IAB Europe Adex Benchmark 2013 Daniel Knapp Director Adver=sing Research IHS
ABOUT THE STUDY
A meta- analysis of online ad spend in Europe GROSS NET RATECARD Revenue Billed Revenue Billed No Agency commissions Campaigns x Ratecard
Submissions from 26 European countries Austria Belgium Bulgaria Czech Republic Croa=a Denmark Finland France Germany Greece Hungary Ireland Italy Netherlands Norway Poland Russia Romania Serbia Slovakia Slovenia Spain Sweden Switzerland Turkey UK
Added format granularity & context
BIG PICTURE & CONTEXT
The value of online adver=sing in 2013 27.3bn
Eurozone economy is coming out of a double- dip recession GDP Growth in Europe (%) 6 4 2 0-2 - 4-6 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 Eurozone GDP Growth France GDP Growth Italy GDP Growth Germany GDP Growth - 8
Double- digit growth in online adver=sing in 2013 35 30 25 20 15 10 5 0 Total online adver8sing ( bn) 11.9% like- for- like 27.3 24.4 2012 2013
A historical perspec=ve Total online adver8sing spend ( bn)* 35 30 27.3 25 21.9 24.4 20 15 14.5 15.8 18.8 10 5 6.6 9.2 0 2006 2007 2008 2009 2010 2011 2012 2013 * Source: IAB Europe for 2011-2013; 2006-2011 retropolated based on IHS growth rates
In a vola=le market environment, online li`ed overall ad spend 25% 20% 2013: adver8sing year- on- year growth 21.2% 15% 10% 10.8% 11.5% 5% 0% - 5% - 10% - 7.8% 1.8% WE - 2.5% - 2.5% CEE Total Europe - 1.7% - 6.7% Total excl. online Online Total
Despite economic turmoil, online grew its ad spend per capita steadily since 2006 80 70 60 50 40 30 20 10 0 Ad spend per capita ( ) 2006 2007 2008 2009 2010 2011 2012 2013 TV Online Print Other media
Due to weak 2013 for all other media, online strengthened its posi=on as it approaches TV Ad spend by category in Europe in 2013 ( bn) TV 32.3 Online 27.3 Newspapers 20.0 Magazines 9.1 OOH 7.6 Radio 5.2 Cinema 0.7 0 5 10 15 20 25 30 35
However, no one online category has yet surpassed Newspapers ad spend Ad spend by category in Europe in 2013 ( bn) TV 32.3 Online 9.2 Newspapers 20.0 Display Magazines OOH 7.6 9.1 Classifieds & Directories Search Radio 5.2 Cinema 0.7 0 5 10 15 20 25 30 35
Over half of all European ad spend comes from three markets 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Share of European online revenue by market 86.6% 86.4% 77.9% 78.2% 69.4% 69.9% 57.3% 56.9% Top 3 Top 5 2012 2013 Top 7 Top 10
A`er a tough year, Sweden increases in rank, helped by economic crisis in Spain 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Total online ad spend ( m) 7,381 4,676 3,494 1,843 1,703 1,312 955 901 709 628 UK Germany France Russia Italy Netherlands Sweden Spain Norway Denmark 2012 2013
Growth drivers Social media Video Rich media Mobile internet penetra8on increasing across all of Europe Programma8c and RTB come into the mainstream E- commerce driving C&D growth
Growth hurdles AQrac8ng brand spend online Measurement Mobile Video inventory s8ll very limited TV dominance in some European markets Data literacy Regula8on
Mix of CEE and WE markets above European average; Russia and Turkey only 2 markets above 20% 30% Online ad growth like- for- like (yoy) 25% 20% 15% 11.9% 10% 5% 0% - 5%
40% 35% 30% Russia Bubble size: market value in m Online ad market growth 25% Turkey 20% Slovakia Austria Norway Serbia UK 15% Hungary Italy Czech Republic Switzerland Romania 10% Poland Germany Greece Ireland Croa=a Finland Sweden 5% Denmark Bulgaria Spain France Netherlands Belgium 0% - 20 40 60 80 100 120 Slovenia - 5% Online ad spend per capita ( ) - 10%
Uniform growth paferns in 2013 50% Online adver8sing growth year- on- year (%) 40% 30% 20% 10% 0% - 10% 0 5 10 15 20 25 30-20% 2012 2013
The range of growth is converging across Europe 40% 35% 30% 25% 20% 15% 10% 5% 0% - 5% - 10% Online adver8sing growth year- on- year (%) 2012 2013
FORMATS
Accelera=on in Display growth, Display and Search drove online ad spend in 2013 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Year- on- year growth (%) 14.9% 15.5% 13.0% 11.5% 11.9% 9.1% 6.3% 3.6% Display Classifieds & Directories Paid- for- search Total 2012 2013
Search and Display grow their share at the expense of Classifieds & Directories Format shares of total online 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34.1% 36.6% 36.6% 47.3% 48.0% 47.1% 48.8% 49.2% 18.3% 14.9% 18.9% 19.8% 20.7% 19.6% 18.5% 16.8% 47.5% 48.2% 43.8% 32.2% 31.0% 32.7% 32.4% 33.8% 2006 2007 2008 2009 2010 2011 2012 2013 Display Classifieds & Directories Paid- for- search Other
A renaissance of Display adver=sing: mature markets saw strongest growth in 2013 35% Display adver8sing growth year- on- year (%) 30% 25% 20% 15% 14.9% 10% 5% 0% - 5% - 10%
Online video is now a significant part of Display adver=sing 35% 30% 25% 20% 15% 10% 5% 0% Video share of Display 13.1%
Growth in video strong, but no country achieves triple- digit growth 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Online video growth year- on- year (%) 45.4%
Video ad spend mirrors total online ad spend ranking 400 350 300 250 200 150 100 50 0 Online video ad spend ( m)
Mobile now has a double- digit share of online display 30% 25% 20% 15% 10% 5% 0% 11.5% Mobile display as a share of total Display 2012 2013
This is more evident Display year- on- year growth (%) 35% 30% 25% 20% 15% 10% 5% 0% - 5% - 10% Display including mobile
when we remove Mobile from Display Display year- on- year growth (%) 35% 30% 25% 20% 15% 10% 5% 0% - 5% - 10% Display including mobile Display without mobile
Mobile is most important growth engine for online display European Display with mobile: +14.9% European Display without mobile: +1.1%
Classifieds & Directories struggled in 2013 with 11 countries experiencing decline 40% Classifieds & Directories year- on- year growth (%) 30% 20% 10% 3.6% 0% - 10% - 20% - 30%
Con=nued growth in Paid- for- search shows the success of the format Paid- for- search year- on- year growth (%) 40% 35% 30% 25% 20% 15% 13.0% 10% 5% 0% - 5%
Like in Display, Mobile is now a significant driver of Paid- for- search 30% Mobile search as a share of Paid- for- search (%) 25% 20% 15% 12.6% 10% 5% 0% Ireland Austria UK Europe Sweden Germany France Hungary Spain
OUTLOOK
By 2020, we expect there to be 2bn connected devices across Europe 2,500 Europe: Installed connected devices (m) 2,000 1,500 1,000 500-2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
With growth driven by smartphones, tablets and smart TVs 2,500 2,000 1,500 1,000 500 Digital media adapters Pay TV set- top boxes FTA set- top boxes BD players Smart TVs PCs Game consoles Tablets Smartphones Europe: Installed connected devices (m) - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
What this means is that there will be a huge increase in very small screens, sub- 15 Average Screen Size by 5" category Screen size (diagonal inches) 110"- 114" 90"- 94" 80"- 84" 70"- 74" 60"- 64" 50"- 54" 40"- 44" 30"- 34" 20"- 24" 10"- 14" 0"- 4" 0 200 400 600 800 1000 1200 Shipments (m) 2019 2012
Thank you! Ques=ons? Daniel Knapp @_dknapp daniel.knapp@ihs.com