Internet Advertising Trends

November 3, 2008

ad:tech–New York

mary.meeker@ms.com/ david.joseph@ms.comwww.morganstanley.com/institutional/techresearch

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Internet Advertising Discussion Thoughts

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Difficult near-term outlook

1)Economic slowdown with decades of build up2)Ad spending highly correlated with GDP Growth3)Rapid inventory growth + CPM pressure4)Monetization tools under-developed for high growth video / social networking / VoIP / mobile Internet

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Good news

1)Internet usage growth remains strong2)Search share gains remain relatively robust3)Performance-based advertising seeing success

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Net

1)There’s bad news, there’s good news…

Specific Proposed Questions

••M&AM&A--Active or Dormant?Active or Dormant?••VC Investments: Continue or Dry Up?VC Investments: Continue or Dry Up?••Online Ad SpendingOnline Ad Spending--Up or Down?Up or Down?••Search vs. Display Trends?Search vs. Display Trends?••Will Online AdWill Online Ad‘‘Flight to QualityFlight to Quality’’to Top 10 Sites Continue?to Top 10 Sites Continue?••Ad NetworksAd Networks--Consolidation or Fragmentation?Consolidation or Fragmentation?••RecessionRecession--Opportunity for New Media?Opportunity for New Media?