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"Europe's online ad market tops €20bn despite economy"

Barcelona, May 30, 012 - Despite the continued weak macroeconomic conditions across Europe and globally, Europe’s online advertising market grew 14.5% year-on-year to a market value of €20.9bn in 2011. By comparison the overall European advertising market - excluding online - grew at just 0.8% in the same time period.*

IAB Europe’s annual AdEx Benchmark survey is the definitive guide to the state of the European online advertising market. Released today at IAB Europe’s Interact conference in Barcelona, it shows that 1 in 5 advertising Euros in Europe is now spent online.

Individual market growth ranged from 55.5% in Russia and 46% in Serbia, to 5.5% in Norway and 4.6% in Romania. Central and Eastern Europe (CEE) markets increased their share of the total from 10.1% in 2010 to 11.8% last year. Russia is now the sixth biggest market with a value of €1.12bn, buoyed particularly by a surging search market. Together the top five markets (UK, Germany, France, Italy, Netherlands) account for almost 67.9% of the total online advertising market, down slightly from 69.2% in 2011.

Head of Advertising Research at IHS Screen Digest and author of the research, Daniel Knapp explains, “Advertising markets are in general very susceptible to changes in the macroeconomic environment – in other words, in an economy where we have the European sovereign debt crisis, high unemployment and cutbacks in consumer spending, we would expect advertising spend to suffer disproportionately as it did on most media in 2011. However, online enjoys a number of unique attributes that have protected it from this effect.

Firstly, it’s a question of formats – advertisers increasingly recognise online as a branding medium; video commands a significant and growing share of spend, and search continues to deliver sound and measurable results. Secondly, the explosion of ‘big data’ has delivered enhanced targeting capabilities, improving monetisation of publishers’ inventory. Thirdly, there is a long term trend for advertisers to shift ad budgets from mature to emerging markets, which is fuelling their online economy. An expanding broadband infrastructure adds to the attractiveness of those markets."

A question of formats
The ROI-centric search format enjoyed the highest growth rate of 17.9% in 2011. However newer formats including video and mobile helped lift the value of Display ad spend, coming a close second at 15.3%.


Video now accounts for 8.2% of online Display
Video’s ability to convey brand messages in a narrative makes it attractive to the big spend advertisers who have a strong legacy in telling stories through TV, the classic branding medium since the age of ‘Mad Men’. AdEx Benchmark 2011 includes online video advertising figures for 14 markets, where video represents 8.2% of the total online Display market value. It ranges from its highest at 9.8% in Sweden but it is also gaining traction in CEE markets as 5.8% in Poland indicates. In Germany and the UK video has already crossed the €100m threshold. In the UK the market is worth €126m; in Germany €117m.

Mobile average growth rates of 45%
While mobile advertising is still a nascent format with mobile display spend contributing
1-3% of online Display ad spend, it is growing rapidly. The nine markets that reported mobile Display advertising for both 2010 and 2011 recorded an average growth rate of 45.6%.


Search experienced strongest growth rates in CEE
Paid-search continued to grow double-digit at 17.9% in 2011 and as such it remains the biggest format in online advertising. Search accounts for 46.5% of total online advertising spend compared with 33.6% for Display and 19.2% for Classifieds and Directories. In 2011 it was the CEE region that really drove the growth of Search, with Croatia, Hungary, Poland, Russia and Slovenia all experiencing significant increases in spend. What the figures alone conceal is the innovation in search – from video to location-based services, data-driven planning to cross-media campaigns with TV in particular, it is the continued creativity of the online advertising industry that allows for search to shine.

The rise of Big Data
With a 15.3% growth in 2011, Display advertising continued its 2010 renaissance, driven both by the recognition of online display as branding medium and the explosion of the big data economy. Big data relies on the rich metrics received through the online medium to plan display advertising. Using ad exchanges, real-time bidding and algorithmic trading, advertisers can reach both broad and niche audiences that meet their exacting criteria. These data-driven techniques increase the cost-efficiency of online advertising, maximising cheaper, remnant inventory to reach consumers. Search advertising has led the way in this data-driven approach and has enjoyed explosive growth across Europe.

Alain Heureux, President and CEO of IAB Europe, concludes: “Innovation and diversity have driven the outstanding growth of the European online advertising sector, which now accounts for over 20% of total advertising spend. With one in every five advertising Euros in Europe being invested in the online medium, it’s clearly a vital part of the region’s economy. In Barcelona this week we have over 500 decision makers from the digital sector celebrating this milestone and looking to build the industry for the future.”

About IHS Screen Digest

IHS Screen Digest is the pre-eminent firm of industry analysts covering global media markets. Headquartered in London, with offices in the US and Australia, we employ a team of 50 specialist analysts covering film, television, broadband media, mobile media, cinema, home entertainment, gaming and advertising. Our online services and reports provide the information and analysis that hundreds of media companies worldwide base their decisions on. Screen Digest was acquired by iSuppli Corporation in November 2010 and the combined entity was acquired immediately after by
IHS. Screen Digest and iSuppli will together be the base around which IHS builds out its coverage of the TMT sector.

About IAB Europe
IAB Europe is a federation of national Interactive Advertising Bureaux (IAB) across Europe.
Its mission is to promote the growth of the interactive advertising markets on behalf of its
clients and national members. Supported by every major media group, advertisers, agency, portal, technology and service provider, its voice represents the interest of more than 5500 company members. IAB Europe coordinates activities across the region including public affairs, benchmarking, research, setting standards and best practices. The member countries are Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom. Our corporate members include Adconion Media Group, Adobe, ADTECH, Alcatel-Lucent, AOL Advertising Europe, AudienceScience, BBC Advertising, CNN, CoAdvertise, comScore Europe, CPX Interactive, Criteo, eBay International Advertising, Expedia Inc, Fox Interactive Media, Gemius, Goldbach Media Group, Google, GroupM, Hi-Media, Koan, Microsoft Europe, Millward Brown, News Corporation,, Nielsen Online, OMD, Orange Advertising Network, PHD, Prisa, Publicitas Europe, Quisma, Sanoma Digital, Selligent, TradeDoubler, Triton Digital, United Internet Media, ValueClick, Verisign, Viacom International Media Networks, Webtrekk, White & Case, Yahoo! and zanox.

Explanatory note on IAB Europe/IHS Screen Digest AdEx Benchmark figures
Each national IAB in Europe runs its own annual online advertising spending study and the IAB Europe AdEx figures are based on these results. As the methodology of the studies varies country by country, IAB Europe and IHS Screen Digest have defined methodology rules to represent the figures in such a way as to make them realistically comparable. This involves:
 Readjusting local figures to allow for harmonised representation. Readjustment rates are supplied by groups of local market experts
 Estimating/harmonising ad spend data for certain formats or segments in certain countries where local IAB studies do not include data or the definition or scope of a format is substantially different from IAB Europe standardised segments
 Where local data is collected in a currency other than Euros, the average exchange rate in 2010 has been used to convert this to Euros. To provide data for prior year growth rates, the prior year figures have also been re-calculated using the 2010 exchange rate in order to give transparency over the growth rate
 AdEx Benchmark focuses on four normalised segments: ‘Display’ (including mobile Display, rich media and video), ‘classifieds and directories’, ‘paid search’ and ‘other’ (including email but excluding email marketing).
 Figures quoted are gross figures (i.e. net invoiced value of the media, plus agency commission if any).

If you have any questions about the data in this report please contact Sarah Botterill