Instant Messaging Global Trends the Russian Market 2042006

Instant Messaging Global Trends & the Russian Market 20/4/2006

The Phenomena • A 10 year revolution! • By 2009 - 1. 2 billion IM accounts and roughly 495 million users worldwide 2 * Source: Instant Messaging market, 2005 -2009, Radicati Group

IM - The Communication Leader Amongst text mediums, IM beats e-mail as the method of choice when talking with friends IM E-mail Text Messaging Face to Face 26% 5% 7% 2% Talk with a friend about something really serious or important 9% 6% 3% 7% Have a private conversation with someone when you don’t want anyone else to know 18% 9% 6% 6% Communication Choices Have a quick conversation with a friend that you see on a regular basis 3 * Source: Teens and Technology, Pew Internet & American Life Project, July 2005

Multiple Communication Tools Are The Norm For Youth 4 October 2005, Trends “How Youth Communicate”

Age Communication • On the average, youth between ages 12 -17 spend 10. 3 hours a week in social activities outside of school, 7. 8 hours of which they spend talking with friends via technology (telephone, IM, e-mail or text messaging) • Older teens (aged 15 -17) are heavier users of IM (84%) compared to younger teens (aged 12 -14, 65%) • While 75% of the online teens are of the online adults are exchanging IM’s 5 * Source: Teens and Technology, Pew Internet & American Life Project, July 2005 using IM, only 42%

Usage Trends open global to a closed local community • From an • Only 5% of the users, on an average Contact List, are from a different country • Most of the IM correspondence within a given territory is between users from that same region, 6 IM Usage Research, AOL 2004 most of them friends

IM Trends in Russia • IM growth rate in Russia is even higher than Internet growth rate • IM is one of the TOP 5 Online activities in Russia (among Search, email, News websites, IM and Downloads) • An IM user has • The average ICQ user uses his IM for 5 hours a day! while the average online user in Russia is online for 3 -4 hours a day (in comparison, the average online user only watches TV for 1. 6 hours a day, in average) 46 contacts, in average, in his IM address book 7 Sources: The Online Monitor - MASMI Russia (Nov - Dec 2005 Study), ICQ Analysis, ICQ Internal data, Information Technologies & Communications

Instant Messaging Future Trends 8

The Demographics • IM is receiving legitimation within time, and becoming more of a communication tool for adults as well IM age demographics, 2003 & 2007 9 * Source: Ferris Research, Radicati, 2003

The Trends • IM will be better positioned as • IM will become a Cross Platform a center of communication • IM will continue to cannibalize traditional forms of communication including landline telephony and face-to-face interactions 10 intimate communication tool Communication Center,

The Russian Internet & IM Market • One of the world’s most growing Internet countries with expected growth rate of 30% for Internet access users* • ICQ expects that in a few years Russia will move into the group of countries with a high IM penetration, such as France and Spain High IM penetration combined with medium to high rate of Internet penetration 11 * 2004 -2009 CAGR (Compound Annual Growth Rate), Datamonitor - Industry Profiles, Russia Internet Access, June 2005

ICQ in Russia 12

ICQ #1 IM in Russia About 50% of “The Online Monitor” 2005 MASMI Study’s responders said that ICQ is their most frequently used Instant Messaging application* ICQ has 13% of the Internet Users in Russia** Source: The Online Monitor, MASMI Russia (Nov - Dec 2005 Study). 13(*) (**) Source: Information Technologies & Communications, ICQ Internal

From Global to Local • 14 ICQ is implementing the Idea of “think global, act local” and is becoming a multi-market player based on this localization strategy o Implementing the ICQ Local Strategic Partners strategy (LSP) by cooperating with local Media & Communication companies o Adopting a localization strategy that brings ICQ close to the users, partners, advertisers, and increases business opportunities

ICQ & Rambler 15

Rambler - ICQ Version Rambler- ICQ Messaging Service attracted ONE MILLION users in the first 6 months Rambler-ICQ users are highly active -50% higher than the average ICQ user - a strong and loyal community! 16

17 Ronen Arad, ICQ VP Product & Marketing