Daniel KnappIHS Markit

May 2017

The data and charts shown in this report cannot be used without the

expressed permission of IAB Europe and IHS Markit

A meta-analysis of online ad spend in Europe

RATECARD

Campaigns x Ratecard

GROSS

Spend Billed

NET

Revenue Billed No Agency commissions

Data for 27 countries in Europe

• Austria

• Belgium

• Belarus

• 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

About the data

This market sizing is based on the following methods:

• Reported data from local IABs

• Estimates by local IABs based on local insight

• Estimates by local IABs in collaboration with IHS Markit

• Estimates & actuals by IHS Markit based on the IHS Advertising Intelligence Service & macro-economic research group

Big Picture

Europe: the value of online advertising in 2016

€41.8bn

Eurozone macroeconomic environment has stabilised after two recessions and holds firm despite political uncertainty

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

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

2016

Q3

2017

Q1

Eurozone France Germany Italy Spain

GDP growth in Eurozone (%)

Source: IHS Markit © 2017 IHS Markit

Gro

wth

Online advertising grew by 12.2% in 2016

37.1

41.8

0

5

10

15

20

25

30

35

40

45

2015 2016

Online advertising spend in Europe (€bn)

€35.2bn net addition in 11 years of this study….

6.69.2

14.5 15.818.8

21.924.4

28.632.1

37.1*

41.8

0

5

10

15

20

25

30

35

40

45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total online ad spend: historical perspective

€35.2bn

*restated from €36bn as measured in 2015 due to methodology change at local IABs

…as online offsets losses of traditional media, establishing a new advertising market high for the first time since the 2009 recession

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Traditional vs Online Advertising (€bn)

Other Media Online€111.4bn €112.6bn

Peak ‘traditional’

media

New market high (+€1.2bn)

Recessionary market low

Historical market high

Flat marketOnline growth offsets decline

”Plus ça change, plus c'est la même chose”: consistency in growth rates over past five years despite fundamental market restructure

39.0%

58.6%

8.9%

18.6%16.5%

11.5% 11.9% 11.6% 13.1% 12.2%

0%

10%

20%

30%

40%

50%

60%

70%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Historical online advertising market growth

Maximum 1.3ppt variation in growth over the past 5 years

Online expands its lead over other media categories*

0 5 10 15 20 25 30 35 40 45

Cinema

Radio

OOH

Print

TV

Online

2016 2015

Ad spend by category in Europe in 2015 and 2016 (€bn)

Source: IHS Markit © 2017 IHS Markit

*broadcaster online video accounted for in the ‘online’ category. TV is linear TV advertising only.

Markets

After four year period of growing concentration on top markets, the long-tail of smaller markets increases its overall share for the first time

57.3

%

56.9

%

58.8

%

60.4

%

58.0

%69.4

%

69.9

%

70.8

%

70.5

%

69.8

%77.9

%

78.2

%

78.8

%

78.4

%

77.7

%86.6

%

86.4

%

86.5

%

86.4

%

86.0

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016

Share of European Online Advertising Revenue by Market Group

Top 3 Top 5 Top 7 Top 10

934

946

1,604

1,622

1,689

2,295

2,640

4,175

5,950

14,181

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Switzerland

Belgium

Sweden

Spain

Netherlands

Italy

Russia

France

Germany

UK

Top 10 Markets Ranked

2016 2015

UK is 2.4x Germany

UK as big as next 3 markets combined

Top 8 in stable ranking, Belgium & Switzerland move up, UK maintains lead over other markets

Growth is mostly lead by smaller CEE markets

36.9

%

33.2

%

31.4

%

23.6

%

22.9

%

22.5

%

22.3

%

21.8

%

19.3

%

17.5

%

14.6

%

13.5

%

13.4

%

13.4

%

12.2

%

11.6

%

11.5

%

11.3

%

10.1

%

9.6%

7.0%

6.4%

6.2%

5.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ro

ma

nia

Slo

ven

ia

Irel

an

d

Slo

vaki

a

Bu

lga

ria

Hu

ng

ary

Sp

ain

Sw

eden

Ru

ssia

Ser

bia

Po

lan

d

Tu

rkey UK

Sw

itze

rla

nd

Eu

rop

ean

Ave

rag

e

Au

stri

a

Gre

ece

Net

her

lan

ds

Ita

ly

Den

ma

rk

Fra

nce

Ger

ma

ny

Be

lgiu

m

Fin

lan

d

Online Advertising YoY Growth 2016

Bulgaria

Denmark

Finland

France

Germany

Greece

Hungary

Ireland

ItalyNetherlands

Norway

Poland

Romania

Russia

Serbia

Slovenia

Spain

Austria

Belgium

Sweden

SwitzerlandTurkey UK

0%

5%

10%

15%

20%

25%

30%

35%

40%

- 50 100 150 200

Most advanced and least mature markets grow faster, tight grouping among Western European markets

Yea

r-o

n-y

ear

gro

wth

European average lines

online ad spend per capita

Bulgaria

Denmark

Finland

France

Germany

Greece

Hungary

Ireland

ItalyNetherlands

Norway

Poland

Romania

Russia

Serbia

Slovenia

Spain

Austria

Belgium

Sweden

SwitzerlandTurkey UK

0%

5%

10%

15%

20%

25%

30%

35%

40%

- 50 100 150 200

Three distinct patterns emerge

online ad spend per capita

Yea

r-o

n-y

ear

gro

wth

European average lines

What enables & hinders growth according to local IABs?

Drivers

• Programmatic & automation

• e- and m-commerce

• Rise of online video consumption

• Premium video inventory

• Improvement in ad quality

• Mobile-first advertiser mentality

• Social platforms

• Native

• E-Sports

• Consolidation

Hurdles

• Ad blocking• Fraud• Complexity of value chain• Brand safety• Privacy & regulation• Measurement (esp. omniscreen video)• Cross-funnel and cross-media attribution• Turning data into insight• Adapting desktop ads to mobile

– High production costs– Structural barriers

• Platform distribution & monetization• Macroeconomic environment and adverse political

conditions

Formats

€5bn added in total, over half of that coming from display

13,877 16,187

6,0496,501

16,915

19,106

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2015 2016

Online Advertising Spend by

Format (€m)*

Display Classifieds & Directories Search

2,309

452

2,191

0

5,000

10,000

15,000

20,000

25,000

Display Classifieds &

Directories

Search

Net additions 2016 (€m)*

2015 2016 net additions

*Not like-for-like 2015 vs 2016 due to methodology changes in Croatia & Czech Republic. Growth rate cannot be calculated. Please use 12.2% like-for-like growth rate. Excludes small number of ‘other’ that was reported without format designation.

Display has been the fastest growing format for the past three years, but classifieds & directories and search experience growing vibrancy

15.2%

5.8%

10.8%11.6%

17.4%

4.9%

12.6% 13.1%13.8%

7.3%

12.9%12.20%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Display Classifieds & Directories Search Total

Online Advertising Growth Rates By Format

2014 2015 2016

Search maintains lead, but display increases share

34.1% 36.6% 36.6%47.3% 48.0% 47.1% 48.8% 49.2% 46.7% 46.7% 46.3%

18.3% 14.9% 18.9%

18.9% 20.7% 19.6% 18.5% 16.8%15.6% 16.4% 15.7%

47.6% 48.5% 44.5%33.8% 31.3% 33.3% 32.7% 34.0% 37.7% 36.9% 38.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Online Advertising Spend Split by Format

Search Classifieds & Directories Display

13 markets grow above European average, incl. 4 out of the top 10 markets by size, but spectrum of growth between markets is vast

45.4

%

41.3

%

38.1

%

29.3

%

29.0

%

24.7

%

24.1

%

20.4

%

19.6

%

17.8

%

17.6

%

15.5

%

14.6

%

13.8

%

13.0

%

11.3

%

11.3

%

11.0

%

10.7

%

9.6%

6.5%

6.5%

5.9%

3.1%

1.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%Ir

ela

nd

Slo

ven

ia

Ro

ma

nia

Slo

vaki

a

Bu

lga

ria

Hu

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ary

Sp

ain

Ru

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Au

stri

a

Ser

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Po

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d

UK

Fra

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Eu

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Den

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Fin

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Ger

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Be

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m

Sw

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rla

nd

No

rwa

y

Online Display Growth 2016 by Country*

incl. video. Desktop & Mobile. Excl. Croatia & Czech Republic as methodology change does not allow growth calculations.

Uneven picture across Europe as classifieds & directories benefit from consolidation, but shift to display-based ad model

*excl. Croatia as methodology change does not allow growth calculations.

20.5

%

19.0

%

18.0

%

16.4

%

16.3

%

10.6

%

10.6

%

9.9%

8.9%

7.8%

7.5%

7.3%

6.2%

6.1%

6.1%

5.8%

3.6%

3.6%

2.0%

1.9%

1.6%

0.4%

-0.1

%

-0.4

%

-4.8

%

-25.

7%

-30%

-20%

-10%

0%

10%

20%

30%H

un

ga

ry

Ser

bia

Po

lan

d

Ita

ly

Slo

vaki

a

Ger

ma

ny

Ru

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Sw

itze

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nd

Net

her

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ds

UK

Den

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Eu

rop

ean

Ave

rag

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Tu

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Be

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Sp

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Gre

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Fra

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Fin

lan

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Sw

eden

No

rwa

y

Au

stri

a

Cze

ch R

epu

bli

c

Slo

ven

ia

Online Classifieds & Directories Growth 2016 by Country*

19 markets saw double-digit growth in paid-for-search

44.9

%

36.1

%

28.0

%

27.5

%

25.1

%

21.4

%

21.0

%

20.8

%

20.7

%

20.1

%

19.2

%

18.9

%

15.0

%

14.4

%

12.9

%

12.4

%

12.2

%

12.0

%

10.1

%

9.0%

8.0%

7.6%

7.3%

6.5%

6.4%

5.0%

4.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%S

love

nia

Sw

eden

Ro

ma

nia

Cze

ch R

epu

bli

c

Irel

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d

Ru

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Hu

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Sw

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Sp

ain

Tu

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No

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y

Cro

ati

a

Ser

bia UK

Eu

rop

ean

Ave

rag

e

Slo

vaki

a

Net

her

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ds

Gre

ece

Den

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Po

lan

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Au

stri

a

Be

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m

Bu

lga

ria

Fin

lan

d

Ita

ly

Ger

ma

ny

Fra

nce

Search Growth 2016 by Country

Mobile shares of format leap by nearly10 percentage points year-on-year

26.8%23.9% 24.7%

36.0%

32.2% 33.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Mobile share of display Mobile share of search Mobile share of total

Mobile share of online ad spend by format*

2015 2016*only countries which reported both mobile display & mobile search considered

A €3bn market, video now is a vital component of online display…

0%

5%

10%

15%

20%

25%

30%

Sw

itze

rla

nd

Be

lgiu

m

Bu

lga

ria

Ita

ly

Cro

ati

a

Irel

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d

Sw

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Cze

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epu

bli

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Sp

ain

Fra

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Ger

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Net

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Eu

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ean

Ave

rag

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Tu

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Au

stri

a

Fin

lan

d

Gre

ece

Ru

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Slo

ven

ia

Po

lan

d

Den

ma

rk

No

rwa

y

Ser

bia

Hu

ng

ary

Ro

ma

nia

Video Share of Online Display 2016

Total: €2.9bn

…and growth is near universally double-digit within 3 clusters

122.

0%

102.

6%

91.8

%

48.0

%

46.0

%

33.6

%

27.6

%

26.8

%

26.3

%

26.0

%

25.0

%

24.6

%

21.1

%

19.6

%

19.4

%

17.4

%

15.2

%

13.9

%

13.9

%

11.9

%

11.7

%

11.0

%

10.4

%

1.2%

0%

20%

40%

60%

80%

100%

120%

140%

Slo

ven

ia

Ser

bia

Irel

an

d

Den

ma

rk

Ita

ly

Tu

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Sp

ain

Sw

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Au

stri

a

Net

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Be

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Ro

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Eu

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Bu

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Ger

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Fin

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Ru

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No

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Sw

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UK

Fra

nce

Gre

ece

Hu

ng

ary

Po

lan

d

Online Video Advertising Growth 2016

+/- 10ppt range of averagegrowth leaders challengers

Mobile display is highly concentrated, but 13 out of 22 countries measured grew faster than the market leader*

2,64

5

677

606

258

178

168

139

129

124

107

100

66 51 49 39 25 24 5 4 1 1

0

500

1,000

1,500

2,000

2,500

3,000

UK

Fra

nce

Ita

ly

Ger

ma

ny

No

rwa

y

Sw

eden

Net

her

lan

ds

Ru

ssia

Tu

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Po

lan

d

Irel

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d

Fin

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d

Cze

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epu

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Sp

ain

Den

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Hu

ng

ary

Au

stri

a

Ser

bia

Ro

ma

nia

Bu

lga

ria

Cro

ati

a

Mobile Display Advertising 2016

(€bn)

327.

0%

191.

3%

156.

3%

156.

3%

107.

7%

89.5

%

88.0

%

86.6

%

85.1

%

72.6

%

64.4

%

53.3

%

51.9

%

51.6

%

45.3

%

37.3

%

36.7

%

34.7

%

33.4

%

30.9

%

26.6

%

26.5

%

0%

50%

100%

150%

200%

250%

300%

350%

Ser

bia

Ro

ma

nia

Cze

ch R

epu

blic

Tu

rkey

Fra

nce

Irel

an

d

Cro

ati

a

Ru

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Bu

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Hu

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Po

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Eu

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ean

Ave

rage

Den

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UK

Sw

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Au

stri

a

Net

her

lan

ds

Fin

lan

d

Sp

ain

No

rwa

y

Ger

ma

ny

Mobile Display Advertising

Growth 2016

*4 countries did not report mobile display

0

500

1,000

1,500

2,000

2,500

3,000

UK

Fra

nce

Ita

ly

Ger

ma

ny

No

rwa

y

Sw

eden

Net

her

lan

ds

Ru

ssia

Tu

rkey

Po

lan

d

Top Mobile Display

+2 ranks vs all display

Market leaders are not created equal: the top 10 ranking by display market size looks different in mobile and video

0

100

200

300

400

500

600

700

800

900

UK

Ita

ly

Ger

ma

ny

Fra

nce

Sp

ain

Bel

giu

m

Net

her

lan

ds

Sw

eden

Ru

ssia

Cze

ch R

epu

blic

Top Video

0

1,000

2,000

3,000

4,000

5,000

6,000

UK

Ger

ma

ny

Fra

nce

Ita

ly

Sp

ain

Ru

ssia

Net

her

lan

ds

Sw

eden

Bel

giu

m

Po

lan

d

Top All Display

Only in mobile Only in

mobile

+1 rank vs all display

-2 ranks vs all display

+1 rank vs all display

Only in video

-3 ranks vs all display

+2 ranks vs all display

+3 ranks vs all display

Not in top mobile

Not in top video

Not in top mobile

Desktop banner is decline as video and mobile power growth

-35%

-25%

-15%

-5%

5%

15%

25%

35%

45%

Irel

an

d

Slo

ven

ia

Ro

ma

nia

Slo

vaki

a

Bu

lga

ria

Hu

ng

ary

Sp

ain

Ru

ssia

Au

stri

a

Ser

bia

Po

lan

d

UK

Fra

nce

Eu

rop

ean

ave

rag

e

Sw

eden

Ita

ly

Net

her

lan

ds

Gre

ece

Tu

rkey

Den

ma

rk

Fin

lan

d

Ger

ma

ny

Bel

giu

m

Sw

itze

rla

nd

No

rwa

y

Display growth composition in 2016

all display excl. mobile excl. mobile & video

Desktop banner is decline as video and mobile power growth

-35%

-25%

-15%

-5%

5%

15%

25%

35%

45%

Irel

an

d

Slo

ven

ia

Ro

ma

nia

Slo

vaki

a

Bu

lga

ria

Hu

ng

ary

Sp

ain

Ru

ssia

Au

stri

a

Ser

bia

Po

lan

d

UK

Fra

nce

Eu

rop

ean

ave

rag

e

Sw

eden

Ita

ly

Net

her

lan

ds

Gre

ece

Tu

rkey

Den

ma

rk

Fin

lan

d

Ger

ma

ny

Bel

giu

m

Sw

itze

rla

nd

No

rwa

y

Display growth composition in 2016

all display excl. mobile excl. mobile & video

Desktop banner is decline as video and mobile power growth

-35%

-25%

-15%

-5%

5%

15%

25%

35%

45%

Irel

an

d

Slo

ven

ia

Ro

ma

nia

Slo

vaki

a

Bu

lga

ria

Hu

ng

ary

Sp

ain

Ru

ssia

Au

stri

a

Ser

bia

Po

lan

d

UK

Fra

nce

Eu

rop

ean

ave

rag

e

Sw

eden

Ita

ly

Net

her

lan

ds

Gre

ece

Tu

rkey

Den

ma

rk

Fin

lan

d

Ger

ma

ny

Bel

giu

m

Sw

itze

rla

nd

No

rwa

y

Display growth composition in 2016

all display excl. mobile excl. mobile & video

Outlook for 2017

• We expect approximately +10% growth over 2016

• Concentration of growth among fewer players will accelerate

• Video will become the primary battleground for consumer attention

• Live video set to focus on sports and UGC

• E-Sports advertising is gaining traction

• Audio is increasingly attractive to marketers

• Mobile-first becomes AI-first (but promise & practice are far apart)

• Regulation will have a material impact on the future health of the market

Contact:

Alison Fennah – fennah@iabeurope.euMarie-Clare Puffett – puffett@iabeurope.euDaniel Knapp – daniel.knapp@ihsmarkit.comQingzhen (Jessie) Chen – jessie.chen@ihsmarkit.comConnect with us:

@IABEurope IAB Europe

www.iabeurope.eu www.technology.ihs.com

@IHS4Tech