A talk by Ahmad Anvari on "Latest Developments and Trends in Online Advertising Business" organized by the Knowledge Diffusion Network

1. Online Advertising
Latest Developments and Trends
Ahmad Anvari
I-AIM Visiting Lecturer
Sharif University of Technology
October 2007

2. Agenda
History and Background
Online Advertising Type and Pricing
Models
Major Players
Recent M&A
Future and Trends
Online Advertising ٢

3. History and Background
90s Early 2000 2005
•Banner Ads •Text Ads •Display
•Classifieds (Contextual) •Search
•Email •Multimedia (rich)
Marketing •Text ads
Online Advertising ٣

4. Value
Web is becoming hot again…
Online Advertising is
primarily responsible
Online Advertising ٤

5. Online Advertising
Revenue and Growth
Source: PwC/IAB Internet Advertising Revenue Report (www.iab.net)
Online Advertising ٥

6. Online Advertising
Revenue and Growth
$10BN in first FH 2006 FH 2007
Search 40% ($3,164) 41% ($4,097)
half of 2007 Classifieds 20% ($1,582) 17% ($1,699)
– Iran’s GDP is Referrals/Lead Generation 7%($592) 8% ($799)
$212BN E-mail 2% ($158) 2% ($200)
Display Related: 31% ($2,413) 32%($3,198)
27% increase – Rich Media (Includes Video) 6% ($475) 8%($799)
comparing to – Ad Banners / Display Ads 21% ($1,622) 21%($2,099)
2006 – Sponsorships 4% ($316) 3% ($300)
– Slotting Fees <1% (<1$) <1% (<$1)
More than $5BN
in the 2nd
quarter Source: The Interactive Advertising Bureau
(IAB) and PricewaterhouseCoopers (PwC)
Online Advertising ٦

7. Types of Online Advertising
Text (contextual)
– Search
– Web
– Inline
Display
– Static
– Rich Media
– Pop-up/Pop-under
Online Advertising ٧

8. Behavioral Advertising
Knowledge of each user’s behavior
and demographic information
Targets users based on their browsing
history and other attributes
Location, Age, Gender, Salary, etc.
Online Advertising ٨

9. Pricing Models
CPM
– Advertiser pays when an ad is shown to a user
Performance
– CPC
Advertiser pays when users click on an ad
– CPA
Advertiser pays when a click leads to an action
Sometimes even a click is not needed
Online Advertising ٩

10. Pricing Models
Revenue Breakdown
Model FH 2006 FH 2007
CPM 48% ($3,797) 45%($4,497)
Performance Deals 47% ($3,717) 50%($4,997)
Hybrid 5% ($395) 5% ($499)
Online Advertising ١٠

11. Contextual Advertising
Web pages crawled by the Advertising
Network
Intelligent algorithms parse and
understand the content
Ads that are relevant to the content
are chosen real-time by the ad servers
Google AdSense, Kanoodle, IntelliText
(Inline)
Online Advertising ١١

12. Contextual Advertising
Example
Online Advertising ١٢

13. Contextual Advertising
Gone Wrong
Online Advertising ١٣

14. Contextual Advertising
Gone Wrong
Online Advertising ١٤

15. Contextual Advertising
Gone Wrong
Online Advertising ١٥

16. Major Players
Google
Yahoo! Network
America Online
Microsoft Network
Turn
TribalFusion
AdBrite
Online Advertising ١٦

17. Major Players - Google
Contextual Advertising
– Text, Display, Rich Media
Products
– AdSense – Publisher Network
– AdWords – Advertiser Network
Recent Acquisitions
– DoubleClick: $3BN
Online Advertising ١٧

18. Major Players – Yahoo!
New Platform: Panama
Has demographic information of a
large network of Yahoo! Users
Has started building verticals: finance,
travel, women, college, sports, auto
Recent Acquisitions
– RightMedia: $680MM
Online Advertising ١٨

19. Major Players – AOL
Led by Advertising.com
– Largest reach (90% US Internet Users)
Recent Acquisitions
– LighteningCast: Video Advertising
– 3rd Screen Media: Mobile Advertising
– ADTECH: Ad Serving Technology
– Tacoda: Behavioral Targeting
Online Advertising ١٩

20. Major Players – MSN
Microsoft AdCenter
Recent Acquisitions
– aQuantive: $6BN
Microsoft’s biggest acquisition by a large
margin
– A 1.6% stake in facebook for $240MM
Online Advertising ٢٠

21. Recent M&A
aQuantive (MSN): $6BN
DoubleClick (Google): $3BN
RightMedia (Yahoo!): $680BN
AdTech, TSM, LighteningCast (AOL)
Online Advertising ٢١

22. Future and Trends
Mobile Advertising is hot
Video (pre-roll, post-roll, and in-video)
advertising is next
Contextual Advertising will continue to
grow
New technologies allow behavioral
targeting
Blog Advertising (small networks)
Online Advertising ٢٢

23. Questions?
anvari@yahoo.com
Online Advertising ٢٣