Search Economy and Trends

1. Panel: Search Economy and Trends
Panelists:
Heather Dougherty, Research Director Hitwise
Jaideep Singh – CEO of Spock.com
Kevin Lee – Chairman & CEO / Co-Founder of Didit
Sean Walsh – VP of Online Marketing at Luxurylink.com
Moderator:
Sandeep Aggarwal, Managing Director
Sr. Internet Analyst at Collins Stewart LLC

2. Secular Growth Trends in Internet Advertising
$MM 2004 2005 2006 2007 2008E 2009E 2010E '07-'10 CAGR
Total Worldwide Advertising $543,600 $569,100 $604,600 $639,700 $667,900 $695,593 $722,560 4.1%
Y/Y Change 11.0% 4.7% 6.2% 5.8% 4.4% 4.1% 3.9%
WW Internet Ad Spend $16,500 $21,000 $28,000 $35,663 $44,399 $54,569 $66,259 22.9%
G rowth Rate 38% 27% 33% 27% 24% 23% 21%
WW Internet as a % of Total 3.0% 3.7% 4.6% 5.6% 6.6% 7.8% 9.2%
Y/Y Increase in Penetration 59 bps 65 bps 94 bps 94 bps 107 bps 120 bps 133 bps
Source: Universal Mc Cann; IAB & PricewaterhouseCoopers; Collins Stewart LLC estimates
• Worldwide advertising is approximately $700bn industry
• Internet advertising is $45bn industry
• Internet advertising is expected to grow 5x of overall advertising industry growth for
next several years
• Internet advertising will be 9%+ of the total advertising in 2010 (up from 3% in 2004)

3. Search Will Continue Dominate Internet Advertising
Ad Revenue ($MM) 2004 2005 2006 2007E 2008E 2009E 2010E
Total $16,500 $21,000 $28,000 $35,663 $44,399 $54,569 $66,259
Search $6,627 $8,864 $11,867 $15,923 $20,237 $25,256 $31,149
Classifieds $2,265 $2,724 $3,817 $4,405 $5,323 $6,371 $7,480
Referrals/Lead Gen $495 $1,007 $1,740 $2,063 $2,562 $3,153 $3,913
Email $266 $314 $449 $569 $709 $855 $1,017
Display Related Ads $6,846 $8,073 $10,128 $12,704 $15,569 $18,935 $22,700
Banners Ads $4,517 $5,594 $7,439 $8,646 $10,453 $12,565 $14,761
Rich Media/Video ads $1,064 $1,388 $1,738 $2,843 $3,717 $4,759 $6,102
Sponsorships $1,064 $965 $951 $1,214 $1,398 $1,612 $1,836
Slotting Fees $202 $125 $0 $0 $0 $0 $0
Ad Revenue (Y/Y Growth) 2004 2005 2006 2007E 2008E 2009E 2010E
Total 38% 27% 33% 27% 24% 23% 21%
Search 58% 34% 34% 34% 27% 25% 23%
Classifieds 49% 20% 40% 15% 21% 20% 17%
Referrals/Lead Gen 131% 103% 73% 19% 24% 23% 24%
Email 0% 18% 43% 27% 25% 21% 19%
Display Related Ads 18% 18% 25% 25% 23% 22% 20%
Banners Ads 20% 24% 33% 16% 21% 20% 17%
Rich Media/Video ads 38% 31% 25% 64% 31% 28% 28%
Sponsorships 16% -9% -1% 28% 15% 15% 14%
Slotting Fees NA NA NA NA NA NA NA
Ad Revenue (% of Total) 2004 2005 2006 2007E 2008E 2009E 2010E
Total 100% 100% 100% 100% 100% 100% 100%
Search 40% 42% 42% 45% 46% 46% 47%
Classifieds 14% 13% 14% 12% 12% 12% 11%
Referrals/Lead Gen 3% 5% 6% 6% 6% 6% 6%
Email 2% 1% 2% 2% 2% 2% 2%
Display Related Ads 41% 38% 36% 36% 35% 35% 34%
Banners Ads 27% 27% 27% 24% 24% 23% 22%
Rich Media/Video ads 6% 7% 6% 8% 8% 9% 9%
Sponsorships 6% 5% 3% 3% 3% 3% 3%
Slotting Fees 1% 1% 0% 0% 0% 0% 0%
Source: Collins Stewart LLC estimates

4. Fireside Chat with Search Industry Experts
• Sean Walsh – VP of Online Marketing at Luxurylink.com
• Heather Dougherty, Research Director Hitwise
• Kevin Lee – Chairman & CEO / Co-Founder of Didit
• Jaideep Singh – CEO of Spock.com

5. Sean Walsh
Vice President, Online Marketing
What is LuxuryLink.com?
5-Star Vacation Packages at Auction
My Professional Background
•VP, Online Marketing for Countrywide Financial
•Director, Online Marketing for Sony Connect
•Various Web Development / Product Mgt. Positions
•Began as Aerospace Engineer for Hughes Space & Comm.

6. Travel Search Volume Trend

7. Hotel Vacancy Trend

8. New Hotel Investment Trend

9. Treasury's Paulson says US economy is healthy, transitioning to
moderate growth March 1, 2007
WASHINGTON (AFX) - The US economy is 'healthy' and transitioning
to a soft landing after blockbuster growth in early part of last year,
Treasury Secretary Henry Paulson said today.
'For a number of months now I have believed that the US economy is
A Few Interesting Quotes
successfully transitioning to a moderate and sustainable rate of growth,
and yesterday's data supports this view,' he said in a speech to the
Economic Club of Washington.
“Wait a minute. What did you just say? You’re predicting
$4-a-gallon gas? That’s interesting. I hadn’t heard that.” —
George W. Bush, Washington, D.C., Feb. 28, 2008
US inflation rate “still relatively contained”, Paulson July 4, 2008
LONDON – Treasury Secretary Henry Paulson said inflation that strips
out food and fuel costs in the US remains in check and he praised the
job Federal Reserve chairman Ben S Bernanke is doing conducting
monetary policy.

10. “Inflation is contained”…
Oh, really?!

11. 1. The American Economy is in worse shape than
many would have you believe.
2. American consumer demand is entering a
protracted downcycle.
3. Consumer spending is 70% of US GDP.
What’s my point?
4. The benefits of the offline to online advertising
shift cannot overcome this downward force.
5. Therefore, it is prudent for all of us search
marketers to pay close attention to the true health
of the American economy and its consumers.
Track your acquisition costs closely!

12. Heather Dougherty
Research Director,
Hitwise

13. Hitwise - Who We Are
Online Competitive Intelligence
Service
Monitor the largest worldwide
sample of Internet users – 25 million
Report on the most online
businesses (1M+ Websites)
Provide daily delivery of information
to drive better business decisions
Founded in 1997 with profitable
operations in the US, UK, Australia,
New Zealand, Hong Kong and
Singapore
Acquired by Experian in 2007
1,400+ Clients Worldwide

14. Searches on Google increased
10% in July 08 over previous year
Share of Searches by Search Engine - July 06 to July 08
Others
100%
Ask
MSN Search
80%
Yahoo! Search
Share of Searches
60%
40%
Google
20%
0%
07
08
7
8
6
7
8
6
07
07
07
7
08
08
08
06
06
06
6
07
07
07
7
7
8
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l- 0
l- 0
l- 0
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-0
b-
b-
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g-
p-
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v-
ar
ar
ct
ct
ay
ay
ec
ec
Ju
Ju
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Ap
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Fe
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Au
Ju
Au
Ju
No
No
Ja
Ja
Se
Se
O
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M
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M
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* MSN Search includes Live.com

15. Google’s traffic is increasing while
maintaining repeat visitors
Google's Market Share of Visits by New & Returning Visitors
7%
Monthly Market Share of Visits
6%
5%
4%
New
3% Returning
2%
1%
0%
Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul-
07 07 07 08 08 08 08 08 08 08

16. Impact of search varies widely
among industries

17. Willingness to purchase search
traffic also a factor
Share of Paid Search Traffic by Industry
4 Weeks Ending Aug. 9, 2008
Retailers
Auto Manuf
Banks & FIs
Food & Bev Brands
Grocery & Alcohol
Employment
Newspapers
0% 5% 10% 15% 20% 25% 30%
Share of Paid Traffic

18. What does Didit do?
Didit transforms clients’ businesses through the
application of digital media technology & strategy.
Didit is the industry leader in search engine
marketing, keyword targeted media and auction-
media.
Didit was co-founded by industry thought leader,
SEMPO board member, Kevin Lee. Kevin’s years
of SEM expertise provide the foundation for Didit’s
proprietary Maestro search campaign technology.
Didit’s unparalleled results and client growth have
earned Didit recognition not only among marketers
but also as part of the 2007 Inc 500 (#137) as well
as a #12 position on Deloitte’s Fast 500.

19. Spending based on marginal profit
Google’s share of wallet keeps growing:
Goog Yahoo Microsoft
Q1'06 Actuals 64% 34% 0%
Q2'06 Actuals 68% 28% 3%
If the Google Yahoo deal
Q3'06 Actuals 69% 25% 5% is approved then look at
Q4'06 Actuals 71% 22% 5% the shifts and allocation.
Q1'07 Actuals 70% 22% 6%
Q2'07 Actuals 71% 22% 5% Monetization
Q3'07 Actuals 72% 22% 5% Click Share
Q4'07 Actuals 73% 20% 6% CPC Escalation
Q1'08 Actuals 73% 21% 6%
Q2'08 Actuals 74% 20% 5%

20. SEMPO: Most Advertiser Respondents Could Still
Tolerate Further Price Rises, at Moderate Levels
RESEARCH HIGHLIGHTS
• Over three-quarters of respondents said they could tolerate further rises in paid placement prices
• 21% report they cannot afford to pay more for leads/conversions because they are currently at maximum
efficiency, a slight decrease from 2006, and on par with 2005
• Even among advertisers who report the capacity to increase ad expenditure, more than half can afford 30% or less
• Despite increasing ad spend and year-to-year growth in the value of search engine marketing, we are likely
nearing a pricing plateau as advertisers near their maximum efficacy.
Ability to Afford Further Price Escalation in Paid Placement Ads
quot;Given the current efficiency you experience with Paid Placement programs, and the quality of the leads that this tactic
generates, how much more could you afford to pay for the leads / conversions this channel provides before you could not
30% justify the expense?quot;
% of Advertiser Respondents
21%
20% 18%
17% 16%
10%
10%
6%
5%
4%
1% 1% 2%
0%
Nothing 10% more 20% more 30% more 40% more 50% more 60% more 70% -90% Tw ice as Three times Don't know
more much as much
Advertisers n=240
Source: Search Engine Marketing
Professional Organization survey of SEM
agencies and advertisers, Dec 07-Jan 08.
Global Results. Copyright © 2008 20

21. Faced With Escalating Keyword Prices,
Advertisers Would Increase Program Efficiency
RESEARCH HIGHLIGHTS
• Paid placement advertisers would address price rises by improving
the efficiency of their programs before cutting back on spending
• Improving site conversion efficiency and improving the overall
efficiency of bidding programs would be first steps in maintaining
paid placement programs
Reaction to 2-Year Steady Increase in Paid Placement Costs
quot;How would you likely react to hypothetical scenario where the cost of Paid Placement steadily increased for the next
two years?quot;
100%
% of Advertiser Respondents
74% 77%
80% 72% 67% 70%
65%
60%
28%
40% 26% 23% 22% 25% 21% 22%
21% 16% 22% 15% 22% 19%
20% 13% 15% 13% 17% 13%
20% 13% 11% 13% 13% 13% 2%
2% 1%
0%
Improve site's Improve our bid Shift more Rely more on Increase the Rely more on Supplement Rely less on Grin and bear Decrease Cease Paid
efficiency at mgmt programs budget to more number of outside SEM cost from outside SEM it; w e can still budget for Paid Placement
converting * niche search sophisticated keyw ords agencies brand budgets agencies afford to pay Placement programs
ad netw orks softw are w e bid on more altogether
All Advertisers Advertisers of <500 Employees Advertisers of 500+ Employees
Source: Search Engine Marketing
Professional Organization survey of SEM Advertiser n=240
agencies and advertisers, Dec 07-Jan 08. 21
Global Results. Copyright © 2008

22. What does Didit do?
This year, while the search engines may try to add
tools into their interfaces, chances are complexity will
increase:
• Keyword-targeted display (contextual)
• Re-targeted search display ads and text
• Keyword-targeted Video and Rich Media
• Better control over syndication networks
• Mobile? CPC, CPCall, CPM, CPA, CPSMS?
• Real-time cookie/profile driven adserving
• Blending of search and display
• MSFT/YHOO merger, Goog/Yahoo alliance?

23. PEOPLE SEARCH
PEOPLE SEARCH

24. SPOCK IS THE LEADER IN PEOPLE SEARCH
Funding Venture backed with $8 million raised through Clearstone and Opus Capital
Strong team with winning culture (36 FT from leading companies and schools)
Team Leading technical advisors from Stanford, Google, and Yahoo!
The #1 Market leading product
Product Over 300 million people indexed to date
Deep IP through patents and 2 years of intense product development
4 million unique visitors per month growing at 25% monthly
Leadership The best brand perception from thought leaders, the press, and users
Emerging distribution model
24

25. PEOPLE SEARCH IS A HUGE OPPORTUNITY
Search Engines
7 billion people
searches per month
Social Networks
7 billion people
searches per month
Over 45 billion monthly searches
Address Books
30 billion address
book searches
worldwide
Spock is monetizing this market
with relevant targeting of ads
Content
IMDB 1 billion people
searches per month
Directories
2 billion searches
per month on online
directories
25

26. PEOPLE SEARCH IS NAME + KEYWORD DRIVEN
People enables both name searches & keyword searches
Keyword searches make targeting better and create value for users & advertisers
Meta data (keywords) used to target name searches better
26
CONFIDENTIAL

27. Fireside Chat with Search Industry Experts
on Interesting Topics on Search Marketing
1. Revisiting the value proposition for search – why search continues to be the most attractive online ad format?
2. Search beyond direct marketers - Adoption of search by brand advertisers and other advertisers
3. Google vs Yahoo! Vs Microsoft – shares of wallet, innovations, product enhancement etc
4. Spending trends – by verticals, any visible impact from economic headwinds
5. Key metrics trends – CPC, CTR and conversion trends
6. Vertical search - People search
7. Search beyond PC – mobile search
8. Geographical search – US vs. International, national vs. local
9. Search marketing trends by size of advertisers – SMB, Govt, enterprise, education or just large vs. small to mid
size advertisers
10. Universal search – how it is performing, signs of traction, how it is changing how advertisers buy keywords and run
search campaigns

28. Thank You!!
Sandeep Aggarwal, Managing Director
Sr Internet Analyst
Collins Stewart LLC
saggarwal@collinsstewartllc.com
415-659-2260