Interact 2013 barcelona

IAB Adex Benchmark 2012 Daniel Knapp, IHS Electronics & Media

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©IAB Europe 2013. All rights reserved.

ABOUT THE STUDY

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©IAB Europe 2013. All rights reserved.

A meta-analysis of online ad spend in Europe

RATECARD

Campaigns x Ratecard

GROSS

Revenue Billed

NET

Revenue Billed No Agency commissions

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Horizontal expansion: country coverage

2006: 13 countries

2008:19 countries

2012: 26 countries

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26 countries in 2012

• Austria • Belgium • Bulgaria • Czech Republic • Croatia • Denmark • Finland • France • Germany • Greece • Hungary • Ireland • Italy

• Netherlands • Norway • Poland • Russia • Romania • Serbia • Slovenia • Slovakia • Spain • Sweden • Switzerland • Turkey • UK

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Vertical expansion: format granularity & context

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BIG PICTURE & CONTEXT

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The value of the European online ad market 2012

€24.3bn

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Eurozone  volatility  casts  spell  on  media  economy…

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2004

Q1

2004

Q2

2004

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2004

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2005

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GDP growth in Europe

Eurozone GDP Growth y-o-y France GDP Growth y-o-yItaly GDP Growth y-o-y Germany GDP Growth y-o-y

Source: IHS

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…industrial  production  &  household  consumption  are  good  indictators  for  advertising  market  prospects…

-15%

-10%

-5%

0%

5%

10%

15%19

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

UK advertising revenue growth

Actual NAR growth (yoy) Projected NAR growth (yoy)

Source: IHS Electronics & Media

…tectonic shifts are characterizing ad markets…

11

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Indonesia Argentina China Brazil Russia Mexico UK Germany France Spain Italy

CAGR of Total Media Ad Revenue (2011-2017)

Source: IHS Electronics & Media

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…but  European  online  ad  growth  continues  at  a  double-digit rate

21.8 24.3

0

5

10

15

20

25

30

2011 2012

Total online advertising (€bn)

11.5%

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Indeed, online is more resilient to macro-pressure than other media

2.5%

9.4%

3.8%

-5.2%

2.9%

-4.0%

9.5%

26.6%

11.5%

-1.7%

7.2%

-0.4%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

WE CEE Total

2012: economic & advertising growth

GDP Total excl. Online Online Total

Source: IAB Europe & IHS Electronics & Media

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Overall ad spend shows volatility, TV is resilient, online shows linear growth trajectory

0

20

40

60

80

100

120

140

2006 2007 2008 2009 2010 2011 2012

Ad spend per capita by medium

Online ad spend per capita TV ad spend per capita Total ad spend per capita

Source: IAB Europe & IHS Electronics & Media

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There is no single factor for print decline & online does not absorb all print revenue, but budgets do migrate

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012

Ad spend per capita

Online ad spend per capita Print ad spend per capita

Source: IAB Europe & IHS Electronics & Media

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In 6 years online more than doubled its share of all media revenue: 1 in 4 ad €s go to online in 2012

10.3%

19.0%

25.6%

0%

5%

10%

15%

20%

25%

30%

2006 2009 2012

Online market share of ad budgets: total Europe

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Online for the first time overtakes print newspaper ad spend & becomes 2nd biggest media category in Europe

0.6

4.6

6.3

8.7

19.3

24.3

28.1

0 5 10 15 20 25 30

Cinema

Radio

OOH

Magazines

Newspapers

Online

TV

2012: European advertising market share by medium

Note: Source for non-online ad revenue is IHS. Print ad spend excludes direct mail.

Source: IAB Europe & IHS Electronics & Media

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Small number of markets make largest contribution to European ad spend

46.0%

69.5% 78.3%

86.7% 95.5%

0%

20%

40%

60%

80%

100%

Top 2 Top5 Top 7 Top 10 Top 15

Share of European online ad revenue by market

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Russia climbs up to 4th largest spender as remaining top 10 maintain their position in the European ranking

6,642

4,551

2,770

1,536 1,418 1,207 920 841 617 591

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000Total online ad spend (€m)

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What is driving growth?

• Both emerging markets growing from low basis and established markets that demonstrate sustainability of online ad momentum

• Video • Mobile • RTB has the potential to be a driver • Social networking sites • Europeanisation and consolidation of classifieds & directories • Localisation & individualisation of search, mobile search

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CEE leads growth, but remarkable is the sustainability of growth in mature markets

12%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%Online ad growth

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Bulgaria

Croatia

Czech Republic

Denmark

Finland France Germany

Greece

Hungary

Ireland

Italy Netherlands

Norway

Poland Romania

Russia

Serbia

Spain

Austria

Belgium

Sweden

Switzerland

Turkey

UK

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 20 40 60 80 100 120

Online ad spend per capita (€)

Onl

ine

ad m

arke

t gro

wth

Note: country bubbles represent market size

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Bulgaria

Croatia

Czech Republic

Denmark

Finland France Germany

Greece

Hungary

Ireland

Italy Netherlands

Norway

Poland Romania

Russia

Serbia

Spain

Austria

Belgium

Sweden

Switzerland

Turkey

UK

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 20 40 60 80 100 120

Online ad spend per capita (€)

Onl

ine

ad m

arke

t gro

wth

Note: country bubbles represent market size

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FORMATS

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Search outperforms, display still high single digit, classifieds & directories pick up pace

17.9%

15.3%

5.7%

14.5% 15.5%

9.1%

6.3%

11.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Search Display Classifieds & directories Grand total

Year-on-year growth by format

2011 2012

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Search remains strongest segment in 2012

47.1% 48.8%

32.7% 32.4%

19.6% 18.5%

0%

20%

40%

60%

80%

100%

2011 2012

Format shares of online

Others Classifieds and directories Display Search

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Display growth shows few strong outliers above average rate, yet more outliers below average rate

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

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Online video is now 13% of all online display…

13%

0%

5%

10%

15%

20%

25%

Italy Spain Europeanaverage

Poland UK Finland Russia Sweden Turkey

Online video share of display

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…but  range  of  growth  varies  tremendously…

50.6%

-50%

0%

50%

100%

150%

200%

250%Online video growth

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…and so do absolute video market sizes

020406080

100120140160180

2012: size of online video advertising by market

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Mobile revenues are becoming significant, but are still lagging behind consumption

5%

0%

2%

4%

6%

8%

10%

12%

14% Mobile display share of total online display 2011 2012

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Role of video & mobile as drivers becomes apparent if factoring them out of display

-30%

-20%

-10%

0%

10%

20%

30%

40%Online display growth

display display excl. video display excl. video and mobile

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Classifieds & Directories sees group of countries with strong positive outliers above average rate

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35% Classifieds & directories growth

Note: Russia not measured for classifieds & directories

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Majority of markets outperform average search growth, largest search market just shy of average

-20%

-10%

0%

10%

20%

30%

40%

50%

60% Search growth

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OUTLOOK

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What may the future hold? Addressable market is not only growing in mobile, but fixed-line  as  well…

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90

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fixed Broadband penetration of households (%)

France Germany Italy Spain UK Nordics total Western Europe

Source: IHS Electronics & Media

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…yet  the  emerging  multi-device landscape creates new opportunities

0 100 200 300 400 500

PC

Connected TV sets

Games consoles

Blu-ray disc players

STBs

Tablets and eReaders

Smartphones

Western Europe: Connected Devices (m)

20162012

Source: IHS Electronics & Media

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Thank you! daniel.knapp@ihs.com @_dknapp