Industry Overview

The information in this section is derived from various third party sources. Neither we nor any other person connected with the Issue have verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and, accordingly, investment decisions should not be based on such information. For the purpose of this section, certain numerical information is presented in "millions" and "billions" units.

Online Advertisements

According to the IAB Internet Advertising Revenue Report for 2009 Second-Quarter and First Six Months Results, internet advertising revenues in the United States totaled $10.9 billion for the first six months of 2009, with Q2 accounting for approximately $5.4 billion. Internet advertising revenues for the first six months of 2009 decreased 5.3 percent from the same period in 2008.

Online advertisement vis-à-vis other media

According to the IAB Internet Advertising Revenue Report for 2008 Full Year, the Internet has continued to grow in significance when compared to other ad-supported media.

*The total U.S. advertising market includes other segments not charted here.
*“TV Distribution” includes national and local TV station ads as well as multichannel system ads.

Source: IAB Internet Advertising Revenue Report for 2008 Full Year released in March, 2009 (www.iab.net)

Online Advertising – Pricing Models

According to the IAB 2009 Report, performance based pricing, has been the most prevalent pricing model since 2006, has maintained a strong sequential growth rate and is followed by CPM/Impression based pricing which has declined as a percentage of revenue over the past several years. Hybrid pricing has seen the greatest loss in percentage revenue over the period, dipping sharply from 17% in 2004 to 4% in the first six-months of 2009.

Source: IAB Internet Advertising Revenue Report for 2009 Second-Quarter and First Six Months Results (www.iab.net)

Further, approximately 58 percent of 2009 second quarter revenues were priced on a performance basis, up from the 54 percent reported in the second quarter of 2008, approximately 38 percent of 2009 second quarter revenues were priced on a CPM or impression basis, down from 42 percent in the second quarter of 2008 and approximately 4 percent of 2009 second quarter revenues were priced on a hybrid basis, consistent with the 4 percent reported for the second quarter of 2008.

Online Advertising- Advertisement Formats

The current online industry for online advertisement is through several formats which are broadly categorized as:

Display Advertising (Banner Ads): advertiser pays an Internet company for space to display a static or hyper-linked banner or logo on one or more of the Internet company's pages.

Sponsorship: represents custom content and/or experiences created for an advertiser which may or may not include ad elements such as display advertising, brand logos, advertorial or pre-roll video. Sponsorships fall into several categories:

• Spotlights are custom built pages incorporating an advertiser's brand and housing a collection of content usually around a theme.
• Advergaming can range from an advertiser buying all the ad units around a game or a "sponsored by" link to creating a custom branded game experience.
• Content & Section Sponsorship is when an advertiser exclusively sponsors a particular section of the site or email (usually existing content) re-skinned with the advertiser's branding.
• Sweepstakes & Contests can range from branded sweepstakes on the site to a full-fledge branded contest with submissions and judging.

E-mail: banner ads, links or advertiser sponsorships that appear in e-mail newsletters, e-mail marketing campaigns and other commercial e-mail communications. Includes all types of electronic mail (e.g., basic text or HTML-enabled).

Search: fees advertisers pay Internet companies to list and/or link their company site domain name to a specific search word or phrase (includes paid search revenues). Search categories include:

• Paid Listings: text links appear at the top or side of search results for specific keywords. The more a marketer pays, the higher the position it gets. Marketers only pay when a user clicks on the text link.
• Contextual Search: text links appear in an article based on the context of the content, instead of a user-submitted keyword. Payment only occurs when the link is clicked.
• Paid inclusion: guarantees that a marketer's URL is indexed by a search engine. The listing is determined by the engine's search algorithms.
• Site optimization: modifies a site to make it easier for search engines to automatically index the site and hopefully result in better placement in results.

Lead Generation: fees advertisers pay to Internet advertising companies that refer qualified purchase inquiries (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone fax). These processes are priced on a performance basis (e.g., cost-per-action, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations.

Classifieds and auctions: fees advertisers pay Internet companies to list specific products or services (e.g., online job boards and employment listings, real estate listings, automotive listings, auction-based listings, yellow pages).

Rich media: advertisements that incorporate animation, sound, and/or interactivity in any format. It can be used either singularly or in combination with the following technologies: sound, Flash, and with programming languages such as Java, JavaScript, and DHTML. It is deployed via standard Web and wireless applications including e-mail, static (e.g. .html) and dynamic (e.g. .asp) Web pages, and may appear in ad formats such as banners, buttons and interstitials. Interstitials are included in the rich media category and represent full- or partial-page text and image server-push advertisements which appear in the transition between two pages of content. Forms of interstitials can include splash screens, page takeovers and pop-up windows.

Digital Video Commercials: TV-like advertisements that may appear as in-page video commercials or before, during, and/or after a variety of content in a player environment including but not limited to, streaming video, animation, gaming, and music video content. This definition includes digital video commercials that appear in live, archived and downloadable streaming content.

Search has remained the leading format since 2004, and has had strong sequential growth over this period. Search is followed by Display Banners and Classifieds/Directories in percentage share of Internet advertising. Sponsorship revenues have dipped from 8.00% of total revenues in 2004 to 2.00% of total revenues the first six months of 2009, while Classifieds/Directories revenues have dropped from 18.00% of total in 2004 to 14.00% in 2008 and to 10.00% in the first six months of 2009. Provided below is an industry survey capturing internet advertising revenue shares by advertising format.

According to the IAB 2008 Report, search remains the largest revenue format, accounting for 45 percent of 2008 full year revenues, up from the 41 percent reported in 2007. Search revenues totaled $10.5 billion for the full year 2008, up 20 percent from the $8.8 billion reported in 2007. Display-related advertising revenues totaled $7.6 billion or 33 percent of full year 2008 revenues, up nearly 8 percent from the $7.1 billion (34 percent of total) reported in 2007. Display-related advertising includes Display Banner Ads (21% of 2008 full year revenues or $4.9 billion), Rich Media (7% or $1.6 billion), Digital Video (3% or $734 million), and Sponsorship (2% or $387 million). Classifieds revenues accounted for 14 percent of 2008 full year revenues or $3.2 billion, down 4 percent from the $3.3 billion (16 percent of total) reported in 2007. Lead Generation revenues accounted for 7 percent of 2008 full year revenues or $1.7 billion, up 6 percent from the $1.6 billion (7 percent) reported in 2007.

*Format definitions may have changed over time period depicted, both within the survey process and definitionally by survey respondents.

Source: IAB Internet Advertising Revenue Report for 2009 Second-Quarter and First Six Months Results (www.iab.net)

According to the IAB 2009 Report, Retail advertisers represent the largest category of Internet ad spending, accounting for 20 percent of revenues for the first six-months of 2009 or $2.2 billion, down from the 21 percent ($2.4 billion) reported in the first six-months of 2008. Telecom companies accounted for 16 percent of 2009 first six-months revenues or $1.8 billion, up slightly from the 15 percent ($1.7 billion) reported in the first six-months of 2008. Financial Services advertisers accounted for 12 percent of 2009 first six-months revenues or $1.3 billion, down from the 13 percent ($1.5 billion) reported in the first six-months of 2008. Automotive advertisers accounted for 11 percent of revenues for the first six-months of 2009 or $1.2 billion, down slightly from the 12 percent ($1.4 billion) reported in the first six-months of 2008. Computing advertisers represented the fourth-largest category of spending at 10 percent of 2009 first six-months revenues or $1.1 billion, in line with the 10 percent reported ($1.1 billion) for the first six-months of 2008. Consumer Packaged Goods and Food Products represented 6 percent of the first six-months of 2009 revenues ($702 million) down slightly from the 7% or $754 million reported in the first six-months of 2008. Entertainment accounted for at 4% of 2009 first six-months revenues ($478 million), up slightly from the 4% ($466 million) reported in the first six-months of 2008. Media accounted for 4 percent of revenues for the first six-months of 2009 or $434 million, up slightly from the 3 percent ($372 million) reported in the first six-months of 2008.

Internet Ad Revenue by Major Industry Category
2009 First Six Months vs. 2008 First Six Months

Source: IAB Internet Advertising Revenue Report for 2009 Second-Quarter and First Six Months Results (www.iab.net)

According to a press release by Zenith Optimedia dated July 6, 2009, advertisement expenditure, advertisement expenditure according to region is as follows:

Source: ZenithOptimedia
Source : Press release by Zenith Optimedia dated July 6,2009 (www.zenithoptimedia.com)

Electronic Greeting Cards

According to a report by the Mintel International Group Limited on ‘Greeting Cards and eCards’ in February 2008 (“Mintel Report”), in the United States, greeting cards are a $10.8 billion dollar market, with Christmas ($3.2 billion), Birthday ($2.6 billion), and Valentine’s Day cards ($1.1 billion) representing the top three segments. The number of cards sent annually for Christmas has reached an estimated 2.2 billion. It is clear that people still want to connect, be remembered, and acknowledge others during key seasons or significant life events. From 2004 to 2007, the market has grown 34%, with Easter and Halloween cards experiencing the greatest increases. Sales for 2007 grew at a slightly slower rate due to an influx of value priced cards, though this also made greeting cards more accessible to those with lower disposable income.

According to the Mintel Report, greeting card markets are expected to continue to expand between 6.00 and 8.00% annually during 2008-10, much as it did in 2007, though significantly slower than in 2004-06. More than 90% of all U.S. households buy greeting cards. The average person receives more than 20 cards per year, about a third of which are birthday cards. According to the Mintel Report, the sales of subscription based electronic greeting cards have increased by US$ 5 million from 2005 to 2007 and the electronic greeting card volume is approximately 300 million per year—less than 5.00% of the number of paper cards being sold.

According to the Mintel Report, U.S. sales and forecast of online greeting cards, 2004-10 are as follows:

Source: Report by the Mintel International Group Limited on 'Greeting Cards and eCards' in February, 2008 (www.mintel.com)