© 2000 Jupiter Communications Jupiter 1 Patrick Keane Vice President and Senior Analyst Jupiter Research Patrick Keane Vice President and Senior Analyst Jupiter Research

© 2000 Jupiter Communications Jupiter 2 Agenda: I. Trends and Outlook II. Future Advertising Models III. Sports Metrics IV. Anatomy of the Online Shopper

Jupiter Online Advertising Through 2005

© 2000 Jupiter Communications Jupiter 4 Key Questions What Is the Size of the Online Advertising Market?What Is the Size of the Online Advertising Market? What Does the State of the Current Market Imply for Online Advertisers?What Does the State of the Current Market Imply for Online Advertisers? How Can Buyers Overcome Increasing Clutter?How Can Buyers Overcome Increasing Clutter? How Should Sellers Increase Their Share of Advertising Dollars?How Should Sellers Increase Their Share of Advertising Dollars?

© 2000 Jupiter Communications Jupiter 5 US Online Users, Source: Jupiter Internet Population Model, (4/00);n=TK, (US Only) Percentage of US Population Number of Online Users (in millions)

© 2000 Jupiter Communications Jupiter 6 Internet Has Already Proven Itself to Be a Mass Medium for Advertising Source: Jupiter Internet Advertising Model, (7/00); U.S. Only Online Ad Spending ($ in billions)

© 2000 Jupiter Communications Jupiter 7 Buyer Fragmentation Creates Opportunity for Sellers to Grab Piece of the Pie Percentage of Total Online Ad Revenue for Top 15 Sites Q Source: AdRelevance; Jupiter Analysis 29% 71% Percentage of Total Online Ad Spending for Top 15 Advertisers Q % 21% All Other Advertisers Top 15 Advertisers

© 2000 Jupiter Communications Jupiter 8 Despite Skepticism, Advertisers Will Increase Online Spending Source: Jupiter Executive Survey (8/00), n=32; US only For Which of the Following Media Do You Plan on Increasing Your Budget for the Next 12 Months? (Please Check All That Apply)

© 2000 Jupiter Communications Jupiter 9 Online Advertising Projected to Reach $16.5 Billion by 2005 Source: Jupiter Internet Advertising Model, (7/00); US Only ($ in billions)

© 2000 Jupiter Communications Jupiter 10 The Internet Is on Track to Bypass Magazines and Cable-TV Spending in 2005 ($ in billions) Source: Jupiter Internet Advertising Model, (7/00); US Only

© 2000 Jupiter Communications Jupiter 11 Traditional Advertisers Present the Greatest Opportunity to Ad Sellers Share of Off-line Spending in 2005 Share of Online Spending in 2005 Source: Jupiter Internet Advertising Model, (7/00); US Only

© 2000 Jupiter Communications Jupiter 12 Increase in Traditional Advertiser Interest Fuels Healthy Growth Media FinancialServices Telco ConsumerGoods Health Percentage of Online Spending Hardware/Software Travel Automotive Source: Jupiter Internet Advertising Model, (7/00); US Only

© 2000 Jupiter Communications Jupiter 13 Significance of Online Spending– 2005 Percentage of Market Shift to Online by 2005 Percentage of Online Population Purchasing Online Computers:$19.7 Books,Music,AndVideo:$14.2 Apparel and Footwear:$12 Home and Garden:$13.1 Grocery and Pet Food: $19.8 Ticketing:$4.3 SportingGoods:$2 Flowers and Gifts: $3.4 Art:$1.8 Office Products: $4.3 AutoParts:$1.9 Consumer Electronics: $3.8 Health and Beauty: $7.2 ($ in billions) 50% 40% 30% 20% 10% 0% 0% 10%20% 30% 40% 50%60%70%

© 2000 Jupiter Communications Jupiter 14 Consumer Broadband Reaches Critical Mass in 2005 (in millions) 1.4m 11.8m 13.8m Source: Jupiter Projections Households 1.8m 28.8m 23.8m 18.5m 13.3m 8.6m 4.8m 1.8m 4% 9% 14% 20% 26% 31% 36%

© 2000 Jupiter Communications Jupiter 15 Incremental Spending Larger than Loss from Any Single Medium Source of Online Ad Spending in 2005 Key Factors Off-line SizeOff-line Size Targeting PotentialTargeting Potential Level of National AdvertisingLevel of National Advertising Level of Print vs. BroadcastLevel of Print vs. Broadcast Source: Jupiter Internet Advertising Model, (7/00); US Only

© 2000 Jupiter Communications Jupiter 16 The Downside: Increase in Clutter Dilutes Connection to Consumers Marketing Impressions per User per Usage Day Source: Jupiter Internet Advertising Model, (7/00); US Only

© 2000 Jupiter Communications Jupiter 17 And Off-line Clutter Is Increasing Source: The Entertainment Economy, Permission Marketing Number of Marketing Message Exposures per Average Consumer per Day

© 2000 Jupiter Communications Jupiter 18 Sellers Must Court Traditional Advertisers, Not Just Dot-Coms Strong Editorial Environment Higher Degree of Hand-holding Promotional Opportunities Flexible Pricing Online/Off-line Integration Proven Accountability Source: Jupiter Analysis

© 2000 Jupiter Communications Jupiter 19 Publishers Must Maintain Flexible Pricing Schemes Jupiter Internet Advertising Model, 6/00; U.S. Only; Excludes Classifieds Percentage of Online Media Buy Spending

© 2000 Jupiter Communications Jupiter 20 In Summary Capital Constraints Increase Advertiser Focus on EfficiencyCapital Constraints Increase Advertiser Focus on Efficiency Online Advertising Is Projected to Reach $16.5 Billion by 2005Online Advertising Is Projected to Reach $16.5 Billion by 2005 Advertisers Must Outrun the Increase in Clutter by Using a Diverse Arsenal of TacticsAdvertisers Must Outrun the Increase in Clutter by Using a Diverse Arsenal of Tactics Publishers Must Satisfy Advertisers’ Demand for Ways to Break Through the ClutterPublishers Must Satisfy Advertisers’ Demand for Ways to Break Through the Clutter

Jupiter Online Sports: The Model for Convergent Businesses

Jupiter The Rule for Most Online Businesses is Channel Shift & Cannibalization... Sports Shatters This Rule

© 2000 Jupiter Communications Jupiter 23 Online Sports: Incremental Opportunity Broadband Will Not Affect Sports in the Near TermBroadband Will Not Affect Sports in the Near Term $3b in Commerce, but Categories Reflect Complementary Dynamic$3b in Commerce, but Categories Reflect Complementary Dynamic Sports Media Revenues Will be IncrementalSports Media Revenues Will be Incremental Content Consumption = Utility and InformationContent Consumption = Utility and Information League Revenue Diversification and Customer OwnershipLeague Revenue Diversification and Customer Ownership

© 2000 Jupiter Communications Jupiter 24 Sports Popularity Proven Rank AOL Channel Unique (millions) Reach (%) 1News Entertainment Shopping Personal Finance Sports Computing Games Research and Learn Teens Interest Source: Media Metrix, 1/00

© 2000 Jupiter Communications Jupiter 25 And Growing... Rank AOL Channel Unique (millions) Reach (%) 1News % 2Entertainment % 3Sports % 4 Personal Finance % 5Women’s % 6Computing % 7Travel % 8Shopping % 9Interests % 10Workplace5.77.1% Source: Media Metrix, 1/00

© 2000 Jupiter Communications Jupiter 26 Sports Content Site Reach Chart Source: Media Metrix, 1/00

Jupiter Ticketing Leads Commerce Category Revenue

© 2000 Jupiter Communications Jupiter 28 Online Sports Commerce Market ($ in billions) Source: Jupiter/NFO,1/00

© 2000 Jupiter Communications Jupiter 29 Ticketing Leads Category Revenues ($ in millions) Source: Jupiter

© 2000 Jupiter Communications Jupiter 30 Narrowband Reality Prevents Viewing Replacement (in millions) 1.4m 11.8m 13.8m Source: Jupiter Projections Households 1.8m 28.8m 23.8m 18.5m 13.3m 8.6m 4.8m 1.8m 4% 9% 14% 20% 26% 31% 36%

© 2000 Jupiter Communications Jupiter 31 Broadband Still Fails to Resonate With Online Novices Likelihood of Getting Home Broadband Service over the next 12 months, Ranked from 1 (very unlikely) to 5 (very likely). Source: Jupiter Consumer Survey, N=2,143

© 2000 Jupiter Communications Jupiter 32 Which of the following services do you use while visiting sports oriented Web sites? Source: Jupiter/NFO, 2/00 n=1,478 Sports Media Driven by Commodity Data and Utility Chat w/ Stars Chat w/ Fans Simulcasted Web Content Fantasy Leagues Video Highlights Purchase Tickets Listen to Events Contests/Games Shopping Event Info. Read about Sports Scores/Stats Info

Jupiter Convergent Programming: Exploiting the Sports TV Connection

© 2000 Jupiter Communications Jupiter 34 Sports Benefits Most From Convergent Viewing How often do you watch TV while you are online? Source: Jupiter/NFO, Spring/99 N = 3,000

© 2000 Jupiter Communications Jupiter 35 Tenure Increases Intensity How often do you watch TV while Online? Percentage of Respondents Source: Jupiter/NFO, Spring/99 N = 3,000

© 2000 Jupiter Communications Jupiter 36 What factors would motivate you to purchase sporting goods or sports-related merchandise and/or apparel online? Source: Jupiter/NFO, 2/00 N = 1,478 Big Surprise: Consumers Driven by Price Expert Product recommendation Same day delivery/in-store pickup Specific sports info. Customer service Friend's recommendation Familiar brands Physical store returns Deeper selection than physical store Would not purchase online Better prices than physical store

© 2000 Jupiter Communications Jupiter 37 Summary Consumers Crave Utility, Not EntertainmentConsumers Crave Utility, Not Entertainment Sports Programming Should Be SupplementalSports Programming Should Be Supplemental League, Team, and Media Revenues Will Be IncrementalLeague, Team, and Media Revenues Will Be Incremental

© 2000 Jupiter Communications Jupiter 38 Anatomy of the Online Shopper

© 2000 Jupiter Communications Jupiter 39 US Online Retail Revenues, Source: Jupiter Internet Shopping Model, (9/00);(US Only) Online Spending ($ in billions)

© 2000 Jupiter Communications Jupiter 40 Online Retail Spending by Age Group, Percentage of Online Sales Source: Jupiter Internet Shopping Model, (9/00); (US Only)

© 2000 Jupiter Communications Jupiter 41 Online Retail Spending by Income Group, Percentage of Online Spending Source: Jupiter Internet Shopping Model, (9/00); (US Only)

© 2000 Jupiter Communications Jupiter 42 Online Retail Spending by Gender, Percentage of Online Spending Source: Jupiter Internet Shopping Model, (9/00); (US Only)

© 2000 Jupiter Communications Jupiter 43 Online Commerce Buyers*, Percentage of Online Population Number of Online Buyers (in millions) Source: Jupiter Internet Shopping Model, (9/00);n=TK, (US Only) * Includes travel

© 2000 Jupiter Communications Jupiter 44 Users’ Shopping Behavior Percentage of Online Users Source: Jupiter Internet Shopping Model, (9/00);n=TK, (US Only)

© 2000 Jupiter Communications Jupiter 45 Commerce Spending* per Buyer, Spending per Buyer Source: Jupiter Internet Shopping Model, (9/00);n=TK, (US Only) * Includes travel

© 2000 Jupiter Communications Jupiter 46