A meta analysis of online ad spend in Europe GROSS NET RATECARD Revenue Billed Revenue Billed No Agency commissions Campaigns x Ratecard
Data for 27 countries in Europe Austria Belarus Belgium Bulgaria Czech Republic Croatia Denmark Finland France Germany Greece Hungary Ireland Italy Netherlands Norway Poland Russia Romania Serbia Slovakia Slovenia Spain Sweden Switzerland Turkey UK
The value of online advertising in H1 2016 18.6bn
2004-Q1 2004-Q3 2005-Q1 2005-Q3 2006-Q1 2006-Q3 2007-Q1 2007-Q3 2008-Q1 2008-Q3 2009-Q1 2009-Q3 2010-Q1 2010-Q3 2011-Q1 2011-Q3 2012-Q1 2012-Q3 2013-Q1 2013-Q3 2014-Q1 2014-Q3 2015-Q1 2015-Q3 2016-Q1 GDP growth across Europe underpins a strong online advertising market in 2016 GDP growth in the Eurozone (%) 8,0% 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% -6,0% -8,0% Eurozone France Italy Germany Spain
Online advertising up 13.4% year-on-year in H1 2016 25,0 Online advertising spend in Europe ( bn) 20,0 16,4 +13.4% 18,6 15,0 10,0 5,0 - H1 2015 H1 2016
All formats noted increases in H1 2016 again 25,0 20,0 15,0 10,0 5,0 - Online advertising spend in Europe ( bn) 8,0 2,6 9,0 2,7 5,8 6,8 H1 2015 H1 2016 Paid-for-search Classifieds & Directories Display 10,0 8,0 6,0 4,0 2,0 - Online advertising spend in Europe ( bn) 1,1 5,8 0,1 2,6 1,1 8,0 Display C&Ds Paid-for-search H1 2015 H1 2016 net additions
Mobile was the key driver of growth across formats in H1 2016
Europe: H1 2016 snapshot H1 2015 ( bn) H1 2016 ( bn) Growth (yoy %) Share (%) Display 5.8bn 6.8bn 18.2% 36.7% of which video 1.1bn 1.6bn 46.0% 8.5%* of which mobile 1.2bn 1.9bn 61.3% 10.9%* Classifieds & Directories 2.6bn 2.7bn 3.5% 14.7% Paid-for-search 8.0bn 9.0bn 13.3% 48.6% of which mobile 1.2bn 1.9bn 57.3% 12.2%* Total 16.6bn 18.6bn 13.4% 100% *The share is calculated excluding countries who didn t report video or mobile
Display increased its share in H1 2016 at the expense of Paid-for-search and Classifieds & Directories Online advertising spend in Europe (H1 2015) Online advertising spend in Europe (H1 2016) 48,7% 35,2% Display Classifieds & Directories 48,6% 36,7% Display Classifieds & Directories Paid-for-search Paid-for-search 16,1% 14,7%
Mobile advertising amounted to 3.8bn in H1 2016, split evenly between search and display 5 000 4 000 3 000 2 000 1 000 - Mobile advertising spend in Europe ( m) 8 000 7 000 +2.1% 6 000 +57.3% Mobile share of 3 898 3 979 5 000 1 875 search: 32.0% +6.2% 4 000 1 192 +61.3% 3 000 Mobile share of 1 916 display: 32.8% 2 000 1 188 1 000 3 683 3 910 - H1 2015 H1 2016 H1 2015 H1 2016 Mobile display Mobile search *The value is calculated excluding countries who didn t report mobile Desktop advertising spend in Europe ( m)* Desktop display Desktop search
Western Europe: H1 2016 snapshot WE: Online advertising spend in H1 2016 H1 2015 ( bn) H1 2016 ( bn) Growth (yoy %) Share (%) Display 5.0bn 5.9bn 17.0% 36.0% of which video 1.0bn 1.4bn 48.2% 8.8%* 48,0% 16,0% 36,0% of which mobile 1.1bn 1.8bn 58.3% 11.3%* Classifieds & Directories 2.5bn 2.6bn 3.3% 16.0% Paid-for-search 6.9bn 7.9bn 13.8% 48.0% of which mobile 1.0bn 1.6bn 58.6% 11.8%* Display Classifieds & Directories Paid-for-search Total 14.5bn 16.4bn 13.1% 100% *The share is calculated excluding countries who didn t report video or mobile
Central and Eastern Europe: H1 2016 snapshot CEE: Online advertising spend in H1 2016 H1 2015 ( bn) H1 2016 ( bn) Growth (yoy %) Share (%) Display 0.7bn 0.9bn 27.1% 41.5% of which video 0.1bn 0.1bn 26.0% 6.5%* of which mobile 0.07bn 0.2bn 103.9% 8.0%* 41,5% 53,5% 5,0% Display Classifieds & Directories Paid-for-search Classifieds & Directories 0.1bn 0.1bn 8.4% 5.0% Paid-for-search 1.1bn 1.2bn 9.6% 53.5% of which mobile 0.2bn 0.3bn 50.5% 14.6%* Total 1.9bn 2.2bn 16.2% 100% *The share is calculated excluding countries who didn t report video or mobile
Outlook for 2016 Drivers Favourable economic forecasts Large-scale sporting events: Euro 2016 Rio Olympics Growth of video, facilitating the move of TV brand budgets online New native ad formats Hurdles Tough comparatives (especially in H2 2016) Complexity of devices, platforms, behaviours No universal digital currency Duplication & fragmentation of ad tech infrastructure 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% -6,0% Source: IHS Markit Media ad spend growth in 2016 (%) 10,5% 5,2% 5,0% 4,3% 2,6% Online Cinema OOH TV Radio Print -4,6%
The extrapolation trap : Thus, in the future, all advertising will be in video form, displayed in native manner, purchased programmatically, distributed to social media platforms and viewed on a mobile device.
KPIs & Metrics: From quantity to quality Viewability : the fight for standards and the 70% compromise. The same rules may not apply to Video/banner and desktop/mobile. Ad Fraud : filtering out non-human traffic. Will detection technology ever reach 100%? Clutter : defending share of voice by identifying number of ad placements per screen / page. Increasingly critical parameter as viewability demands increase risk. Brand safety : ensuring appropriate or ideal context for ads to be served. Issue is a byproduct of Programmatic, particularly in open marketplaces. Do scale and safety match? Ad Blocking : developing standards for user friendly (light, non-intrusive etc) advertising to halt and ultimately reverse a growing trend.
The big Questions : the next 18 months Cross platform unique ID : the major advantage of Platforms, i.e. registered, profiled users at superior scale. How is this shaping the market and how can publishers respond? The Holy Grail of the egrp : possibly in the next 12-18 months, leading in an accelerated migration of video advertising from TV to Digital. The mobile evolution : the influence of Platforms leads to an app-led, closed ecosystem especially when in-app advertising matures. (Re)defining native advertising and its metrics : premium native doesn t (really) scale, performance native is commoditized. Aims and metrics diverge: branding vs response, engagement vs CTR. Publishers business model : the necessity for (a) paid content (b) upmarket advertising positioning and (c) new revenue streams (e-commerce, agency services etc).
Contact: Alison Fennah - Fennah@iabeurope.eu Marie-Clare Puffett puffett@iabeurope.eu Connect with us: @IABEurope www.iabeurope.eu IAB Europe @IHS4Tech www.technology.ihs.com