The Advertising Association/Warc Expenditure Report Executive Summary of adspend survey data for Q and forecasts to Q REVISED OCTOBER 2011 (FOLLOWING RELEASE OF IAB INTERNET DATA FOR H1 2011)

Summary – Overall UK Outlook The Internet Advertising Bureau (IAB) released official internet adspend data for H in October Consequently we have updated the Expenditure Report with the latest figures. This has led to a revision of earlier Q results and forecasts. We have upgraded our full-year 2011 adspend forecast, following a strong performance from online in the first six months of the year. We predict growth of +1.6% in 2011 (at current prices), equivalent to a fall of –2.8% after inflation is taken into account (at 2005 prices). However, the UK economy continues to suffer low GDP growth, while rising inflation and tough labour market conditions are impacting heavily on consumer spending. Confidence remains weak in the face of the deteriorating global economic outlook. Consequently the forecast for adspend growth in 2012 has been revised downwards. We now anticipate growth of +4.7% (at current prices), rather than the +5.4% predicted in June. Source: Advertising Association/Warc Expenditure Report,

Summary – The UK Media Mix Source: Advertising Association/Warc Expenditure Report, In Q2 2011, adspend increased 0.9% at current prices, ahead of the marginal increase of +0.3% previously predicted. This is a good result given the strong growth recorded in Q (+11.9%). Internet and radio performed very well in the latest quarter (+13.9% and +7.3% respectively). However, drops recorded by TV (–2.2%) and press (– 7.7%) offset these strong increases. We expect adspend to return to continue to grow in H2 2011, with increases of +1.3% and +1.7% for Q3 and Q4 respectively. Display advertising fell –0.1% in Q compared with the previous year. However, classified (including search), increased by +3.2% over the same period.

Summary – The UK Advertising Mix We anticipate display advertising growth of just +1.4% for 2011 as a whole, followed by an increase of +4.6% next year. Internet will increase its share of display spend by 1.1pp this year, largely at the expense of national newspapers and business magazines, both set to lose –0.3pp. Total classified adspend is expected show growth of +2% in 2011 compared with 2010, despite the predicted fall in recruitment spend of almost –17%. Internet should again significantly increase it share of classified (+4.1pp). Uncertainty continues to cloud the labour market but we expect conditions to improve as 2012 progresses. Recruitment advertising is therefore predicted to maintain spend in 2012 (–0.5%), with total classified rising +4.8% Non-recruitment classified (including search), by comparison, is expected to increase spend by +4.8% this year, followed by further growth of 5.5% in 2012 Source: Advertising Association/Warc Expenditure Report,

Adspend increased 4.7% year on year in 2010 (at constant prices) % Total UK adspend annual % change (at constant prices) Source: Advertising Association/Warc Expenditure Report,

UK adspend is expected to increase throughout the forecast period, although predictions for 2012 have been lowered % Source: Advertising Association/Warc Expenditure Report, Total UK adspend annual % change (at current prices)

Total adspend increased +0.9% in Q2 2011, following strong performances from internet and radio % Source: Advertising Association/Warc Expenditure Report, Annual % change in UK adspend, Q (at current prices) Note: Press total combines all newspaper and magazine categories.

TV and internet showed the biggest annual increases in the 12 months to June 2011 % Source: Advertising Association/Warc Expenditure Report, Annual % change in UK adspend, 12 months to June (at current prices) Note: Press total combines all newspaper and magazine categories.

Radio, internet and direct mail all gained share in Q Percentage points difference Source: Advertising Association/Warc Expenditure Report, Annual percentage points change in share of UK adspend, Q Note: Press total combines all newspaper and magazine categories.

TV, internet and direct mail gained share in the 12 months to June 2011 Source: Advertising Association/Warc Expenditure Report, Annual percentage points change in share of UK adspend, 12 months to June Percentage points difference Note: Press total combines all newspaper and magazine categories.

In real terms, by the end of the forecast period adspend is expected to be roughly on a par with levels recorded in the late 1990s £bn Source: Advertising Association/Warc Expenditure Report, Total UK adspend (constant 2005 prices)

Display adspend should reach pre-recession levels in 2012 but recruitment is expected to fall £bn Source: Advertising Association/Warc Expenditure Report, UK adspend by type (at current prices)