IAB/PwC Internet Advertising Revenue Report

IAB/PwC Internet Advertising Revenue Report 2015 Full Year and Q4 2015 April 21, 2016

2015 Full Year and Q4 2015 IAB/PwC Digital Ad Revenue Report Highlights Apr. 2016 Sherrill Mane SVP, Research, Analytics and Measurement, IAB 2

2015 Full Year Digital Ad Revenue Highlights To improve is to change; to be perfect is to change often. -- Winston Churchill 3

1996 2016: 20 Years of IAB Internet Ad Revenue Reporting Happy 20 th Birthday!!!

In billions 20 Years of Tracking Internet Ad Revenue Quarterly Internet Ad Revenue Trends, in Billions 1996 2015 Formats Added to Report: Banners, Sponsorships, Interstitials, Email, Other 2016 $59.6B First Internet Ad Revenue Report Search Added Video Added Mobile Added Mobile Subformats Added 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1996 $267M Rich Media, Lead Gen & Classifieds Added Social Media Added 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 5

Annual Interactive Ad Revenue Exhibits Double Digit for the Sixth Consecutive Year 2015 US interactive ad revenue totals $59.6 billion This represents an increase of 20.4% over last year and equals $10.1 billion Stellar annual revenue picture for digital advertising contrasts with small overall ad market declines reported by Nielsen (-5 %) Key drivers of revenue growth: Mobile exceeds $20 ($20.7) billion, up 66% and now accounting for 35% of total interactive ad revenue Digital video continues double digit growth, up 30% since last year for a total of $4.2 billion, an increase of nearly $1 billion Across measured platforms and formats, aggregate social media advertising revenue closed the year at $10.9 billion, up 55% from 2014 6

Full Year 2015 Interactive Advertising Outpaces the Market Softness in (desktop) display, sponsorships and rich media: Display/Banners now at $7.7 billion (-4%), and sponsorships at $649 million, rich media at $1.3 billion Migration to mobile is further supported by 80% growth in all mobile display related advertising including mobile video, banners, etc., closing the year at $11 billion Similar patterns prevail for 4th quarter 2015 internet ad revenue, up 23% overall from same time in 2014, to a total of $17.4 billion 7

$ Billions FY 2015 Year Over Year Revenue Digital Ad Revenue (FY 2014 vs. FY 2015) $70.0 $60.0 $50.0 $40.0 $30.0 $49.5 20% $59.5 Total Media Ad Revenue (FY 2014 vs. FY 2015) The Nielsen Company estimates total media revenues decreased 5% over 2015 to $119.8B. $20.0 $10.0 $0.0 FY 2014 FY 2015 8 Sources: IAB Internet Advertising Revenue Report, 2015 First Half Year and 2 nd Quarter Report; The Nielsen Company, MonitorPlus (Standard Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Apr. 2016

Mobile Advertising Revenue Continues 1st Half Year US Mobile Ad Revenue ($ Billions) First Half Year, Full Year and % YoY 2nd Half Year $20.7 $12.4 1HY: 75% FY: 76% $12.5 1HY: 54% FY: 66% 9 9 $0.6 FY: 149% $1.6 1HY: 95% FY: 111% $3.4 $2.1 $1.0 $0.6 $1.2 1HY:145% FY: 110% $7.1 $3.0 $5.3 $8.2 FY '10 FY'11 FY'12 FY '13 FY '14 FY '15 *Full year totals accurately reflect the sum of half year totals as rounded to two decimal places. Source: IAB Internet Advertising Revenue Reports, Full and Half Year 2010-2015 $4.0 $7.1

Digital Video Advertising on a Trajectory, FH Year Revenue More than Tripled Since 2010 $1.4B $0.8B 1st Half Year 1HY: 47% FY: 29% $1.8B $0.9B US Video Ad Revenue ($ Billions) First Half Year, Full Year and % YoY 1HY: 18% FY: 29% 2nd Half Year $2.3B $1.3B $2.2 1HY: 24% FY: 19% $2.8B $1.5B 1HY: 13% FY: 17% $3.3B $1.8B 1HY: 35% FY: 30% $4.2B $2.2B $0.6B $0.9B $1.0B $1.3B $1.5B $2.0B FY '10 FY'11 FY'12 FY '13 FY '14 HY'15 10 10 Source: IAB Internet Advertising Revenue Reports, Full and Half Year 2010-2015

Social Media Advertising Revenue Grows Over 50% Every Year Measured US Social Media Ad Revenue ($ Billions) First Half Year, Full Year and % YoY 1st Half Year 2nd Half Year $10.9 $7.0 $6.4 $2.9 $1.7 $1.2 1HY: 50% FY: 53% $4.5 $2.6 $1.9 $2.2 1HY: 58% FY: 57% $4.1 $2.9 1HY: 51% FY: 55% $4.4 FY'12 FY '13 FY '14 HY '15 11 11 Source: IAB Internet Advertising Revenue Reports, Full and Half Year 2012-2015

$ Billions Q4 2015 Revenue Compared With Q4 2014 Digital Ad Revenue (Q4 '14 vs. Q4 '15) $20.0 $18.0 23% $17.4 Total Media Ad Revenue Change (Q4 '14 vs. Q4 '15) $16.0 $14.0 $12.0 $14.2 According to Nielsen, total media revenues decreased 3% from Q4 2014 to Q4 2015 to 33.9B. $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 Q4 2014 Q4 2015 12 Sources: IAB Internet Advertising Revenue Report, 2015 First Half Year and Q4Report; The Nielsen Company, MonitorPlus (Standard Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Apr. 2016

Q4 2015 Ad Revenue Digital vs. Top Non-Digital Media Internet Broadcast TV Cable TV Total Ad Revenue Q4 14 vs. Q4 15 ($Billions) $15.5 $15.2 $6.4 $6.8 $14.3 $11.7 Percent YoY Change 15% 23% 7% 2% -6% Newspaper $2.7 $3.0-3% -13% Radio Magazine $1.6 $1.5 $4.4 $4.5 Q4 '15 Q4 '14 6% 1% -3% 13 Source: Nielsen FY 2015, Apr. 2016 +Source: PWC IAB First Half Year and Q4 2015 Internet Advertising Revenue Report, Apr. 2016 The total U.S. advertising market includes other segments not charted here. Broadcast Television includes Network and Syndicated and Spot television advertising revenue. Cable Television includes National Cable Networks and Local Cable television advertising revenue. Radio includes Network and Spot Radio advertising revenue. Newspaper includes Local, National, Sunday Supplement. Magazine includes Local, National.

Display: Eight Category Avg. CPM Trend Weighted Average - CPM of All buys Placed Within the Quarter - Dec. 2015 $50.00 $45.00 WebCosts Eight Category Average CPM Q1 2013 Q4 2015 $40.00 $35.00 Finance / Insurance / Investment $30.00 $25.00 Automotive $20.00 Entertainment $15.00 Family & Lifestyles Home and Fashion $10.00 $5.00 News & Information Corporate Information Search Engines / Portals & Communities $- 1Q_13 2Q_13 3Q_13 4Q_13 1Q_14 2Q_14 3Q_14 4Q_14 1Q_15 2Q_15 3Q_15 4Q_15 SQAD Copyright(c) 2009-2016 SQAD LLC - All Rights Reserved

WebCosts Display Composite Fifty Average CPM, Full Year 2015 - Fifty Same-Site Comparative Report $15.00 $14.00 $13.00 $12.00 $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 40 30 20 10 0 2015 Q4 Average CPM Compared to 2014 Year Average. CPM 32 17 1 Up Down Flat WebCosts Display Composite Fifty Average CPM, 2013 Through 2015 2013 Average CPM: $11.61 2014 Average CPM: $11.35 2015 Average CPM Full Year: $12.09 2013 2014 2015 January February March April May June July August September October November December 15 SQAD Copyright(c) 2009-2016 SQAD LLC - All Rights Reserved

Display and In-Stream Video Quarterly CPM Comparison WebCosts Database, All sites / All Categories $30.00 $25.00 Display and In-Stream Video Quarterly CPM Comparison All sites / All Categories WebCosts Database $20.00 $15.00 $10.00 $5.00 $0.00 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Display Average SQAD WebCosts Copyright(c) 2009-2016 SQAD LLC - All Rights Reserved. In-Stream Average

Key Takeaways Brand spend continues to rise: CPMs up Digital video continues to grown significantly (+30%) Revenue associated with impression based advertising up 21% and holding a one third share as it has for some time now $11 billion of mobile revenue, nearly half of its total, is coming from display-related mobile formats including video Dollars moving from other media into digital, all forms of digital Unabated growth in a flat top media market Mobile likely garnering incremental spend from other media, digital media and through experimental budgets 17 *Note: Display-related ad formats are defined as: banner ads, digital video commercials, rich media, and sponsorships.

Key Takeaways Positive effects of improved measurement, viewable inventory and combatting fraud becoming noticeable Rising CPMs along with demand likely offset inventory supply changes Programmatic buying contributing to new supply demand relationships 18 *Note: Display-related ad formats are defined as: banner ads, digital video commercials, rich media, and sponsorships.

2015 Full Year and Q4 2015 IAB/PwC Digital Ad Revenue Report Highlights Apr. 2016 Sherrill Mane SVP, Research, Analytics and Measurement, IAB 19

THANK YOU FOLLOW-UP QUESTIONS: Additional questions from IAB members can be directed to Kristina Sruoginis: Kristina@IAB.com Additional press questions can be directed to Laura Goldberg: Laura.Goldberg@IAB.com Reports (from 1996 to present) can be found at: http://www.iab.net/adrevenuereport