Q 3 2016 IAB PWC NEW ZEALAND INTERACTIVE

Q 3 2016 IAB / PWC NEW ZEALAND: INTERACTIVE ADVERTISING SPEND

Introduction • • • Census of 34 major NZ media owners and agencies In conjunction with Pricewaterhouse. Coopers (Pw. C), the IAB has produced quarterly interactive advertising spend figures in NZ since 2007 Data shown by: – General Display split out by Video and Ad Exchange • Banner display by verticals i. e. Finance, Travel and Accommodation, Telecommunication – Search & Directories: paid search is a mixture of actual (agency spend) and estimated data (direct) and includes revenue from online directories – Classifieds: revenue from ads placed to buy or sell an item or service (does not include consumer Trade Me auctions) – Mobile: from general display or search engine listings viewed on mobile devices such as a smartphone or tablet – Social media: Vendor-based Agency bookings reported by the Standard Media Index (SMI) for the quarter. – this amount does NOT include advertisements booked directly with social networking websites by advertising brands. www. iab. org. nz representing NZ's fastest growing and exciting industry 2

METHODOLOGY www. iab. org. nz representing NZ's fastest growing and exciting industry

Reported and Estimated Revenue Reported Revenue • Actual revenue data is obtained directly from companies deriving revenue from the sale of interactive advertising • Survey includes revenue submitted by 34 companies • Aggregate amounts reported are rounded to the nearest $10, 000 • Based on information provided by contributors, approximately 78% of the data in this document is derived from participants whose underlying financial records have been, or will be, audited by an independent auditor • Data submitted by participants is kept completely confidential and figures are only ever reported in an aggregated form • Variance checks are performed on data submitted by participants for reasonableness in light of past submissions and general industry trends • Expenditure is based on gross amounts charged to advertisers and inclusive of any applicable agency commissions • As of Q 3 2015 the IAB/Pw. C Revenue report reflects vendor-based Agency bookings as reported by the Standard Media Index (SMI) for the quarter. The 2014 SMI report has been referenced to ensure consistency in year-on-year comparisons. The value quoted does NOT include advertisements booked directly with social networking websites by advertising brands. www. iab. org. nz representing NZ's fastest growing and exciting industry Estimated Revenue • The methodology used to estimate the Paid Search market was developed in consultation with leading New Zealand-based Search Engine Marketing agencies and data submitted to Pw. C by those companies 4

Adjustments and like-for-like reporting • All growth percentages are “normalised” to exclude the effect of new contributors to percentage measures of industry growth and also to remove the effect of any previous contributors that have not provided figures for the current quarter • For this reason, calculating percentages based on the dollar totals may not result in the same growth percentage figures • This is due to totals including all reported revenues, while “normalised” percentages exclude contributions from new contributors made during the comparison period and/or previous contributions made by contributors not contributing in this quarter • This approach is to ensure we provide both a true picture of industry growth and an accurate measure of total industry spend www. iab. org. nz representing NZ's fastest growing and exciting industry 5

Display Advertising Category Definitions • Automotive - Any business related to the automotive sector including vehicles (cars and motorbikes), associations, equipment, retail (car dealers), fuel, maintenance, parts and accessories • Business Services and Office Products - All companies providing services to other businesses such as accounting, legal and taxation services; advertising and marketing services; printing and publishing services, and employment/personnel/training Services. This category also includes all office products and services including stationery, furniture, photocopiers and retailers. • Computers - Computer hardware, software, peripherals, systems, connectivity including internet service providers, games machines, printers and dedicated retail and services. • Food & Beverage - All foodstuffs products which also includes corporate, pet food, confectionery, and, all beverages including alcohol and retail liquor. This category also includes supermarkets and food stores. • Government Departments, Services and Communities - All information on any form of Government from national to local and including political parties. This category also includes services/utilities such as gas and electricity suppliers; all educational institutions from pre-school to tertiary and, not-for-profit, community and charitable organisations. • Health, Beauty and Pharmaceuticals - This category covers toiletries and cosmetics including baby products, cosmetics, personal care products, fragrances, hair and skin care, soaps and cleaners, and pharmaceutical products including remedies, medicines, lotions, vitamins, diet, corporate, dressings, health services and retail (i. e. pharmacies). • Home & Garden - This category includes all materials used in home improvements (e. g. paving, roofing & guttering, security, paint, wallpaper and retail); household electrical products (e. g. personal products, batteries, white-ware, brown-ware); household items (e. g. cookware, light bulbs, wraps, sprays, cutlery, china, storage); household cleaning products ( i. e. any product used in cleaning any area of the home including laundry products); household furnishings for the home (not covered by household electrical) i. e. beds, floor covers, occasional furniture, soft furnishings; home heating (includes all home heating or cooling products, services and retail); and gardening including garden furniture, BBQ's, tools, plants, equipment and retail. • Investment, Finance, Banking - Any company/financial institution providing banking and/or investment products, services or advice; from banks to bonds, credit cards to travellers cheques. . • Insurance - Any business, either corporate or individual, involved with insurance-related products or services. This includes motor vehicle insurance, house and household contents insurance, life insurance, health insurance, corporate and professional insurance, and brokers. www. iab. org. nz representing NZ's fastest growing and exciting industry 6

Display Advertising Category Definitions continued • Leisure, Entertainment and Media - This category includes any organisation that provides goods and services related to lifestyle and/or entertainment, or is incorporated in leisure time activities ie. venues, events, sports, music, movies, boating, games of chance, fitness centres, dedicated retail. This category also includes any business related to mass communication i. e. mediums such as television, radio, newspapers, magazines, websites and cinema. • Real Estate - Any business providing commercial or residential property advice, information and retail services for the sale and management of real estate, includes residential housing, sections, commercial property, property developers and real estate agents. • Retail - This category includes major retailers such as department stores, discounters and warehouses. Also included is fast food, restaurants and other food outlets, shopping centres, bookstores, as well as direct response (e. g. Chrisco Christmas Club), function centres and support services, hair and beauty salons, craft shops, television/video rental and servicing and other specialist stores not already excluded. Note: The Retail category excludes: - Supermarkets and food stores (covered under food & beverages); agricultural trading societies and laboratories, automotive dealers, retail liquor, clothing and footwear retail, computer retail, gardening centres and retailers, home improvement retail, furnishing and flooring retail, home heating retail, industrial contractor retail, music and entertainment (DVD/video etc. ) stores, office retail, chemists, real estate agents, telecommunications retail, travel agents. • Telecommunication - All aspects of telephony. This includes telephone hardware, accessories and services, mobile phone hardware accessories and services, telecommunications retail, corporate, and connectivity including service plans and packages. • Travel & Accommodation - Any business providing products, services and/or information and advice related to the travel and tourism industry. Any travel services including carriers, accommodation, tours, destinations and retail (i. e. travel agents). • Other - Any business that does not meet the general parameters of any of the preceding definitions. This may include clothing/accessories covering all areas of clothing, footwear and accessories including retail; agricultural (covering services, animal remedies and veterinary, chemicals, buildings and equipment and retail); industrial (including products, machinery, equipment, tools and retail); smoking (including all smoking products and anti-smoking products and organisations); transportation (covering commercial transportation services), pet products, manufacturing & construction, wholesale trade and education & training services. www. iab. org. nz representing NZ's fastest growing and exciting industry 7

Classified Advertising Category Definitions • Automotive - Any classified advertising related to the automotive sector including vehicles (cars and motorbikes), equipment, retail (car dealers), parts and accessories, servicing. • Personals - Any classified advertising related to personal advertising including dating sites, services offered, births deaths and marriages, sundry personal announcements etc. • Real Estate - Any classified advertising relating to the buying, selling, leasing or rental of any form of real estate property or services including residential and commercial. • Recruitment - Any classified advertising relating to the recruitment industry including situations vacant, or job-seeker advertisements, contract services etc. • Other - Any classified advertising that does not fall into the categories listed above. www. iab. org. nz representing NZ's fastest growing and exciting industry 8

Q 3 2016 Contributors 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Acquire Online Ad 2 One. Group Bauer Media Group Denstu Aegis Network Digital Marketing Initiative Fairfax Media FIRST Grown. Ups Ltd GSL Promotus i. Start Localist/Ora HQ Mediacom Mediaworks Interactive Metservice Mi 9 (MSN, Skype, Outlook, Ticketek, Daily Mail, Bing and Windows 10) 16. Neo@Ogilvy New Zealand 17. NZME www. iab. org. nz representing NZ's fastest growing and exciting industry 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. Realestate. co. nz Search Republic SEEK NZ Sky. TV Network Starcom Sure. Fire Search The Radio Network Ltd Trade Me Ltd TVNZ Ve. NA View New Zealand Ltd Vivaki Y&R Yahoo Search and Marketing NZ Yahoo! New Zealand Ltd Yellow Pages Zenith. Optimedia 9

Global Trends 2016 - 2017 • Interactive will be the biggest medium in a third of the global ad market by 2017 • Video consumption on mobile devices is forecast to grow by 34. 8% in 2016 • Online Video will soon account for 12. 8% of the total Interactive Ad-spend market by 2017 • Mobile Internet advertising to overtake Desktop in 2017 • Mobile Internet consumption to grow 28% in 2016 • Paid search to grow at an average rate of 14% a year to 2017 Source: Zenith. Optimedia www. iab. org. nz representing NZ's fastest growing and exciting industry 10

2016 Q 3 Executive Summary • • • 2016 Q 3 - $225. 54 m 12. 99% Yo. Y growth Estimated 2016 Interactive Revenue - $850 m to $900 m Mobile revenue – $10. 95 m Social revenue - $15. 64 m Fastest growing channels Q 3 Yo. Y: - Mobile - 59% - Social Media – 50% Source: IAB/Pw. C Q 3 2016; IABNZ www. iab. org. nz representing NZ's fastest growing and exciting industry 11

Q 3 2016 AT A GLANCE ONLINE VIDEO DISPLAY Yo. Y 7% Yo. Y 20% Rising Again 17% Share SEARCH & DIRECTORIES 11% Rising Steady 4% Share TOP 5 DISPLAY CATEGORIES TOTAL MARKET 54% Share MOBILE SOCIAL MEDIA CLASSIFIEDS Yo. Y 59% 6% 50% Ascendant Steady Ascendant 5% Share 17% Share OTHER FOOD FINANCE AUTO REAL ESTATE 13% 11% 10% 9% 13% YOY Growth channels: 1 Mobile # 2 Social Media #

NZ INTERACTIVE SPEND Q 3 2016 TOP LINE RESULTS www. iab. org. nz representing NZ's fastest growing and exciting industry

NZ INTERACTIVE Q 3 SPEND 2008 -2016 $M $10. 95 220 $6. 94 200 $10. 41 180 $37. 64 $3. 48 160 $3. 37 $36. 73 $1. 44 $35. 28 100 $30. 05 80 $25. 76 60 0 $38. 91 $33. 49 120 20 $36. 46 $6. 78 140 40 $15. 64 $21. 44 $15. 84 $19. 08 $14. 90 $24. 40 $17. 22 $18. 11 $21. 30 $22. 36 $25. 20 $122. 39 $27. 63 $33. 05 $110. 42 $86. 17 $29. 21 $52. 28 $38. 58 $37. 17 2009 2010 2011 2012 2013 Total $57. 69 Total $67. 93 Total $88. 74 Total $94. 02 Total $120. 20 total search & directories total classified total display 2015 2016 Total $200. 96 Total $225. 54 2014 2008 Total $49. 82 Total $165. 20 total social media total mobile SOURCE: IAB/PWC Q 3 2016

TOTAL ONLINE SPEND FOR Q 3 2016 LARGEST QTR EVER $225. 54 M AN INCREASE OF 13% YEAR-ON-YEAR IN Q 3 2016 SOURCE: IAB/PWC Q 3 2016

YOY GROWTH Q 3 2016 TOTAL DISPLAY CLASSIFIEDS 7% 13% 6% TOTAL INTERACTIVE AD SPEND Q 3 2016: SEARCH 11% SOCIAL VIDEO 20% 50% $225. 54 M MOBILE 59% SOURCE: IAB/PWC Q 3 2016

DIGITAL MIX Q 3 2016 TOTAL SOCIAL MEDIA $15. 6 M 7% 5% $11. 0 M TOTAL MOBILE PROGRAMMATIC* $5. 0 M 2% 17% TOTAL DISPLAY $37. 6 M ONLINE VIDEO $8. 9 M 4% 17% 54% TOTAL SEARCH & DIRECTORIES $122. 4 M TOTAL CLASSIFIED $38. 9 M * Q 3 Programmatic Revenue reflects a correction for over-estimated Q 2 revenue by several contributors 100% TOTAL Q 3, 2016 $225. 54 M SOURCE: IAB/PWC Q 3 2016

DIGITAL MIX CHANGE Q 3 SUMMARY 2015 vs. 2016 ONLINE VIDEO MOBILE $6. 9 M SOCIAL MEDIA $10. 4 M 3% 5% 4% $7. 4 M 3% $5. 8 M MOBILE PROGRAMMATIC SOCIAL MEDIA $15. 6 M 12% GENERAL DISPLAY $23. 2 M 18% CLASSIFIEDS 55% SEARCH & DIRECTORIES $110. 4 M $11. 0 M 5% 4% $8. 9 M 2% $5. 0 M PROGRAMMATIC* 7% 11% GENERAL DISPLAY $23. 7 M 17% 54% SEARCH & DIRECTORIES $122. 4 M CLASSIFIEDS $36. 7 M $38. 9 M Q 3 2015 Q 3 2016 $200. 96 M $225. 54 M SOURCE: IAB/PWC Q 3 2016 * Q 3 2016 Programmatic Revenue reflects a correction for over-estimated Q 2 2016 revenue by several contributors

SEARCH & DIRECTORIES $122. 39 M IN Q 3 2016 AN INCREASE OF 11% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

CLASSIFIEDS $38. 91 M IN Q 3 2016 AN INCREASE OF 6% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

DISPLAY $37. 64 M IN Q 3 2016 A INCREASE OF 7% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

DISPLAY ADVERTISING TOTAL SPEND BY SECTOR Q 3 2016 1 - 5 TOP 5 represent 53% of all DISPLAY SPEND 6 -10 GOVT drops from 3 rd to 6 th this quarter 11 -15 OTHER* 12. 64% GOVT 7. 64% HOME 4. 57% FOOD & BEVERAGE 10. 92% TRAVEL 6. 84% HEALTH 3. 80% FINANCE 10. 87% RETAIL 6. 49% INSURANCE 2. 59% AUTO 9. 93% TELCO 6. 08% BUSINESS SERVICES 2. 13% REAL ESTATE 8. 82% ENTERTAINMENT 5. 85% COMPUTERS 0. 83% SOURCE: IAB/PWC Q 3 2016 * Refer page 6 for definitions of Display Advertising Category ‘Other’

DISPLAY ADVERTISING TOTAL SPEND BY SECTOR Q 3 2016 SOURCE: IAB/PWC Q 3 2016 4, 5 4 3, 5 6 -10 3 2, 5 11 -15 2 1, 5 1 0, 5 pu te C om rv i Se s ne s si Bu rs s ce nc e ra th In su ea l H H om e t in m en o lc te rta l et ai R el av Tr e ov t G Te En R ea l. E st at Au to nc e na Fi od Fo th er 0 O $M 1 - 5 5

VIDEO ADVERTISING $8. 89 M IN Q 3 2016 A INCREASE OF 20% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

SOCIAL MEDIA $15. 64 M IN Q 3 2016 AN INCREASE OF 50% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

MOBILE ADVERTISING $10. 95 M IN Q 3 2016 AN INCREASE OF 59% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

Q 3 2016: TOTAL SMARTPHONE VS. TABLET $9. 23 M TOTAL MOBILE Q 3 2016 $7. 46 $1. 73 SUB CATEGORIES OF TOTAL MOBILE SMARTPHONE TABLET 59% 55% YEAR-ON-YEAR SOURCE: IAB/PWC Q 3 2016

Summary • $225. 54 m for the Quarter – Largest Quarter Ever! 2016 Q 3 - $225. 54 m 12. 99% Yo. Y growth Estimated 2016 Interactive Revenue - $850 m to $900 m • Mobile is still fastest growing channel but still lags behind US, UK & Australia • Q 3 Programmatic Revenue reflects a correction for over-estimated Q 2 revenue by several contributors • Globally** - Online Video will soon account for 12. 8% of the total Interactive Ad-spend market by 2017 - Mobile Internet advertising to overtake Desktop in 2017 - Mobile Internet consumption to grow 28% in 2016 ** Source: Zenith. Optimedia www. iab. org. nz representing NZ's fastest growing and exciting industry 28

www. iab. org. nz representing NZ's fastest growing and exciting industry

www. iab. org. nz representing NZ's fastest growing and exciting industry

www. iab. org. nz representing NZ's fastest growing and exciting industry

Contacts IABNZ Executive CEO: Adrian Pickstock Email: adrian. pickstock@iab. org. nz Member Services Manager: Chris Ogles Email: chris@iab. org. nz Graphic Designer: Billie Charlton Email: capandshoe@gmail. com Project Sponsor Chris Perree, Partner Mobile: +64 -21 -358 -004 Email: chris. perree@nz. pwc. com Project Manager James Budd Mobile: +64 -21 -644 -004 Email: james. j. budd@nz. pwc. com Project Analysts Salmaan Khan, Associate Email: salmaan. x. khan@nz. pwc. com Logan Burgess, Associate Email: logan. g. burgess@nz. pwc. com www. iab. org. nz representing NZ's fastest growing and exciting industry 32

About Pw. C • Pw. C (www. pwc. com) firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169, 000 people who are committed to delivering quality in assurance, tax and advisory services. • "Pw. C" is the brand under which member firms of Pricewaterhouse. Coopers International Limited (Pw. CIL) operate and provide services. Together, these firms form the Pw. C network. Each firm in the network is a separate legal entity and does not act as agent of Pw. CIL or any other member firm. Pw. CIL does not provide any services to clients. Pw. CIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. • For more information about Pw. C New Zealand how they may be able to help you please visit www. pwc. co. nz www. iab. org. nz representing NZ's fastest growing and exciting industry 33

Disclaimer • This document has been prepared using information provided by contributing media companies to Pw. C. The firm has relied on the information provided as being complete and accurate at the time it was given. Pw. C’s analysis of the data provided by contributors, walkthroughs conducted and preparation of this document do not constitute an audit performed in accordance with New Zealand Auditing Standards. Accordingly, Pw. C does not express an audit opinion or other form of assurance with respect to the information in this document. • Pw. C does not accept any responsibility for any reliance placed on this document by any person and hereby disclaims any liability for any loss or damage caused by errors or omissions, whether such errors or omissions resulted from negligence, accident or some other causes. Pw. C makes no representations about the analysis or application of the data. • Pw. C has received a fee for the preparation of this document and takes responsibility for the independence of the research and analysis contained in this document. • Please notify Pw. C of any errors or omissions identified in this document. Copyright Notice © Copyright Interactive Advertising Bureau New Zealand Inc. 2016. All rights reserved. • Any companies using tables or charts or other information from this document for any purpose must attribute the source of the information used to this document. Full permission in writing must be sought before publishing parts or the full document. www. iab. org. nz representing NZ's fastest growing and exciting industry 34