Tài liệu Nothing But Net 2009 Internet Investment Guide 3 pdf

21
Global Equity Research
05 Januar
y 2009
Imran Khan
(1-212) 622-6693

Google Is Most Used by Young, High Income Participants
Although Google dominates all demographic levels, our survey found it had its
largest market share among those aged 18-41, and those with incomes over $100K.
The majority of Yahoo!, MSN and AOL users in our study fell into the over-42 age
group. MSN and AOL had their largest market shares among users with income
levels of $50K-$99K, while the market share for Yahoo! was highest among those
who earned $49K or less.
Table 7: Market Share by Age and Income Level
% of participants
Ages Incomes:
All 18-41 42+ $0-$49K $50-$99K $100K+
AOL 6.6% 4.8% 8.0% 5.9% 7.3% 6.9%
Ask 2.0% 2.5% 1.7% 2.5% 2.2% 0.0%
Google 59.0% 67.1% 52.2% 55.9% 60.4% 70.1%
MSN 7.7% 5.1% 9.5% 7.4% 7.7% 6.9%
Yahoo 20.0% 18.0% 22.7% 24.1% 17.6% 12.6%
Other 3.1% 2.2% 3.7% 3.2% 2.9% 2.3%
Don't Use/Don't Know 1.5% 0.3% 2.2% 1.0% 1.8% 1.1%
Source: J.P. Morgan research
62% of Respondents Would Be Willing to Consider Switching Search Engines
When asked what improvements by other search engines would cause them to switch
from their preferred brand, only 38% of respondents stated that nothing would cause

them to switch, as they were satisfied with their current search engine. This was
consistent with last year’s survey responses. Again, the most frequently selected
improvement was results that better matched the search term, with 45% of
respondents stating that this would cause them to switch search engines. Other
factors that would cause respondents to consider switching search engines were
faster response speeds to searches (28%), the user friendliness of the site (27%), and
the ability to preview web content (23%).
Table 8: Factors that Would Cause Search Engine Switching
% of participants
All AOL Ask Google MSN Yahoo Other
Results that better match my search
term
45.0% 42.0% 25.0% 48.6% 33.3% 43.3% 34.8%
Results that include video, web,
music and oother forms of
information
11.5% 12.0% 18.8% 11.5% 14.0% 9.6% 13.0%
A more uncluttered easy to navigate
site
26.5% 20.0% 31.3% 24.9% 36.8% 29.9% 17.4%
The ability to preview web content 22.6% 24.0% 25.0% 21.9% 22.8% 26.1% 8.7%
Faster response speed to searches 27.8% 36.0% 18.8% 25.8% 35.1% 29.3% 26.1%
Other 0.7% 0.0% 0.0% 0.7% 3.5% 0.0% 0.0%
Nothing, happy with current search
engine
38.2% 30.0% 31.3% 37.5% 38.6% 41.4% 52.2%
Source: J.P. Morgan research

The Int’l Search Market Is Now Larger than the US Market
We continue to believe the opportunities for paid search in the international

marketplace are even more significant than in the US. By our estimate, while the UK
is at par or ahead of the US market, the overall international paid search market is
still 3+ years behind the US in terms of development.



22
Global Equity Research
05 Januar
y 2009
Imran Khan
(1-212) 622-6693

The international market is now larger than the domestic market, reaching $15.0B in
F’08. As such, we believe the international markets will be a key growth driver in the
upcoming year. We think the largest driver will be query growth. While we expect
the US to experience query growth of 19% Y/Y, we believe international markets
will see a 25% Y/Y lift in the number of queries. However, offsetting these gains are
likely declines in foreign currency exchange rates. As such, we see international RPS
declines of 8% Y/Y in USD, which should mostly offset the higher query growth.
We are now modeling F’09 paid search revenue growth of 15% Y/Y to $17.2B.
Beyond 2008, we expect the international paid search market to grow at a 20%
CAGR through 2011.
Table 9: J.P. Morgan’s International Search Advertising Revenue Forecast
Units as indicated
International
2006 2007 2008E 2009E 2010E 2011E
08-'11E

CAGR

Internet Population (M) 817 903 988 1,072 1,153 1,239 7.8%
Queries / Month / User 33 41 49 57 63 69 12.2%
Number of Queries (M) 326,900 441,315 582,536 728,170 873,804 1,031,089 21.0%
RPS (per 1,000 searches) $19.07 $23.19 $25.74 $23.63 $24.39 $24.93 -1.1%
% Coverage 37.2% 38.3% 38.5% 38.5% 38.5% 38.6% 0.1%
% Clickthrough Rate 17.2% 18.4% 19.1% 19.8% 19.8% 20.5% 2.4%
$ Revenue / Click 0.30 0.33 0.35 0.31 0.32 0.32 -3.5%
Int'l Search Forecast ($M) 6,233 10,235 14,993 17,208 21,315 25,701 19.7%
Y/Y Growth 90.1% 64.2% 46.5% 14.8% 23.9% 20.6%
Source: J.P. Morgan estimates, Company reports, comScore, Nielsen//NetRatings, IDC, IWS

We Think Google Will Continue to Take Market Share
We estimate that Google has a 74% dollar market share currently (including revenues
from AOL, Ask, and other affiliates). We believe its share will continue to grow at an
accelerated pace in 2009 now that 1) the AOL and Ask TAC rates are locked in
under a new multiyear contract, 2) Yahoo! is comping its monetization gains from
Project Panama, and 3) we think advertisers are more likely to cut their spend with
the other search engines and stick with the leader in a recession. On a query volume
basis, we also expect Google to continue to excel in market share gains. 2008 saw
Microsoft attempt everything from creating contests to increase search volume to
actually paying users to purchase items through Microsoft search ads. Despite this,
Google’s US core search market share increased to 62.9% in September 2008 from
58.4% in December 2007.


23
Global Equity Research
05 Januar
y 2009

Imran Khan
(1-212) 622-6693

Figure 8: US Core Search Market Share,
September 2008
62.9%
20.2%
8.5%
4.1%
4.3%
Google Sites Yahoo! Sites
Microsoft Sites AOL LLC
Ask Network
Source: comScore and J.P. Morgan estimates
Figure 9: US Core Search Market Share,
December 2007
58.4%
22.9%
9.8%
4.6%
4.3%
Google Sites Yahoo! Sites
Microsoft Sites AOL LLC
Ask Netw ork
Source: comScore and J.P. Morgan estimates

Search Advertising Likely to Be Winner in Macroeconomic
Aftermath
Although we acknowledge that all types of advertising, including search, will likely
be hit by advertising budget reductions in 2009, we think search advertising will be

the long-term winner in the reshuffling of budget allocations. We believe the weak
macroeconomic environment has forced advertisers to test performance-based search
advertising at an accelerated pace. Even after economic strength returns, we think
advertisers will stick with their new allocations based on better metrics and higher
measurable returns. Specifically, we see newspaper and radio advertisements
suffering the most from these budget shifts.



24
Global Equity Research
05 Januar
y 2009
Imran Khan
(1-212) 622-6693

Table 10: Percent Change in Measured US Ad Spending, 1H’08
MEDIA SECTOR % CHANGE
TELEVISION MEDIA -0.40%
· Network TV -2.40%
· Cable TV 3.10%
· Spot TV -4.40%
· Syndication - National 10.20%
· Spanish Language TV -0.10%
MAGAZINE MEDIA -1.80%
· Consumer Magazines -1.80%
· B-to-B Magazines -5.90%
· Local Magazines -2.80%
· Sunday Magazines 4.80%
· Spanish Language Magazines 7.10%

NEWSPAPER MEDIA -7.40%
· Local Newspapers -7.10%
· National Newspapers -9.50%
· Spanish Language Newspapers -11.00%
INTERNET (Display Advertising Only) 13.00%
RADIO MEDIA -6.50%
· Network Radio 3.40%
· National Spot Radio -7.40%
· Local Radio -7.50%
OUTDOOR 1.80%
FSIs 2.00%
TOTAL -1.60%
Source: TNS Media Intelligence and J.P. Morgan estimates



25
Global Equity Research
05 Januar
y 2009
Imran Khan
(1-212) 622-6693

2009 Graphical Advertising Outlook
2008 was a difficult year, as display advertising pricing (CPMs) was pressured not
only from a non-premium inventory glut but also from lower ad budgets spent on
premium slots. Unfortunately, we see these trends continuing into 2009. Specifically,
we think 2009 growth will be impacted by:
• Lower ad budgets given macroeconomic weakness and shifts towards
performance-based advertising;

• Continued pressure on non-premium inventory pricing as social networks and
other non-traditional sites struggle to find a monetization model that works;
• Difficult comps due to the 2008 Olympics and political campaigns; and
• Continued trouble finding an appropriate way to monetize video inventory
without alienating viewers.
Having said this, we see pockets of strength for publishers who provide better
targeting capabilities and who effectively use ad networks and ad exchanges to better
monetize non-premium inventory.
We Expect the Global Graphical Advertising Market to Grow
6.7% in F’09
We now think 2009 will be a weak year for graphical advertising publishers, as we
expect the graphical ad sector to under-perform performance-based advertising in a
down economy. On the back of estimated 14% Y/Y growth in 2008, we believe
global graphical advertising revenues will grow 7% in F’09. From a metrics
standpoint, we believe page views will grow 10% Y/Y while RPMs decline ~3%
Y/Y. We expect the global Internet population growth to remain strong at 7% Y/Y,
reaching 1.3B in 2009. We expect the global graphical advertising market to grow at
an 11% CAGR through 2011.
Table 11: J.P. Morgan's Global Graphical Advertising Revenue Forecast
Units as indicated
Global
2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E
08-'11E

CAGR

Internet Population (M) 593 710 820 924 1,020 1,113 1,205 1,295 1,380 1,471 6.9%
Pages Viewed / User / Day 33 34 36 37 38 39 40 41 43 44 2.7%
Total Pages Viewed (B) 7,209 8,897 10,724 12,607 14,275 15,986 17,793 19,590 21,510 23,539 9.8%
RPM (per 1,000 pages) $1.02 $0.75 $0.81 $0.87 $0.97 $1.07 $1.09 $1.06 $1.09 $1.13 1.2%

Global Graphical Forecast ($M) 7,354 6,674 8,642 10,984 13,829 17,068 19,368 20,670 23,494 26,536 11.1%
Y/Y Growth -19.6% -9.2% 29.5% 27.1% 25.9% 23.4% 13.5% 6.7% 13.7% 12.9%
Source: J.P. Morgan estimates, Company reports, comScore, Nielsen//NetRatings, IDC, IWS, and IAB

US Growth Likely to Mirror the Global Market at 6.3% in F'09
We expect the US graphical advertising market to grow 6.3% in 2009, well below
our year-ago estimate of 16.6%. We think that during 1H’09, US graphical
advertising revenue will be flat to down slightly Y/Y. However, as the economy
stabilizes, we expect 2H’09 display advertising to improve, resulting in our F’09
estimate of 6.3% Y/Y growth. We believe page view growth will slow to 6.5% in