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2 About This Report Who in marketing and advertising doesn t want to take full advantage of the wide range of opportunities offered by emerging alternative media, but at the same time feels overwhelmed at the explosion of disruptive digital technologies, volatile media markets, audience fragmentation and the pace of change. The PQ Media Alternative Media Forecast , presents first-ever primary research to define, structure, size & forecast digital & alternative media covering all 18 segments of the alternative media landscape. The report offers unique perspective, actionable data and the insights necessary for sound strategic planning and media mix decision-making. The thinking behind this report had one goal in mind: Focus on demystifying the changing alternative media landscape through proven media econometric methods and analytics, as well as paint a clear picture of the most promising segments and what s likely to happen next. Our objective, as always, is to empower media companies, financial institutions, and brand marketers to make high-stakes investment decisions. Our media econometric methodology layers the impact of key data and variables, including economic, demographic, behavioral, technological and regulatory, among others. PQ Medianomics has consistently predicted key trends, insights and outcomes that have influenced strategic plans, investment parameters and tactical approaches. PQ Media research has provided our clients with support for developing gamechanging strategies to achieve competitive advantage and growth. Toward that end, the exclusive PQ Media Alternative Media Forecast will answer the following questions, among others: How are the 18 alternative media segments defined? How does alternative media share of spend vs traditional change over time? Where do media dollars move within alternative media and why? What trends have been driving double-digit growth through 2007? Which segments are poised for fastest growth in the coming years? What is the long-term growth potential for each segment through 2012? Table of Contents Letter from the Publisher... Error! Bookmark not defined. Methodology... Error! Bookmark not defined. Executive Summary... 8 Alternative Media Analysis, Definitions & Segmentation...11 Alternative Advertising Online & Mobile Advertising Key Takeaways...16 Definitions & Segmentation...17

3 Online & Mobile Advertising Analsyis, Search & Lead Generation...19 Online Classifieds & Displays...20 E-Media...22 Online Video & Rich Media...23 Internet Yellow Pages...24 Consumer-Generated Media...25 Mobile Advertising...27 Online & Mobile Advertising Forecast, Entertainment & Digital Out-of-Home Advertising Key Takeaways...32 Definitions & Segmentation...33 Entertainment & Digital Out-of-Home Advertising Analysis, Local Pay Television...35 Digital Out-of-Home Media...37 VOD, ITV & DVR...38 Videogame & Home Video...39 Satellite Radio...41 Entertainment & Digital Out-of-Home Advertising Forecast, Alternative Marketing... Error! Bookmark not defined. Branded Entertainment Marketing Key Takeaways...46 Definitions & Segmentation...47 Branded Entertainment Marketing Analysis, Event Sponsorship & Marketing...49 Product Placement...51 Advergaming & Webisodes...55 Branded Entertainment Marketing Forecast,

4 Interactive Marketing Key Takeaways...60 Definitions & Segmentation...61 Interactive Marketing Analysis, E-Direct Marketing...62 Word-of-Mouth Marketing...65 E-Custom Publishing...67 Interactive Marketing Forecast, Forecast Conclusions Alternative Marketing Forecast, Appendix Appendix I: Alternative Media Spending & Growth by Sector & Segment...73 Appendix II: Alternative Media Sectors & Segments Ranked by Spending...74 Appendix III: Alternative Media Sectors & Segments Ranked by Growth...75 Appendix IV: Share of Alternative Media in Overall Ad & Marketing Spend...76 Appendix V: Selected Sources...77 Data Tables & Charts Executive Summary ES.1 Alternative Media Spending, Online & Mobile Advertising 1.1 Online & Mobile Advertising Spending, Share of Spending on Online & Mobile Advertising in Number of Magazine Titles with Websites Number of Global Blogs Online & Mobile Advertising Forecast, Entertainment & Digital Out-of-Home Advertising 2.1 Entertainment & Digital Out-of-Home Advertising Spending, Share of Spending on Entertainment & Digital Out-of-Home Advertising in DVR Subscribers Entertainment & Digital Out-of-Home Advertising Forecast, Branded Entertainment Marketing 3.1 Branded Entertainment Marketing Spending, Measuring Campaign Effectiveness Share of Spending on Branded Entertainment in Branded Entertainment Marketing Forecast, Interactive Marketing 4.1 Interactive Marketing Spending, Share of Spending on Interactive Marketing in Consumer Trust of Media in Purchasing a Product Interactive Marketing Forecast, Forecast Conclusions

5 FC.1 Alternative Media Forecast, Appendix A.1 Alternative Media Spending & Growth by Sector & Segment A.2 Alternative Media Sectors & Segments Ranked by Spending A.3 Alternative Media Sectors & Segments Ranked by Growth. 75 A.4 Share of Alternative Media in Overall Ad & Marketing Spend. 76 A.5 Selected Sources Executive Summary As the New Media Order gains strength through significant advances in technology and critical changes in the consumer base, the advertising industry is in a seminal period of transition. Driven by these market forces, brand marketers perceive traditional media as being less effective. As a result, marketers need new strategies to connect with consumers without disrupting them. Major advertisers have already begun reallocating traditional media budgets to alternative advertising and marketing strategies, as they scramble to successfully navigate the rapidly changing media landscape. What the full PQ Media Alternative Media Forecast report makes abundantly clear is the fast growth of the alternative media sector has been driven by significant advances in digital technology, critical changes in consumer media usage and behaviors, and increasing demand for more accountability and stronger return-on-investment (ROI) metrics. As a result, brand marketers need new strategies to connect with consumers without disrupting them. Spending on alternative media jumped 22.0% to $73.43 billion in 2007 and grew at a compound annual rate of 21.7% from 2002 to 2007,

6 The momentum is expected to continue in 2008 despite a slowing economy, as brand marketers scramble to stay in step with a rapidly changing media landscape. Total spending on alternative media is forecast to grow 20.2% to $88.24 billion in 2008 and post compound annual growth of 17.0% in the period, reaching $ billion. Digital and alternative media are forecast to command 26.6% of total U.S. advertising and marketing spend in While all 18 segments of PQ Media s Alternative Media Matrix including 12 alternative advertising segments and six alternative marketing segments posted double-digit growth in 2007, 12 of the 18 segments grew faster than 20% for the year. These same 12 segments are projected to drive growth over the next five years, including consumer-generated media, mobile advertising, videogame advertising, online video advertising, word-of-mouth marketing, search & lead gen advertising, and digital out-of home media, among others. The largest alternative media segments in 2007 were event sponsorships & marketing, search and lead gen, e-direct marketing, online classifieds & displays, local pay TV, and product placement, according to the PQ Media Alternative Media Forecast , the first source ever to define, structure, size and forecast the direction of the comprehensive digital and alternative media sector. About PQ Media PQ Media ( is the leading provider of custom media econometrics and the pioneer of alternative media research. PQ Media partners with private-equity

7 firm Veronis Suhler Stevenson on the renowned VSS Communications Industry Forecast, the media industry s annual benchmark for spending, usage and trends data. The Alternative Media Forecast is part of PQ Media s Alternative Media Research Series, the first source to define, size and forecast emerging markets such as word-of-mouth marketing, product placement, consumer- generated media and digital out-of-home advertising, among others. PQ Media is located at Two Stamford Landing, Suite 100, Stamford, CT We can be reached by phone at We welcome your feedback. us at

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