DIGITAL 101 The Digital Space –

Always on the Edge of Glory

Holly Bowyer

Yahoo!

June 2012

Agenda ONLINE UNIVERSE

Why Digital?

Trends & Usage

Online Behavior

Ad Spending

MEDIA PROPERTIES Search

Video

Mobile

Social

Rich Media

Q&A

2

the AUDIENCE Content: Community: Search: Personalization

1 FIND & ENGAGE

the AUDIENCE Activities & Preferences

2 KNOW

the OFFER Multi-channel: Rich Media: Creative Assembly: Offer transformation

3 CAPTURE

MEASURE and PROVIDE INSIGHTS…

5 UNDERSTAND the OFFER Audience targeting: Optimizing relevance & value Executing

4 Match & Present

3

Why Digital?

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

195

200

205

210

215

220

225

% o

f p

op

ula

tio

n

(millio

ns o

f u

niq

ue v

isit

ors

)

Year

US Internet Users and Penetration, 2009-2012 (millions and % of population)

Reach % of Population

The number of internet users is expected to continue to

increase

4 Source: ComScore MediaMetrix Dec. 2009- May 2012; Total Uniques Home & Work

2009 2010 2011 2012 Through May

The Online Universe Growing Exponentially

Total Monthly Internet Audience

ComScore Total Unique Visitors (000)

Total Minutes (MM)

Total Minutes Per Unique

2011 220,439 469,397 2,129

2010 213,584 390,435 1,828

5 Source: ComScore MediaMetrix Dec. 2011, Nielsen NetView Dec. 2011 Total Internet: Total Audience

Unique Visitors Is Growing

6 Source: ComScore MediaMetrix Jan 2011 – May 2012 NTotal Uniques Home & Work

200,000

205,000

210,000

215,000

220,000

225,000

230,000

Total Unique Visitors (000)

221,163

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec Jan

Feb

Mar

Apr

May

2011 2012

221,621

Up 4.5%

So Is Usage

Source: ComScore MediaMetrix Feb 2009-May2012

Average Minutes per Visitor

Average Pages per Visitor

1,677.0

2,105.4

2,417

3,213

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Feb-2

009

Mar-

2009

Apr-

2009

May-2

009

Jun-2

009

Jul-2009

Aug-2

009

Sep-2

009

Oct-

2009

Nov-2

009

Dec-2

009

Jan-2

010

Feb-2

010

Mar-

2010

Apr-

2010

May-2

010

Jun-2

010

Jul-2010

Aug-2

010

Sep-2

010

Oct-

2010

Nov-2

010

Dec-2

010

Jan-2

011

Feb-2

011

Mar-

2011

Apr-

2011

May-2

011

Jun-2

011

Jul-2011

Aug-2

011

Sep-2

011

Oct-

2011

Nov-2

011

Dec-2

011

Jan-2

012

Feb-2

012

Mar-

2012

Apr-

2012

May-2

012

Minutes Spent Online & Pages Viewed per Visitor (red = Avg. Pages per visitor) (blue = Avg. Minutes per visitor) Up

33%

Up 26%

Jan

Feb

Mar

Ap

r M

ay

Ju

n

Ju

l A

ug

Sep

Oct

No

v D

ec

Jan

Feb

Mar

Ap

r M

ay

Ju

n

Ju

l A

ug

Sep

Oct

No

v D

ec

Jan

Feb

Mar

Ap

r M

ay

Ju

n

Ju

l A

ug

Sep

Oct

No

v D

ec

Jan

Feb

Mar

Ap

r M

ay

2009 2010 2011 2012

7

Top 10 Online Properties as of Dec 2011

ComScore Total Unique Visitors (000)

TOTAL UNIQUES 220,439

Google Sites 187,138

Microsoft Sites 177,296

Yahoo! Sites 176,485

FACEBOOK.COM 162,486

Amazon Sites 114,732

AOL, Inc. 107,076

Ask Network** 89,168

Glam Media*** 86,616

Turner Digital*** 84,215

Wikimedia Sites 83,010

8 Source: ComScore MediaMetrix Nov. , Dec. 2011, *ComScore ranks Apple at #11 and eBay at #15.

What Do Consumers Do Online?

GATHER INFORMATION

Search

COMMUNICATE

Email Messenger Social Media & Communities

CONSUMER CONTENT

News, Sports, Finance, Entertainment, and more

PERFORM TASKS

Online Banking Paying Bills Shopping

PERSONALIZE THEIR EXPERIENCES

Social Customized Sites Groups

9

2011 Top Categories By Time Spent Online US Internet Users and Penetration, 2011-2012 (millions and % of population)

0%

5%

10%

15%

20%

Share of Total Time Spent on Internet at Top Web Properties

Portals E-mail Community

Social Networking News/Information Games

Entertainment Retail

10 Source: ComScore MediaMetrix Dec. 2010-Dec.2011 from ComScore 2012 U.S. Digital Future in Focus

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2011 2012

Entertainment

Social

Email

Portals

Top Trending Online Behaviors

92%

60%

49%

35%

33%

33%

24%

18%

92%

37%

44%

15%

18%

31%

17%

13%

2010 2007

Use email

Purchase products

Send or receive photos by email

Visit social networking sites

Watch Internet video/streaming video

Use instant messaging

Listen to Internet radio/streaming audio

Read blogs

163

107

86

62

58

58

42

31

Millions of adults (2010)

Which of the following online activities do you do at least monthly?

11 Base: 29,295 US online adults / *Base: 28,771 US online adults (Multiple responses accepted) Source: Forrester, December 2010

Trended Online Activities Show Continued Growth 2008-2015

In a typical week, how many hours do you spend doing each of the following?

Reading magazines (not online)

Reading newspapers (not online)

Listening to the radio (not online)

Using the Internet*

Watching TV

2015 2014 2013 2012 2011 2010 2009 2008

0%

117%

-18%

-17%

-6%

Percent change (2008-2015)

12 July 2009 “Consumer Behavior Online: A 2009 Deep Dive” Source: North American Technographics® Benchmark Surveys, 2008 to 2015 *Since 2007, Internet usage was split into “Internet for personal purposes” and “ Internet for work purposes.” The number shown here represents the sum. In prior years, we asked about Internet usage in a single item.

Speaking of other media…Multitasking is the Latest

Trend. 3 out of 4 online Americans use the Internet and

TV at the same time

13

Frequency of simultaneous use

4%

7%

8%

31%

51%

Ha

lf:

Da

ily

90

%:

Wee

kly

75%

25%

Multitask Don’t

This happens frequently: over half of Simultaneous users multi-task daily

Less often

Once or twice per month

Once per week

Several times per week

Daily

American Media Multitasking Study, 2011 Q: Do you ever do the following at the same time? Q: On average, how often do you watch TV at the same time as using the internet?

Focus on the Internet

54% Divide

Attention

30% TV

16%

When using the TV & Internet at the same time, ATTENTION is usually focused ONLINE

14

But, there are several mismatches between the average

share of time people spend with a medium and the share

of ad dollars that medium receives

42.5%

25.9%

14.6%

10.1%

4.0%

2.8%

42.0%

22.2%

10.7%

1.0%

14.3%

10.6%

Tv

Internet*

Radio

Mobile

Newspapers

Magazines

Share of Average Time Spent per Day with Select Media by Us Adults vs. US Ad Spending Share, 2011 (% of total)

Time spent share Ad spending share

15 Note: *time spent with the internet excludes internet access via mobile, but online ad spending includes mobile ad spending; due to this, the total of the ad spending shares for all the media adds up to more than 100% Source: eMarketer, Dec 2011 & Jan 2012

Social network ad spending will grow 54% between 2012

and 2014

$5.59

$4.73

$3.63

$2.54

18.0%

30.4%

43.0%

28.9%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2014 2013 2012 2011

US Social Network Ad Revenues, 2011-2014 (billions and % change)

Social network and revenues % change

16 Note: Includes paid advertising appearing within social network sites, social network games and social network applications; excludes spending by marketers that goes toward developing or maintaining a social network presence Source: eMarketer, Feb 2012

17

Let the competition begin!

Large Online Ad Buys Grew in 2011

79 65

74

104 99

10 14

15

15 20

12 12

10

13 17

4 4

5

7 9

0

20

40

60

80

100

120

140

160

Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011

Number of Advertisers Delivering at Least 1 Billion Display Ad Impressions per Quarter

1-3 Billion 3-5 Billion 5-10 Billion 10+ Billion

18 Source: ComScore Ad Metrix, US Q4 2010 – Q4 2011, ComScore 2012 Digital Future in Focus

Top Digital Advertisers of 2011

105,792

67,565

49,481

44,031

40,454

38,662

36,991

32,302

30,042

29,403

AT&T Inc

Experian Interactive

Verizon Communications

Scotttrade, Inc

Google, Inc

Microsoft Corporation

Netflex, Inc

Ebay, Inc

Progressive Corporation

IAC - Interactivecorp

Top Ten U.S. Online Display Advertisers by Numbers of Impressions in Millions

19 Source: ComScore Ad Metrix, Jan. 2011-Dec. 2011, ComScore 2012 Digital Future in Focus

So you’re sold on digital but which are the best formats?

35%

20%

18%

11%

9%

53%

13%

8%

6%

Banner ads

Overlay ads

Sponsorship

Pop-up ads

Expandable banner ads

Pre, mid, post rolls

Video banner ads

Pop-up video ads

Expandable video banner ads

I remember seeing this ad format (Among those who remember seeing advertising)

20 Interpret Study, 2011 C21a. Please take a look at the explanations below and tell us what type of ads you remember seeing during this video experience. N=6280

SEARCH

21

Search will remain the largest ad format

49.4%

23.4%

7.9%

6.4%

4.9%

4.2%

3.5%

0.4%

Search

Banners

Video

Classifieds and directories

Lead generation

Rich media

Sponsorships

Email

US Online Ad Spending Share, by Format, 2012 (% of total)

22 Note: eMarketer benchmarks its US online and spending projections against the IAB/PwC data, for which the last full year measured was 2010 Source: eMarketer, Jan 2012

Marketing Objectives Met by Search

PAID SEARCH HELPS ACHIEVE MARKETING GOALS

DRIVE AWARENESS

Traffic Reach and frequency

OBTAIN LEADS

Registrations

DRIVE PURCHASES

ROI Conversions

23

Organic (SEO) vs. Paid Listings (SEM)

24

Display Advertising is a Powerful Driver of Search

After being exposed to a display ad, consumers were:

136% more likely to search the brand’s keywords

86% more likely to click on a sponsored text ad

25 Google/ComScore panel.

Rich Ads in Search (RAIS)

NEW AD FORMATS

26 Internal Yahoo! and Microsoft Data, December 2011

Include ADDITIONAL LINKS, IMAGES, FAVICONS, VIDEOS AND MORE

MAINLINE EXCLUSIVE POSITION for brand terms on Yahoo! Search and Bing

Help IMPROVE CTR AND INCREASE BRAND AWARENESS

Average a 30-35% CTR: 40-50% HIGHER compared to a standard text ad.*

MORE ENGAGING EXPERIENCE for prospective customers

Search Needs to be Part of the Marketing Mix/Buying

Cycle

AWARENESS

CONSIDERATION

INTEREST

ACTION/ PURCHASE

Higher Converting

Lower Converting

Rich Ads in Search

Email

Targeted Display

Non-Targeted Display

Offline

Contextual Text Ads

Search

27

Continued innovation in Search

AIMING TO DELIVERING ANSWERS, NOT LINKS making it easier to access the information, services and answers people are looking for.

28

Today’s Search

Experience

Query Search Results Page

• Find the Best Answers • Get Things Done • Discovery & Entertainment • Make Smarter Choices • Wherever the User Goes

Query + Personal Context: • Search and

Behavioral History • Social • Location

Yesterday’s Search

Experience

29

Navigating a New

Course In Search –

Yahoo! Axis

….re-imagining the search and browse process.

Smarter, Faster Search with Rich Design

Connected Experience across multiple devices

Personalized Home Page

Standalone Mobile Browser, Desktop Plug-In

30

DIGITAL VIDEO

PR

EMIU

M

ON

LIN

E V

IDEO

P

REM

IUM

O

FFLI

NE

VID

EO

UG

C

VID

EO

NET

WO

RK

S

Originals

Video Marketplace

December 2011 Total Video Audience

VIDEO Videos (000)*

Total Unique Viewers (000)

Minutes (per Viewer)

43,472,412 181,669 1,389.8

VIDEO ADS Video Ads

(000) Frequency

(Ads per Viewer) Total Ad Minutes

(000)

7,115,272 45.6 3,009

December 2011 Highlights 85.3 percent of the U.S. Internet audience viewed online video.

The duration of the average online content video was 5.8 minutes, while the average online video ad was 15 seconds.

Video ads accounted for 14.1 percent of all videos viewed and 1.2 percent of all minutes spent viewing video online.

All time high!

32 *A video is defined as any streamed segment of audiovisual content, (both progressive downloads and live streams). For long-form, segmented content, (e.g. TV episodes with ad pods in the middle) each segment of the content is counted as a distinct videostream. Source: ComScore Video Metrix Dec. 2011 Total U.S. – Home/Work/University Locations. Content Videos Only (not ads), Press Release

More and More People Are Viewing Videos Online

73.70

30.10

175.00

105.10

43.50

239.00

Growth in Total Online Video Content Market Dec-2010 Dec-11

Average daily unique viewers

(millions)

Videos viewed (billions)

Videos per viewer

+43%

+44%

+37%

33 Source: ComScore Video Metrix Dec. 2011, Dec. 2010. 2012 Digital Future in Focus

Top Online Video Sites

28,233

30,168

38,925

41,247

42,833

44,298

49,479

53,604

157,663

Hulu

Amazon Sites

AOL, Inc.

Viacom Digital

Microsoft Sites

Facebook.com

VEVO

Yahoo! Sites

Google/YouTube

Total Unique Visitors (000)

34 Source: comScore Video Metrix, April 2012

Online video watching has increased significantly

43%

38%

18%

14%

57%

48%

31%

21%

I watched in the past 24 hours... 2009 2011

Watch online videos Watch short clips Watch full-length TV shows

Watch full-length movies

+33%

+26%

+72%

+50%

35 S9. When would you say was the last time you watched the following types of streaming online video? N=24163 Arrows indicate significant difference at 90% level of confidence

High Quality, Short Form Videos Are Most Popular

The vast majority of online video consumption is short-form and consumers are saying they want more!

Type of video watched online in past 24 hours*

Full-Length Movies

Full-Length TV Shows

Short-form video

60% 60%

I expect to watch more…

...professionally-produced short

online video clips

...original video content that can

only be found online

Q: How much do you agree or disagree with each of the following statements about online video? (Top 2 Box

Agreement Reported) N= 1142

8%

18%

74%

36 Interpret Study, 2011

When are they watching?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

5AM - 8:59AM 9AM - 11:59AM 12:00PM - 2:59PM 3PM - 5:59PM 6PM - 8:59PM 9PM - 12:59AM 1AM - 4:59AM

2009 2011 I watched in the past 24 hours...

Netflix in the past 24hrs +200% Hulu in past 24hrs +67%

?

37 Interpret Study, 2011 C1. At what time or times in the past 24 hours did you begin watching a video or series of videos? N=4089

Video ad spending will jump more than twice as much

as any other format or the overall market

54.7%

27.0%

27.0%

23.3%

19.8%

18.5%

4.1%

3.1%

1.2%

Video

Search

Sponsorships

Total

Banners

Lead generation

Rich media

Email

Classifieds and directories

US Online Ad Spending Growth, by Format, 2012 (% change)

38 Note: eMarketer benchmarks its US online ad spending projections against the IAB/PwC data, for which the last full year measured was 2010 Source: eMarketer, Jan 2012

TV is great for reach but when it comes to effectiveness,

digital video works harder

46%

26% 21%

14%

65%

50%

39%

26%

General Recall Brand Recall Message Recall Likeability

Online Video Ads Outperform TV Ad Performance

TV Premium Online Video

39 Source: Nielsen IAG, A18-49, Jan 2011

#1 Online Video is the new primetime

40

#2 Shortform is still most popular

41

#3 Go Professional!

42

#4 Multi-tasking is common and frequent

43

MOBILE 44

Mobile Trends

Rising smart device and mobile web adoption signal new imperatives for marketers. Marketers need to look toward the day when the mobile web is no longer a sideshow but a main event.

Mobile marketing is no longer a question of “if” but of “when.” Expect to see mobile continue to emerge as less of an afterthought and more of a permanent fixture in marketers’ digital strategies.

Mobile advertising is following a similar evolution as the desktop. Search and display are emerging as the dominant mobile ad formats. The outlook for mobile ad spending overall is trending sharply upward.

The future of mobile is all about sophistication. More capable devices, faster networks, savvier mobile consumers and richer experiences lie ahead. Marketers’ strategies must evolve in line with the growing sophistication of mobile devices and consumers’ usage patterns.

45

US Mobile Ad Spending (millions and % change)

Mobile Ad Dollars Are on the Rise

2011

2012

2013

2014

2015

$1,102 +48%

$1,226 +65%

$1,501 +36%

$1,802 +47%

$2,036 +36%

$2,523 +40%

$2,549 +25%

$3,381 +34%

$4,396 +30%

Sept 2010 forecast Sep 2011 forecast

46 Emarketer, 2011

Smartphone Users Engage with Web &

Media Content

92% Send/receive text messages

84% Access the internet

76% Send/receive email

69% Download an app

59% Access a social network

54% Watch a video

76% Access Twitter

47 Source: Pew Internet & American Life Project, *Americans and Their Cell Phones,,” Aug 15, 2011 www.eMarketer.com

So Do Tablet users

77% General web browsing

73% Email

71% Reading news

69% Streaming video

66% Gaming

66% Social networking

61% Shopping/ purchasing

57% Movies

56% Work

48 Source: InsightExpress, June 2011

Search and display are emerging as the dominant

mobile ad formats

US Mobile Ad Spending, by Format, 2010-2015 (millions and CAGR)

2010 2011 2012 2013 2014 2015 CAGR

Messaging $327.3 $442.6 508.3 560.2 612.0 633.0 14%

Banners and rich media $202.5 376.4 594.8 883.2 1,207.1 1,600.0 51%

Search $185.0 349.4 594.8 908.4 1,291.6 1,767.1 57%

Video $28.3 57.6 104.5 171.6 270.5 395.6 69%

Total $743.1 $1,226.1 $1,802.4 $2,523.3 $3,381.3 $4,395.7 43%

49 Note: Numbers may not add up to total due to rounding Source: eMarketer, Sep 2011 Twitter: #eMwebinar @noahelkin

Mobile: Bottom line: Mobile can play a key role at every stage of the purchase funnel

AWARENESS

ENGAGEMENT

CONSIDERATION

CONVERSION

LOYALTY

Tag traditional media with barcodes Mobile display media Mobile search engagement

SMS alerts Mobile websites/apps 2-D barcodes Display media

Mobile websites/apps Mobile coupons IVR/Click-to-call

Mobile shopping/m-commerce 2-d barcodes Mobile websites/apps

SMS alerts Mobile apps

50

SOCIAL 51

Social Trends

US social network ad revenues will reach $2.74 billion in 2011.

By 2013, revenues are expected to grow to $4.81 billion.

More ad dollars are funneling to social sites. In 2013, 11.7% of US online ad spending will go toward social networks.

Ad spending is growing because more consumers are using social networks. 65% of online adults use them, according to the Pew Internet & American Life Project.

52

Social networks will receive 11.7% of US online ad

spending in 2013

US Social Network Ad Revenues, 2009-2013 (billions and % of total US online ad spending)

2009 2010 2011 2012 2013

Social network and revenues $1.44 $2.00 $2.74 $3.90 $4.81

Total US online ad spending $22.70 $26.00 $31.30 $36.80 $41.20

Social network % of total 6.3% 7.7% 8.8% 10.6% 11.7%

53 Note: includes paid advertising appearing within social network sites, social network games and social network applications; excludes spending by marketers that goes toward developing or maintaing a social network presence Source: eMarketer, Sep 2011

147.8% 157.8%

164.2% 170.7%

47.2% 49.9% 51.4% 52.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

2011 2012 2013 2014

US Social Network Users and Penetration, 2011-2014 (millions and % of population)

Social network users % of population

This year, nearly half of the US population will be social

network users

54 Note: Ages 12+; use several times per day Source: Arbitron and Edison Research, “ The Infinite Dial 2012: Navigating Digital Platforms, “ April 10, 2012 www.eMarketer.com

This year, nearly half of the US population will be social

network users

Ways that US Social Network Users Use Social Media, Jan 2012

4%

36%

25%

20%

15%

Dating

Staying in touch

Entertainment

Information

Self-expression

55 Note: Ages 18+ Source: Netpop Research, “Social Media in the U.S.” as cited in MediaPost, Aprila 16, 2012 www.eMarketer.com

Social : Bottom line PROS 1 on 1 conversation with consumers

Ability for viral pass along and recommendation

Relationship/CRM marketing

Extends conversation/reach from other media and ads

High engagement and time spent

CONS Unauthentic messages being delivered

Knowing what to measure

Privacy and privacy controls pertaining to location

56 eMarketer: Social Media Marketing by the Numbers: Key Stats, Trends and Indicators Feb 2010

57

RICH MEDIA

What is Rich Media? Creative Technology

Rich Media is online advertising enhanced by motion, sound, video, or some interactive element

With rich media, online ads approach television in terms of dynamism: they float above content, animate, integrate video and audio. They also go beyond television to include interactive elements like:

Pull-downs for more information, micro-site in-the-banner

Branded games and immersive activities

Polls and Quizzes

Downloadable Icons, Screensavers, Ring Tones, Documents, and more

E-commerce functionality inside the ad unit

Data Collection/Email Registration

Viral Marketing – Send to a Friend

58

Anatomy of a Rich Media Ad

1. Banner automatically displays on publisher site (1 impression)

2. Upon rollover, panel expands (1 interaction)

3. Panels can contain any combination of rich media features

4. User can click-through to site to continue experience (1 click-through)

Click on image in slide show mode to view demo

BANNER PANEL

WEBSITE

GAMING

PRICE COMPARISON

INTERACTIVE VIDEO PHOTO GALLERY

STANDARD VIDEO

59

60

The ‘Smack Talk’ Smart Ad

61

In summary… the digital space is always on the edge of glory

…connects marketers with their most valuable audience wherever

they may be.

…understands users passions with accuracy and detail never

before achieved in traditional media.

…offers creative products that enable marketers to find consumers in hard to reach places with unique and engaging messages.

…continues to experiment with new formats and devices to continue

connecting marketers and consumers in mutually beneficial ways.

62

63

Holly Bowyer hbowyer@yahoo-inc.com