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Dr Daniel Knapp
Chief Economist, IAB Europe
Brussels, 11th December 2019
iabeurope.eu
IAB Europe Economic Trends Forum:
2020 Outlook
Cyclical
Structural
Endogenous
Exogenous
2020 is going to be shaped by a multitude of forces. These have different origins and different longevity. To better contextualise these forces, the labels on the left will be used.
Ad spend is correlated to economic growth
R² = 0.8651
-20%
-15%
-10%
-5%
0%
5%
10%
15%
-4% -3% -2% -1% 0% 1% 2% 3% 4% 5%
Ad
Gro
wth
GDP Growth
USA
GDP
HH Consump-
tion
Industrial production
3 important macro variables
Real GDP growth below 2% YoY in Europe
-6
-4
-2
0
2
4
6
8
10
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
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19
88
19
89
19
90
19
91
19
92
19
93
19
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19
95
19
96
19
97
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98
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99
20
00
20
01
20
02
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04
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11
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15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
Real GDP YoY Growth (%)
Advanced economies Emerging market and developing economies Euro area European Union World
Cyclical Exogenous
Uncertainty impacts global economic investment
“Uncertainty is the enemy of the
business cycle, and “uncertainty still
reigns.”Chetan Ahya, Chief Economist
Morgan Stanley
“We’re still in the middle of really trying to understand where
the trade talks are going to land and how that’s going to impact the overall economy.”Mary Barra, CEO General Motors
“Brexit [uncertainty] made it too risky to put a Gigafactory in
the UK.”Elon Musk, CEO Tesla
Cyclical Exogenous
Uncertainty indicators on highest recorded levels
0
50
100
150
200
250
300
350
400
19
97
-1
19
97
-8
19
98
-3
19
98
-10
19
99
-5
19
99
-12
20
00
-7
20
01
-2
20
01
-9
20
02
-4
20
02
-11
20
03
-6
20
04
-1
20
04
-8
20
05
-3
20
05
-10
20
06
-5
20
06
-12
20
07
-7
20
08
-2
20
08
-9
20
09
-4
20
09
-11
20
10
-6
20
11
-1
20
11
-8
20
12
-3
20
12
-10
20
13
-5
20
13
-12
20
14
-7
20
15
-2
20
15
-9
20
16
-4
20
16
-11
20
17
-6
20
18
-1
20
18
-8
20
19
-3
20
19
-10
Global Economic Policy Uncertainty Index (adjusted for PPP) • Developed by Kellogg, Stanford, Booth economists.
• Quantified newspaper coverage of policy-related economic uncertainty.
• Number of federal tax code provisions set to expire in future years.
• Disagreement among economic forecasters as a proxy for uncertainty.
• Global index focusses on trio of terms relating to economy (E), policy (P) and uncertainty (U) in news coverage.
• Calculated monthly as GDP-weighted average.
Source: Economic Policy Uncertainty
Cyclical Exogenous
Global trade is stalling as trade conflicts heat up
Growth in imports & exports
Cyclical Exogenous
Business confidence in 22 months consecutive decline
92
93
94
95
96
97
98
99
100
101
102
103
19
99
-10
20
00
-02
20
00
-06
20
00
-10
20
01
-02
20
01
-06
20
01
-10
20
02
-02
20
02
-06
20
02
-10
20
03
-02
20
03
-06
20
03
-10
20
04
-02
20
04
-06
20
04
-10
20
05
-02
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05
-06
20
05
-10
20
06
-02
20
06
-06
20
06
-10
20
07
-02
20
07
-06
20
07
-10
20
08
-02
20
08
-06
20
08
-10
20
09
-02
20
09
-06
20
09
-10
20
10
-02
20
10
-06
20
10
-10
20
11
-02
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11
-06
20
11
-10
20
12
-02
20
12
-06
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12
-10
20
13
-02
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13
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13
-10
20
14
-02
20
14
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20
14
-10
20
15
-02
20
15
-06
20
15
-10
20
16
-02
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16
-06
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16
-10
20
17
-02
20
17
-06
20
17
-10
20
18
-02
20
18
-06
20
18
-10
20
19
-02
20
19
-06
20
19
-10
Business Confidence Indicator
Euro Area 19 OECD Europe OECD
Source: OECD
Cyclical Exogenous
But consumer confidence has so far bucked the downward trend…
94
95
96
97
98
99
100
101
102
103
19
99
-10
20
00
-02
20
00
-06
20
00
-10
20
01
-02
20
01
-06
20
01
-10
20
02
-02
20
02
-06
20
02
-10
20
03
-02
20
03
-06
20
03
-10
20
04
-02
20
04
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20
04
-10
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05
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05
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20
05
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20
06
-02
20
06
-06
20
06
-10
20
07
-02
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07
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07
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20
08
-02
20
08
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20
08
-10
20
09
-02
20
09
-06
20
09
-10
20
10
-02
20
10
-06
20
10
-10
20
11
-02
20
11
-06
20
11
-10
20
12
-02
20
12
-06
20
12
-10
20
13
-02
20
13
-06
20
13
-10
20
14
-02
20
14
-06
20
14
-10
20
15
-02
20
15
-06
20
15
-10
20
16
-02
20
16
-06
20
16
-10
20
17
-02
20
17
-06
20
17
-10
20
18
-02
20
18
-06
20
18
-10
20
19
-02
20
19
-06
20
19
-10
Consumer Confidence Indicator
Euro Area 19 OECD OECD Europe
…slow erosion is from the highest level in nearly 2
decades
Source: OECD
Cyclical Exogenous
Advertising in Europe not a multiple of economic growth anymore – but exceptions to the rule exist
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
2020
20
21
Germany
Nominal GDP Ad Spend -10%
-5%
0%
5%
10%
15%
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
France
Nominal GDP Ad Spend
-15%
-10%
-5%
0%
5%
10%
15%
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
Netherlands
Nominal GDP Ad Spend
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
Poland
Nominal GDP Ad Spend
-15%
-10%
-5%
0%
5%
10%
15%
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
UK
Nominal GDP Ad Spend
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
Denmark
Nominal GDP Ad Spend
ExogenousStructural
Exceptionalism fueled by digitally-native brands & small advertisers
3
4
6 6 6
7 7
0
1
2
3
4
5
6
7
8
Q1
2016
Q3
2016
Q3
2017
Q4
2017
Q1
2018
Q1
2019
Q3
2019
Facebook: Active Advertisers
(millions)
“Notably, a substantial share of global
advertising is now accounted for by
digital-first brands that are endemic to the
internet.”GroupM
$1bn+ annual marketing spend*
*company filings, quoted after GroupM, TYNY December 2019
10
10
10
10.5
10.5
11
11.5
11.5
20
22
0 5 10 15 20 25
Sainsbury's
Vodafone
JustEat
Nestlé
SumUp
P&G
EE
Tesco
Microsoft
Huel
UK: Top Facebook
Advertisers H1 2019 ($m)
Source: Pathmatics Source: Facebook SEC filings
“[Spend] has largely been boosted by the
flood of new small and medium-sized
companies using Facebook and Google
to advertise for the first time.”
Zenith
Structural Endogenous
Yet rise of e-commerce to (digital) ad investments in more countries
2.382
2.928
3.535
4.206
4.927
5.695
6.54228.0%
22.9%
20.7%
19.0%
18.1%
20.0%22.0%
10.4%
12.2%
14.1%16.1% 17.1%
15.6% 14.9%
0
1
2
3
4
5
6
7
0%
5%
10%
15%
20%
25%
30%
2017 2018 2019 2020 2021 2022 2023
Global retail e-commerce sales
($ trillion)
retail e-commerce sales % change % of total retail sales
Source: eMarketer
0% 5% 10% 15% 20%
Italy
Poland
Spain
Switzerland
Belgium
Austria
Europe (average)
Netherlands
Sweden
France
Germany
USA
UK
E-commerce share of retail sales
2018 2012
Source: Centre for Retail Research
Structural Exogenous
Faster growth beyond the duopoly – but it remains focused on platforms
Source: Bond, Morgan Stanley, corporate filings
Quarterly revenue of US-based ad-funded internet firms ($bn)
EndogenousCyclical
Warning sign: US is entering a 5th consecutive year of significant declines in pay TV
0
20
40
60
80
100
120
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ho
me
s (m
)
US: Pay TV homes vs. unique SVoD homes
Pay TV homes SVoD homes (unique)
Source: Ampere Analysis
Structural Exogenous
“Overall brands have been faced with a choice: continue to rely on TV, spending more to get less, or invest in data and technology that allows them to aggregate digital audiences cost effectively. The latter is a more
sustainable strategy in the long term.”
Zenith, December 2019
Structural Endogenous
GDPR, Cookies, Identity
% of each browser’s users that enable 3rd party cookies
Source: Nativo, via The Information
Structural Exogenous
Cyclical drivers? Quadriennal boosts? Low impact in Europe
0.6 0.7
1.3
1.7 1.8 1.8
4.2
0
1
2
3
4
5
6
UK Spain Italy Germany Netherlands France USA
Ad growth outperformance even vs odd years
(in ppts)
difference av growth
Note: chart is based on 20-year comparison growth rates even vs odd calendar years. It shows by how many percentage points (not percent!) an even year grows faster on average than an odd year.
-10%
-5%
0%
5%
10%
15%
20%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
US all media ad spend: odd/even year cyclicality
Relevant drivers in 2020• Summer Olympics (Tokyo)• Euro 2020 Football Championship (distributed across
Europe)
Past sports event ad performance in Europe• London 2012: only OOH boost• Germany & Poland Euro Football Championships: event
avoidance• Spanish national team performance drove national ad
spend
Structural Endogenous
’Tis the season: end of year ad forecasts released
4.3%
5.7%
4.6%
3.9%
0%
1%
2%
3%
4%
5%
6%
Zenith (incl.
cyclical)
Magna (incl.
cyclical)
Magna (excl.
cyclical)
GroupM (excl. US
political)
2020 Ad Spend Outlook across forecasters*
*December 2019 reports from all forecasters
Why do forecasts vary?
• Different sources for historical ad spend data
• Gross/net discounting
• Number of countries covered
• Models for cyclical spend
• Every agency only has partial view
Estimates cyclical / US political
• $7bn for Summer Olympics, Euro 2020 Football, US Political combined (Magna)
• US political distorts global growth rates by +/-1% each year (GroupM)
Growth driven by digital & cyclicality, Europe loses global share
5.7%
-0.7%
11.7%
5.2%
-3.4%
14.9%
-5% 0% 5% 10% 15% 20%
Total
Traditional linear*
Digital
Global Advertising Growth
2019 2020
Source: Magna Global, December 2019
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Share of Global Advertising
North America Latin America Europe
Asia-Pacific Middle East & Africa
Source: local trade bodies, GroupM, Magna Global
European digital ad market estimated to reach €68bn in 2020
6.69.2
14.5 15.818.8
21.924.4
28.632.1
37.1
41.8
48.4
55.1
61.8
68.3
0%
10%
20%
30%
40%
50%
60%
70%
0
10
20
30
40
50
60
70
80
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Europe: Digital Ad Market Forecast*
revenue growth
Source: IAB Europe. Based on Adex Benchmark 2018. Excludes CTV, Audio, DOOH
Market will keep growing double-digit
23 26 29
77
8
25
28
31
0
10
20
30
40
50
60
70
80
2018 2019 2020
Europe: Digital ad market forecast by format (€bn}
Display C&D Search
Video to grow share, Out-Stream to lead
5.8
7.6
9.5
11.3
14.0
15.6
16.917.9
0
2
4
6
8
10
12
14
16
18
20
2017 2018 2019 2020
Europe: Banner vs Video revenue
(€bn)
Video Banner
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020
Europe: In-Stream vs Out-Stream
Video
In-Stream Out-Stream
Format balance remains stable in 2020
8.0%
8.0%
12.1%
12.1%
13.3%
14.5%
24.3%
25.0%
34.3%
6.2%
6.2%
11.2%
10.5%
11.0%
12.4%
19.4%
20.3%
25.6%
0% 5% 10% 15% 20% 25% 30% 35% 40%
C&D
Non-Video Display
Search
Total
Display
In-Stream Video
Video
Social
Out-Stream Video
Europe: Digital ad growth forecast by format
2020 2019
OpenRTB programmatic to become a €8bn market, growing 20% YoY
12.6
16.8
21.1
25.4
4.35.5
6.67.9
0
5
10
15
20
25
30
2017 2018 2019 2020
Europe: Programmatic ad forecast (€bn)
Programmatic (incl. social) Programmatic (OpenRTB protocol)
Other factors shaping digital advertising in Europe in 2020
ID solutionsDSP / SSP
innovationsAgencies & In-Housing Talent
@_dknapp
iabeurope.eu
