Search budgets rose 66% during the past five years, with some specific categories such as real estate and medical more than doubling. During that time, challenges such as an increase in churn rates and price competition surfaced. Will the next five years seem as bright? Or, will the industry see a dip in spending? Can brands still reap rewards from spending more? Join Corey Elliott, Director of Research at Borrell Associates, as he provides insight into which marketers will put ad dollars where during the next five years. PRESENTER Corey Elliott, Director of Research, Borrell Associates

1. Tomorrow’s Media, Understood Today
www.BorrellAssociates.com
Predictive Power
in Search Dollars
April 28, 2014

2. © 2014 Borrell
Search – The world that was, and shall be…
Pay-per-click advertising messages that include the purchase of keywords on sites such as
Google, Yahoo, Ask.com, MSN, etc. Directory search type advertising is also included here.
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Paid Search
A Silver Lining Exists
+66%
-32%
Source: Borrell Associates Inc., 2014
In millions

3. © 2014 Borrell
Borrell Associates – Tomorrow’s Media Understood Today
Research marketing & advertising revenues & spending
Consult on advertising strategy & tactics
Focus on local spending – both offline & online
Gather ad spending data from partners
Collect sales data from 4,400+ local websites
Conduct in-market surveys of business owners
Blend in secondary research
Release forecasts twice a year
along with in-depth reports on verticals

4. © 2014 Borrell
Incredible Growth in Digital Spending
$-
$5,000
$10,000
$15,000
$20,000
$25,000
2008 2013
Audio
Video
Paid Search
Display -Targeted
email
Display - ROS
Variances of over $25 million were seen in:
• Medical Professionals
• Financial Services
• Real Estate Services
• Entertainment (general)
• Restaurants
And these all increased spend by over 75%
Some categories actually decreased search spend:
• Home Improvement
• Travel Services
In Search…..
Source: Borrell Associates Inc., 2014
In millions

5. © 2014 Borrell
Although Search Grew, It Was Not Without Challenges
2009 study found 3 major disrupters:
Long tail of SMB’s
60% churn rate among resellers
Everyone jumping in (with varying degrees of skill)
Study followed Yodle, ReachLocal, WebVisible, & Clickable

6. © 2014 Borrell
Today, Many Have Thrived, but…
Yodle went from 250 employees, 5,000 customers, & $24
million in revenue to 1,100 employees, 40,000 customers and
$160 million
ReachLocal went from $200 million to $514 million
WebVisible foreclosed in October 2011
Clickable was acquired by Syncapse in June 2012
What happened?

7. © 2014 Borrell
Evolve or…..
SEM SEO DS

8. © 2014 Borrell
Cable TV
Cinema
Direct Mail
Directories
Radio
Newspaper
Online 25%
Local TV
Stations
Other
Print
Out of Home
Telemarketing
2013
Digital Advertising is Only Part of the Pie – A Very Sizeable One
$-
$5,000
$10,000
$15,000
$20,000
$25,000
2008 2013
Audio
Video
Paid Search
Display -Targeted
email
Display - ROS
Source: Borrell Associates Inc., 2014

9. © 2014 Borrell
Cable TV
Cinema
Direct Mail
Directories
Radio
Newspaper
Online 25%
Local TV
Stations
Other
Print
Out of Home
Telemarketing
2013
And Advertising is Only a Portion of What Companies Spend
Promotions Advertising
$207,958.30
$99,343.49
2013
Source: Borrell Associates Inc., 2014

10. © 2014 Borrell
Search May Fall 32% by 2018, but…
There’s a Silver Lining Out There….

11. © 2014 Borrell
Digital Services is 4.5 Times Larger Than Digital Ad + Promotions
Digital
Services
82%
Digital
Advertising
12%
Online
Promotions
6%
App Development
Blog Management
Digital Press Release Management
Email List Purchasing
Email Management
Listings Claiming
Online Ad Design
Online Agency/Exchange Fees
Online Consulting and Research
Online Contest/Game
Development
Online Video Production
Opt-in List Management
Reputation Management
Search Engine Optimization (SEO)
Site Visitor Analytics
Social Media Management
Web Design/Maintenance
Web Hosting
Source: Borrell Associates Inc., 2014

12. © 2014 Borrell
Where The Money is in Raleigh, NC
$71.9 $69.8
$30.4
$97.3
$157.6
$101.7
$23.7
$88.6
Other Print Direct Mail Cable TV Local TV Stations Newspaper Radio Reputation Mgmt SEO
$828 million Advertising Market $1.8 BILLION Digital Services Market
With a “B”
Source: Borrell Associates Inc., 2014

13. © 2014 Borrell
Breaking Down That SEO Number….
Over $7.7 million spent
by companies with under
250 employees
Over $3.5 million spent
by Banks
Over $1.6 million spent
by Restaurants
Over $19 million spent by
Hospitals & Health Care
Over $1.5 million spent
by companies with under
100 employees
Source: Borrell Associates Inc., 2014

14. © 2014 Borrell
$1 out of $10 spent on Digital
Services will be spent on SEO
Not everything grows….
• Blog development
• Email list purchases
• Email management
And some things go nuts….
• App Design +657%
• Online Video Production +446%
• Mobile Media Management +610%
Overall, DSS grows by 57%
ONLINE PUBLIC
RELATIONS
7%
ONLINE
CONSULTING AND
RESEARCH
8%
WEB PRESENCE
49%
ONLINE
MARKETING
SUPPORT
13%
ONLNE AD
PRODUCTION
23%
2018 Digital Services
By 2018, the amount spent on SEO will have grown 52%

15. © 2014 Borrell
By 2018, SEO will be the main component of OMS
ONLINE PUBLIC
RELATIONS
7%
ONLINE
CONSULTING AND
RESEARCH
8%
WEB PRESENCE
49%
ONLINE
MARKETING
SUPPORT
13%
ONLNE AD
PRODUCTION
23%
WEB PRESENCE
 Website Design/Maintenance
 Web Hosting
 Online Advertising Management
 Mobile Media Management
 Social Media Management
ONLINE PUBLIC RELATIONS
 E-mail Management
 Digital Press Release Distribution
 Reputation Management
 Opt-in List Management
ONLINE MARKETING SUPPORT
 SEO
 Blog Development
 Site Visitor Analysis
 E-mail List Purchase
 Listings Claiming (Pay Per Call, Call Tracking)
ONLNE AD PRODUCTION
 Online Agency/Exchange Fees
 Display Ad Design
 App Design
 Online Contest/Game Development
 Online Video Production
ONLINE CONSULTING AND RESEARCH
$708
Billion
2018 Digital Services

16. © 2014 Borrell
One Thing We Know About the Future is…it’s Unknown
• What could impact these projections?
• Aggressive Media Companies
• Selling SEO with 95% of the front-line sales people
• Other players – web.com, VistaPrint, Hubspot
• Large number of SMB’s buying; then upselling them
• Nature of “search” itself
• Boundaries of intuitive search
• Rules of the game
• Penguin, Panda, Hummingbird, ???

17. © 2014 Borrell
In Conclusion…
• Paid search rose, will peak in 2014, then fall off
• SEO will continue to grow – and grow strong
• Advertising is one piece of the pie….
• Promotions is another, bigger piece….
• But the majority of the pie going forward belongs to Digital Services
• More than 3 out of every 4 digital dollars spent by a company on these three
areas will go to Digital Services

18. Tomorrow’s Media, Understood Today
www.BorrellAssociates.com
Thank you!
This presentation will be
available at:
www.borrellassociates.com/2014sis