. eMarketer’s predictions for expansion through 2015 are higher than those of MAGNAGLOBAL and PwC, but well below FirstPartner’s estimates, which include online and offline message formats.

millions

Comparative Estimates: UK Mobile Ad Spending,2010-2015

£

eMarketer*, Nov 2011

FirstPartner**, Nov 2011

GroupM, July 2011

MAGNAGLOBAL, June 2011

mobileSQUARED, Nov 2010

PwC, June 2011

$

eMarketer*, Nov 2011

FirstPartner**, Nov 2011

GroupM, July 2011

MAGNAGLOBAL, June 2011

mobileSQUARED, Nov 2010

PwC, June 2011

2010

£83.0

-

£82.8

£84.0

£27.5

£83.2

$127.7

-

$135.0

$133.6

$42.9

$128.0

2011

£125.0

£140.9

£141.0

£127.2

-

£138.5

$192.3

$216.7

$230.0

$202.3

-

$213.0

2012

£204.6

£292.4

£199.8

£162.3

-

£206.1

$314.7

$449.8

$326.0

$258.0

-

$317.0

2013

£327.0

£495.2

-

£197.1

-

£282.1

$503.1

$761.8

-

$313.3

-

$434.0

2014

£515.0

£763.1

-

£220.2

-

£370.5

$792.3

$1,174.0

-

$350.0

-

$570.0

2015

£791.7

£987.0

-

£241.6

£258.3

£470.0

$1,218.0

$1,518.5

-

$384.1

$403.5

$723.0

Note: *eMarketer benchmarks its UK mobile ad spending projections against the IAB UK/PwC data for which the last full year measured was 2010; includes banners and text links, search, tenancies, video (pre-, mid-, post-roll and in-game) and other (display within SMS/MMS and other); **includes search, mobile internet (banners), MMS/SMS push advertising, games and videoSource: eMarketer, Nov 2011; various, as noted, 2010 & 2011133409 www.eMarketer.com

133409

Throughout the forecast period, eMarketer estimates that spending on mobile search and video will rise quickest, demonstrating CAGRs of 58.4% and 93.8%, respectively.

Spending on tenancies—which provide advertisers a fixed period of premium, often exclusive placement on specific mobile sites or web pages—and other display formats, such as ads within SMS or MMS messages, will rise steadily between 2011 and 2015, but register the lowest growth rates.

Mobile Ad Spending

millionsUK Mobile Ad Spending, by Format, 2010-2015

SearchDisplay—Banners and text links

—Video*

—Tenancies

—Other**

Total

2010

$84.5$43.2$36.5

$1.7

$2.6

$2.5

$127.7

2011

$128.7$63.7$53.8

$3.7

$3.1

$3.1

$192.3

2012

$212.1$102.6

$87.2

$7.6

$3.8

$4.1

$314.7

2013

$342.1$161.0$136.8

$14.6

$4.5

$5.0

$503.1

2014

$544.3$248.0$210.8

$26.9

$4.8

$5.5

$792.3

2015

$842.9$375.2$317.9

$46.3

$4.9

$6.1

$1,218.0

CAGR

58.4%54.1%54.2%

93.8%

13.2%

19.9%

57.0%Note: eMarketer benchmarks its UK mobile ad spending projections againstthe IAB UK/PwC data for which the last full year measured was 2010;converted at the exchange rate of US$1=£0.65; *pre-, mid-, post-roll andin-game; **includes display within SMS/MMS and otherSource: eMarketer, Nov 2011133405 www.eMarketer.com

133405

Highlights

■■ UK mobile ad spending will leap by more than 50% in 2011, and pass $192 million. In 2015, spending will approach $1.22 billion.

■■ Total ad spending on the mobile platform will post a 57% CAGR between 2010 and 2015.

■■ Mobile search and video spending will rise most quickly during the forecast period, but video will still account for less than 4% of mobile ad spend in 2015.

UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 15

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Impressive growth confirms the importance of search in the mobile economy. Advertisers will spend $129 million on mobile search ads in 2011, or 67% of all mobile ad spending. This in turn reflects the key role search plays in the behavior of mobile consumers. In the UK, 81% of adult smartphone users polled in Q2 2011 by Google and the Mobile Marketing Association said they run local searches on their devices.

% of respondents

Smartphone Users in Select Countries Who Have UsedMobile Local Search, Q2 2011

US (n=6,000) 90%

Japan (n=1,000) 90%

Germany (n=2,000) 85%

France (n=2,000) 83%

UK (n=2,000) 81%

Note: ages 18+Source: Google and the Mobile Marketing Association (MMA), "GlobalPerspectives: The Smartphone User & The Mobile Marketer" conducted byIpsos and TNS Infratest, June 16, 2011129184 www.eMarketer.com

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With mobile video ads, the situation is completely different. Even with an enormous percentage boost in video advertising on mobile platforms, eMarketer estimates that spending on these ads amounted to only £1.1 million ($1.7 million) in 2010. In fact, spending on all mobile display ads reached just £28.1 million ($43.2 million)—a tiny fraction (2.8%) of UK online display ad spending last year.

This is a lower proportion than in some other European countries, including Italy and Spain. Finland is the real star in this arena, however, with an estimated 11.4% of all online display spending devoted to mobile in 2010, according to IAB Europe and Screen Digest AdEx.

% of total online display ad spending

Mobile Display Ad Spending Share in Select Countriesin Europe, 2010

Finland 11.4%

Italy 3.5%

Spain 3.1%

UK 2.8%

Norway 2.8%

Hungary0.7%

Source: IAB Europe and Screen Digest AdEx, June 8, 2011128621 www.eMarketer.com

128621

The entertainment and media sector accounted for the largest single slice (32.9%) of UK display spending on mobile in 2010, but finance, telecoms and consumer goods also claimed substantial shares, IAB UK/PwC reported.

% of total

Top 5 UK Industries, Ranked by Mobile Display AdSpending Share, 2010

1. Entertainment & media 32.9%

2. Finance 18.6%

3. Telecom 14.3%

4. Consumer goods 11.8%

5. Automotive6.5%

Source: Internet Advertising Bureau UK (IAB UK) andPricewaterhouseCoopers (PwC) as cited in press release, March 22, 2011126131 www.eMarketer.com

126131

Few UK agencies invested large sums in mobile advertising in 2010. The StrikeAd “Key Developments in Mobile Advertising 2011” report noted some 28% of agencies spent less than £10,000 ($15,400) on their average mobile campaign in 2010, and a further 30% spent between £10,000 and £20,000 ($30,800). Fewer than 9% of agencies polled said they spent more than £50,000 ($76,900).

All agencies sampled for the StrikeAd report said they anticipated putting more into mobile campaigns in 2011, however. Three in 10 expected to raise their mobile ad spending by more than 25%.

% of total

Expected Growth of Mobile Campaign Spend in 2011According to UK Agencies

0%-5% 4.3%

6%-10% 13.0%

11%-15% 19.6%

16%-20% 15.2%

21%-25% 17.4%

26%-30% 8.7%

30%+ 21.7%

Note: numbers may not add up to 100% due to roundingSource: StrikeAd, "Key Developments in Mobile Advertising 2011"conducted by mobileSQUARED, March 23, 2011129040 www.eMarketer.com

129040

Similarly, a third of UK agencies polled by StrikeAd said at least 30% of their client campaigns would contain a mobile element in 2011.

Mobile Ad Spending

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Alternatives to Mobile Ads

Despite the potential of mobile advertising, many UK mobile phone users are barely touched by it. A June 2011 survey by comScore MobiLens found mobile ads reached only a quarter of smartphone owners ages 13 and older. Reach was greater among younger smartphone users ages 15 to 34, but even the highest rate of exposure was less than 32%.

Mobile Advertising Reach Among UK SmartphoneUsers, by Age, June 2011

15-24

25-34

35-44

45-54

55+

Total smartphone audience 13+

Total audience

(thousands)

1,566

1,533

1,125

580

534

5,415

% reach amongsmartphone

audience

31.6%

29.6%

25.1%

19.5%

15.9%

25.4%

Index*

125

117

99

77

63

100

Note: *where 100=average representationSource: comScore MobiLens as cited in press release, Sep 1, 2011132351 www.eMarketer.com

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Statistics like these underscore the fact that other mobile marketing approaches, such as apps or mobile websites, may produce better ROI than mobile ads. For example, in March 2011, the charity Comic Relief launched an app that enabled users to make donations via SMS or PayPal. The app was downloaded 135,000 times and generated a reported 1,200% ROI. As a result, Comic Relief has said it plans to follow a similar path with at least one major campaign in 2012.

Consumer Attitudes Toward Digital Advertising

For years, exposure to online banner ads has been nearly universal among UK web users. More recently, the reach of newer digital ad formats, such as video and mobile ads, has also risen sharply. According to comScore, 63% of online video viewers saw video ads in June 2011, and more than a quarter of smartphone users ages 13 and older recalled seeing ads on the mobile web or in apps.

thousands and % reach

UK Online Display, Video and Mobile AdvertisingReach, March & June 2011

March 2011 June 2011

Fixed line* internet audience—exposed to display ads

Online video** audience—exposed to video adsSmartphone*** audience—recall seeing web/app ads

Unique audience

39,683

18,446

4,240

% reach

96.1%

54.9%

21.4%

Unique audience

40,020

21,233

5,415

% reach

95.3%

63.1%

25.4%

Note: *ages 15+; **ages 6+; ***ages 13+Source: comScore Ad Metrix, Video Metrix and MobiLens as cited in pressrelease, Sep 1, 2011132348 www.eMarketer.com

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Mobile Ad Spending

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Despite these levels of exposure and the potential for interactivity, there is no clear evidence that any form of digital marketing has surpassed TV’s ability to motivate consumer action. A December 2010 survey by Upstream and YouGov reported TV still reigned supreme as the ad medium to which adult UK web users were most likely to respond. Encouragingly, email did come a close second to TV, cited by 31% of respondents, and SMS texts placed third with 15%. No other online or offline ad medium scored more than 9%.

% of respondents

Ad Media to Which UK Internet Users Would Be MostLikely to Respond, Dec 2010

TV advertising33%

Email31%

SMS15%

Banner advertising on websites9%

Commercial radio ads8%

Google AdWords6%

Twitter direct message3%

Advertising on mobile internet3%

Advertising on smartphone2%

None of these37%

Note: ages 18+; respondents were asked to choose their top 3Source: Upstream, "2011 Mobile Marketing Consumer Attitudes"conducted by YouGov, April 5, 2011128267 www.eMarketer.com

128267

While likely to prompt a response, email is also a format web users consider suitable for messages from brands they know. According to Acxiom, 77% of UK internet users polled in July 2011 said email was an appropriate way for familiar brands to communicate with them. Other digital communications methods, such as mobile phone calls or SMS messages, were viewed as appropriate by just 12% and 9% of respondents, respectively.

% of respondents

Communication Methods Appropriate forBrands/Companies* to Use According to UK InternetUsers, July 2011

Email77%

Post71%

Phone30%

Mobile phone12%

SMS9%

Social media4%

Twitter4%

Note: *that have had a long relationship with a consumerSource: Acxiom, "Tug of Love: How Technology is Changing the RelationshipBetween Consumers and Brands—and What Marketers Can Do About It,"Aug 2011132958 www.eMarketer.com

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Moreover, when UK web users were asked how they would like to hear from brands or companies they had no relationship with, email also scored highest of all digital formats, with 52% viewing it as most suitable. In this case, less than 10% of respondents said they thought brands should contact them by phone or via SMS.

Consumer tolerance for email marketing has grown as brands have generally improved the targeting and timing of their mailings. According to the 2011 “Email Tracking Study” carried out by fast.MAP for the DMA, all but one of 24 brands mentioned in the survey had improved their email marketing, in the opinion of web users, during the previous year. Over half (56%) of UK consumers surveyed said they had a positive view of email marketing by retailers in general. Supermarkets scored well, too, with 49%, as did nationally known bricks-and-mortar retailers with 43%.

Consumer Attitudes Toward Digital Advertising

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Marketers must still take care not to waste recipients’ time. The DMA survey noted that 69% of consumers polled spent less than two hours a day on email at home, so would have little time for messages that didn’t interest them. But the fact that most people opt in to email marketing helps to counterbalance their general impatience. Some 39% of the DMA’s respondents said they had signed up to receive messages from 10 or more companies, and half said they received at least 20 emails from trusted brands each week.

% of total

Average Number of Emails from Trusted BrandsReceived Weekly According to UK Internet Users, Aug 2011

1-2 4%

3-5 9%

6-10 14%

11-15 11%

16-20 10%

20+ 50%

None2%

Source: Direct Marketing Association UK, "Email Tracking Study 2011"conducted by fast.MAP, Oct 7, 2011133840 www.eMarketer.com

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“The evidence we see is that people tend to accept emails from one or two brands per category. If you search for insurance, there are 100 different brands competing for your attention. …That is competition. Our hypothesis is that the inbox is a relatively competition-free zone.” —Dela Quist, chief executive of email consultancy Alchemy Worx, cited in Marketing Week magazine, October 6, 2011

Attitudes to Mobile Advertising

UK consumers have limited enthusiasm for mobile advertising in general and mobile banners in particular. For example, Upstream and YouGov reported that only 1% of UK web users ages 18 and older said they frequently acted on a mobile web ad, and 13% said they had clicked on “one or two” ads from trusted brands. In total, 63% of respondents in this survey said they either did not surf the web on their mobile phones, or they found mobile banners irritating and would not click on them.

Despite these dismaying percentages, research by mobileSQUARED indicated that the number of UK mobile phone users who might respond to a relevant mobile ad will reach almost 16 million in 2011, and approach 22 million in 2012.

millions

UK Mobile Phone Users Who Might Respond to aMobile Ad*, 2010-2012

2010

10.95

2011

15.80

2012

21.53

Note: *if the ad was relevantSource: mobileSQUARED and adsmobi, "Mobile Advertising: Europe's BigFive," Sep 14, 2011132550 www.eMarketer.com

132550

In 2011, attitudes to mobile ads appear to be polarized, at least among smartphone owners. Of those polled for YouGov’s “Smartphone, Mobile Internet, eXperience Tracker (SMIX),” 79% said they believed mobile ads were intrusive, and even higher percentages said they ignored ads appearing on the mobile web or in apps. On the other hand, overall response rates for mobile were relatively high. Some 6% of the sample said they had clicked on a text link or acted on an email accessed on their mobile, while 4% had responded to an ad on the mobile web. This compared favorably with PC-based clickthrough rates for UK banner ads, for example, which have been well below 1% for some years, or the 1.8% rate of interaction with rich media ads recorded by DoubleClick in 2010.

% of respondents

Attitudes and Responses to Mobile Ads Among UKSmartphone Owners, 2011

Attitudes79% of smartphone users questioned believe that mobile ads are intrusive

5% think they are a good idea and welcome them

88% of respondents say they ignore ads in apps

86% ignore them on the mobile web

Responses6% click on a link in a text

6% from an email

4% from the mobile internet

3% from an app

2% from an instant message

Source: YouGov, "Smartphone, Mobile Internet, eXperience Tracker (SMIX)"as cited in press release, July 26, 2011131566 www.eMarketer.com

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Consumer Attitudes Toward Digital Advertising

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Mobile owners do respond positively to discounts and other financial incentives as a trade-off for seeing ads. Some 27% of UK internet users said getting £5 ($7.70) per week off their mobile phone bill would prompt them to opt in to mobile ads, Upstream and YouGov reported. Among smartphone owners, the proportion was 44%.

The September 2011 “Moving Minds Panel” study by Kinetic Worldwide also had encouraging news for mobile marketers. According to Kinetic, 23% of UK adult mobile owners said they did not mind mobile ads if the messages were relevant to their environment at the time. Among respondents ages 35 to 44, half agreed they would be happy to receive mobile ads in such cases. Moreover, 44% of the entire sample said they would use location-based mobile services to take advantage of deals or receive vouchers for products and services.

Mobile and Retail: A Shining Example

UK marketers looking to maximize return on their mobile spending would do well to remember the one context in which mobile is already an unqualified success: retail. Whether shopping online or in a store, consumers are searching for and comparing products and prices via mobile phone.

This research leads directly to purchase in many cases. A survey by Google and Ipsos MediaCT in March 2011 found 41% of UK smartphone users had bought entertainment items after investigating options on their smartphones. Nearly a third had bought clothing, and 28% had bought travel or event tickets. Significant numbers had also purchased electronics, cosmetics, groceries and other goods.

Overall, mobile retail activities grew remarkably in the UK between May 2010 and May 2011, according to comScore MobiLens. In particular, the number of UK smartphone owners ages 13 and older accessing auction sites, online retail sites and shopping guides more than doubled during this timeframe.

% change

Mobile Retail Activity Growth Among Smartphone vs.Total Mobile Subscribers in the EU-5, by Country, May 2011

Total mobileAccessed auction sites

Accessed online retail sites

Accessed shopping guides

SmartphoneAccessed auction sites

Accessed online retail sites

Acessed shopping guides

France

6%

24%

20%

51%

80%

86%

Germany

44%

45%

42%

100%

106%

98%

Italy

1%

-5%

10%

13%

8%

25%

Spain

10%

-5%

21%

35%

22%

63%

UK

95%

118%

71%

141%

163%

109%

EU-5

36%

37%

31%

76%

80%

72%

Note: ages 13+; three-month average for period ending May 2011; read asthe amount of mobile subscribers accessing auction sites has grown 44%in the past yearSource: comScore MobiLens as cited in press release, July 29, 2011130737 www.eMarketer.com

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Looking ahead, analysts at Barclays Corporate have predicted that UK consumers’ purchases via mobile phone and tablet will reach £19.3 billion ($29.7 billion) by 2021, up from £1.3 billion ($2 billion) today. According to this source, electronics, personal care and grocery brands will be among those best placed to take advantage of the mobile buying trend.

Coupons will also play a big role in mobile monetization, to judge from results of an mBlox survey. While nearly 71% of UK mobile phone users ages 16 and older said in September 2010 that they had never used a mobile coupon, an even greater number said they would be interested to receive mobile coupons while shopping in a store.

The mobile operator O2 is among the firms experimenting with mobile coupons in some form. In July 2011, O2 launched Priority Moments, a UK daily deal program offering location-based “treats” in conjunction with 30 brands, including clothing retailer French Connection and upmarket department store Harvey Nichols.

Subscribers download a dedicated app, enter their telephone number and receive a personal identification number. The app uses geolocation technology to alert consumers to deals nearby. Consumers redeem the offer by showing sales staff a voucher on the screen of their handsets. Customers can also save offers for later redemption or share them with friends.

Because such programs enable brands to overcome consumer irritation and deliver marketing communications with tangible value for all parties, they may represent much better value for advertisers than mobile banners or text messaging.

Consumer Attitudes Toward Digital Advertising

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UK Digital Advertising and Marketing: Spending and Trends Copyright ©2011 eMarketer, Inc. All rights reserved. 21

Conclusions

Digital is the driving force of UK ad spending. For many advertisers, financial concerns are encouraging a shift away from traditional media into online and mobile. At the same time, TV, radio, print and outdoor channels are far from dead. For marketers, the essential task is still the same: fusing the strengths of individual platforms to produce a compelling consumer experience. Few brands will be able to ignore offline media entirely, and those that excel at cross-channel marketing should continue to score big successes.

Economic conditions favor search marketing. Consumers feeling a financial pinch are less likely to respond spontaneously to marketing messages, and more likely to spend time considering what and where to buy. That means more time spent searching for specific products and brands. For marketers, ensuring peak efficiency in search engine marketing and optimization can pay real dividends.

Email is a proven performer. Thanks to the opt-in mechanism, most brand emails are widely welcomed by consumers. Marketers can get additional mileage out of this well-established channel by using email to reinforce their other efforts, such as promoting their brand’s social presence, website and physical stores. Email is also a great delivery mechanism for coupons, sent either to shoppers’ desktops or to their mobile phones. Brands that let recipients choose how they receive email coupons or discounts can earn additional loyalty.

Brand usage of social media is evolving fast, but one size does not fit all. CPG and lifestyle brands, and those for whom buzz is crucial, have blazed a trail in social marketing, and many are now shifting even greater budgets to Facebook and other social networks where their audiences gather. For other brands, especially those with transactional websites, social media will probably be less central to brand awareness and sales.

Mobile marketing has a great future, especially among active shoppers. Given the ubiquity of mobile phones and other devices, including tablets, the importance of this channel can only increase. But most consumers have mixed feelings about mobile ads. Marketers that invest heavily in mobile banners may consider shifting budget to mobile search, apps or other mobile services that deliver tangible value to users.

Related eMarketer Reports

Worldwide Ad Spending: Online Drives Growth The Global Media Intelligence Report: Western Europe Western Europe Mobile: Trends, Case Studies and Best Practices

Related Links

comScore Direct Marketing Association (DMA) Efficient Frontier Interactive Advertising Bureau UK (IAB UK) InMobi Institute of Practitioners in Advertising (IPA) Ipsos Mori UK Mobile Marketing Association (MMA) World Advertising Research Center (Warc) YouGov

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