Amsterdam, 23^rd May 2017 – At its annual Interact conference today, IAB Europe announced that online advertising grew 12.2% in 2016 to €41.8bn establishing itself as the dominant advertising medium in Europe.

The AdEx Benchmark study is the definitive guide to the state of the European online advertising market and is now in its eleventh year. The research demonstrates that online advertising continues to surpass TV advertising. All markets participating in the study recorded positive growth, a total of twenty markets grew double-digit for the third year running (three markets recording 30%+ growth. Mobile continues to drive the growth with both mobile display and mobile search seeing 50%+ growth in 2016. Mobile dominates across all markets with a 100%+ growth rate in some markets.

Mobile display now accounts for €5.4bn and continues to grow its share of the display market to 33.3%, with a growth rate of 53.3% compared with 2015.

Video which is considered as a key channel for delivering brand advertising campaigns, according to IAB Europe’s Attitudes to Digital Video Advertising report, continues to experience strong growth to a share of 18.2% of the total display market.

Townsend Feehan, CEO of IAB Europe, commented “A thriving digital ecosystem for Europe depends on advertising and the eleventh AdEx Benchmark study demonstrates its continued importance to the economy. As an industry, we must continue to highlight this contribution, promote European innovation and empower our businesses to provide users with the experiences they demand.”

The IAB Europe AdEx Benchmark study divides the online ad market into three categories: Display, Search and Classifieds and Directories. Growth in these online advertising formats has been underpinned by shifting uses in devices and changing consumption patterns.

Display advertising outperformed other categories for the third year in a row with a growth rate of 13.8% and a value of nearly €16bn.

Search continues to be the largest online advertising category in terms of revenue with a growth of 12.9% and a market value of €19.1bn. It continues to be the largest online advertising format in terms of revenue.

Daniel Knapp, Senior Director TMT at IHS Markit, said “Mobile and video are the powerhouses driving the European online advertising market as we enter a post –desktop banner advertising world. The rules and practices of online advertising have changed with these new formats and screens gaining ground, and our study shows that marketers’ and publishers’ efforts to innovate both in terms of measurement, delivery, targeting, and creative are paying off. At the same time, our 2016 data shows that search and classifieds & directories have entered a period of rejuvenation with accelerating growth rates. Classifieds & directories is fueled by industry consolidation and search benefits from better adoption of mobile and maps as search interfaces.”

Qingzhen Chen, Senior Analyst at IHS Markit, added “In 2016, CEE markets contributed more to European industry growth than ever before. We saw eight countries in the region grow above 15%. Markets like Poland, Czech Republic and Turkey are also among the leaders in mobile and video advertising. At the same time, mature Western European markets remain in healthy shape, with the UK and key Nordic markets growing above European average despite their already high online ad spend per capita.”

Top 3 Individual growth markets were:

1. Romania – 36.9%
2. Slovenia – 32.2%
3. Ireland – 31.4%

Top 10 Rankings

1. UK – €14.2bn
2. Germany – €5.9bn
3. France – €4.2bn
4. Russia – €2.6bn
5. Italy -€2.3bn
6. Netherlands – €1.7bn
7. Spain – €1.6bn
8. Sweden – €€1.6bn
9. Belgium – €0.9bn
10. Switzerland – €0.9bn

For more information, please contact:
Alison Fennah, IAB Europe (fennah@iabeurope.eu)
Marie-Clare Puffett, IAB Europe (puffett@iabeurope.eu)

You can download the results here

About IAB Europe

IAB Europe is the leading European-level industry association for the online advertising ecosystem. Its mission is to promote the development of this innovative sector and ensure its sustainability by shaping the regulatory environment, demonstrating the value digital advertising brings to Europe’s economy, to consumers and to the market, and developing and facilitating the uptake of harmonised business practices that take account of changing user expectations and enable digital brand advertising to scale in Europe.

About the AdEx Benchmark study

The data has been compiled by IAB Europe based on information provided by the national IAB offices around Europe. It is then processed and analysed by IHS Markit. The report includes market size and value information for 2016 for the following markets: Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Norway, Poland, Slovenia, Romania, Russia, Spain, Slovakia, Serbia, Turkey, Sweden, Switzerland and the UK. The data represents the calendar year 2016 January- December. This is the eleventh AdEx Benchmark study which began in the calendar year 2006.

Display includes PC-based and mobile banners, rich media and video formats.

See further explanatory note on data below. 

About IHS Markit Technology, Media & Telecom’s Advertising Intelligence Service

IHS Markit Advertising Intelligence Service provides its clients with a holistic and global view of a rapidly evolving advertising and marketing landscape. Developed and maintained by a team of expert analysts, it offers accurate, continuously updated market data, forecasts and reports that give our clients deep perspective on a dynamic advertising market. As the only global product that offers the same detail and scope for both established and emerging media we provide a unique, independent and objective view.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions.  Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. All other company and product names may be trademarks of their respective owners © 2017 IHS Markit Ltd. All rights reserved.

Explanatory note on IAB Europe/IHS Markit AdEx Benchmark figures

Each national IAB in Europe runs its own annual online advertising spending study and the IAB Europe AdEx Benchmark figures are based on these studies. As the methodology of the studies varies country by country, IAB Europe and IHS Markit 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 2016 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 a constant exchange rate in order eliminate currency effects.
• 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).

Join our European Online Advertising Spend 2016 webinar on Tuesday 18^th July 3pm CEST // 2pm BST. Register here!

The AdEx Benchmark study is the definitive guide to the state of the European online advertising market and is now in its eleventh year. The research demonstrates that online advertising continues to surpass TV advertising. All markets participating in the study recorded positive growth, a total of twenty markets grew double-digit for the third year running (three markets recording 30%+ growth. Mobile continues to drive the growth with both mobile display and mobile search seeing 50%+ growth in 2016. Mobile dominates across all markets with a 100%+ growth rate in some markets.

The results of the study can be browsed or downloaded below

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As the last minute preparations for Interact are put in place we are delighted to bring you some perspectives on the key topics. Ari Paparo, CEO of Beeswax discusses the importance of differentiation in an era of consolidation. Continue reading...

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One of the themes of this year's IAB Interact conference is "Building a commercially viable digital ecosystem" which is apt considering the spate of negative headlines about the larger ad tech world.

It is an interesting time to be in ad tech. On the one hand, there clearly is some consolidation among vendors, and companies that have relied on an IO-based transactional sales model are seeing their businesses shrink or disappear. But at the same time, there's an enormous amount of creativity and innovation taking place with new companies, ideas, and techniques popping up every day. A year ago no one even knew about this crazy idea of "header bidding" and now it is radically altering the landscape.

The key question we should ask is: "How do we encourage creativity and innovation in an industry that is consolidating and where the cost of doing business is increasing?" And this question is more pertinent in Europe than elsewhere because start-ups and their marketing clients often have smaller addressable markets in which to operate and create scale.

Some in the industry think there will ultimately be a very small number of platforms (maybe as few as two!) that everyone will use. This would be a disaster for innovation as new ideas, local requirements and business model innovation would be gated by the whims of large, conflicted entities.

But the opposite scenario, where there are hundreds of platforms, is not the answer either. If you talk to the smart people running scaled ad tech businesses they'll tell you that there is a long tail of poorly-architected, sub-scale platforms out there that are in many cases causing more problems than they solve. Header bidding actually makes this worse, as the barrier to entry for a new platform has declined and more buyers and sellers are trying to get connected every day.

At Beeswax we believe that the scale problem can be overcome with smart technology. While the increasing demands of programmatic scale make it difficult economically to create a trading platform or an innovative ad network, by working smarter, an enormous amount of creativity can be unleashed.

One example is the rise of rewarded and playable ads in the mobile app world. These ad formats produce great results for the right types of advertisers and we've seen a number of our clients innovate ad formats or targeting technology to meet the specific needs of these formats. But accessing this very specific and somewhat rare inventory across exchanges is difficult since most exchanges haven't invested in fine-grained filtering technologies. And since the format is relatively new, building a complete bidding stack from scratch would be cost prohibitive. The next generation of entrepreneurs and innovators need to be able to jump on opportunities like these, but at a reasonable and predictable level of cost and effort, and Beeswax has supported several companies buying media in this nascent space.

As long as platforms like Beeswax continue to invest in open architectures, with powerful APIs, we can support and encourage continued innovation in ad tech and let the entrepreneurs and creators execute their visions in this increasingly difficult marketplace.

Bio:

Ari Paparo is the CEO of Beeswax, an ad tech start-up in New York that has created the industry's first Bidder-as-a-Service platform. Previously, Ari has held a number of product leadership positions in the ad tech and marketing tech sectors, most recently as EVP of Product Management for Bazaarvoice, a publicly traded SaaS company that enables retailers and brands to better connect to their consumers through ratings, reviews, photos and other user generated content. Formerly, he was the Director of Product Management at Google’s DoubleClick business and the head of product management for AppNexus.

Website: www.beeswax.com

Twitter: @aripap

As the last minute preparations for Interact are put in place we are delighted to bring you some perspectives on the key topics. We interviewed Rhys Noelke, VP Strategy, RTL Group on what might the News Rules of Engagement. Continue reading...

Q:‘The new rules of engagement‘ is the theme for Interact this year. How do you interpret the theme and how important do you think it is for the industry this year?

Rhys Noelke: For RTL Group, the rules of engagement have changed significantly. For us, ‘TV’ does not mean television anymore. We have redefined the term, as we are moving towards a ‘total video’ eco-system. This means we need to embrace all kinds of different types of video content and platforms. We want to drive the industry forward, by engaging with all audiences, platform and content partners, as we have done by investing into multi-platform networks on YouTube.

As online video publishers, we are all sitting in the same ‘digital boat’.  I expect some more storms out there in the video world, and I absolutely believe that our industry can only move forward if we tackle these storms together – whether they are about regulation, consumer protection or building more trust in the digital advertising business. I am very excited to have the opportunity to debate this and drive it forward with an industry body such as IAB Europe.

Q: What do the new rules mean in terms of an improved consumer value proposition which can drive engagement? How do you see this working across channels?

Rhys Noelke: We need to focus on our consumer proposition, as the industry needs to respect that consumers expect value from publishers and content providers. The consumer doesn’t care about the underlying economics or how we deliver it, whether it’s an ad-funded or pay business model. Consumers want to understand clearly WHAT they can expect and HOW they can get it, in order to accept the rules of engagement. I really don’t think users will oppose smart advertising, if the proposition is clearly explained and they can choose whether they pay directly or indirectly – for instance by giving consent to data usage.

That’s why I think total video also means total consideration of the viewer’s needs.

Q: Is a different proposition and strategy needed for a younger demographic?

Rhys Noelke: Sure – at RTL Group we have invested in globally leading multi-platform networks like BroadbandTV, StyleHaul and Divimove, catering specifically for younger audiences. We think the fundamentals of these networks – content aggregation – are very close to the broadcasting model, which we have shaped across Europe. And they are growing at a significant rate. With our platforms, we generate 26 billion video views a month on YouTube, with nearly 90,000 creators. This is the ultimate fragmentation of channels: young audiences love to engage with their favourite talent directly. This offer has its own rules, its own language and is quite different to an 8pm prime-time show.

Q: Thinking about the transition from traditional media engagement to digital engagement what are the opportunities for the advertiser and what are their expectations?

Rhys Noelke: In a way, advertiser’s today are spoilt for choice as there are so many ad opportunities and platforms out there. But as rich as the choice is, the outcome and return on investment are not that clear. Digital advertising has some bridges to cross to clarify its accountability across screens, formats and platforms.

It is a big challenge to bring this together in a converged world, but this is what we need to achieve as an industry to keep advertisers’ confidence.

The sheer amount of offers will increase. Today nearly all traditional advertising offers are transforming to digital. Just think about digital ‘Out of Home’ or ‘Below-the-Line’ marketing. TV distribution nowadays is fully digitised, but we are still lacking the ability to extract the data and measure it on a comparable basis.

Q: What’s your take on the current discussions on transparency and brand safety?

Rhys Noelke: I think there is still a lot of work to do. The digital industry and associated intermediaries have been accused on the one hand of not being transparent. But on the other hand, advertisers have high expectations for competitive pricing, viewability or frequency. Relevant context and quality content are holding up strong, so we need to explain the benefits to advertisers and make them understand that our serious investment in content cannot be refinanced in the range of cent CPMs. Just to be clear: all advertising on our TV channels is brand safe. I am 100 per cent aligned with what NBC Universal’s Linda Yaccarino said at the Upfronts 2017: with our channels ‘you never have to worry about your ads showing up next to something objectionable.’

Against the background of the ongoing digitisation, we need a strong European perspective to counter the digital giants from the US. In the end, the trade-off between globalisation and more regional approaches demands new rules of engagement.

As an industry, we can build more confidence, for example with standards illustrated in the ‘Coalition for Better Ads’ or other initiatives at IAB. We can prove value.

Q: Lastly what do you need to develop in your organisation in order to implement an effective digital strategy?

Rhys Noelke: Firstly, the overall goal is to protect our core business and to act as an innovator at the same time. No doubt, this is a cultural challenge. When we launched RTL Plus, one of the first commercial TV channels in Germany, more or less out of a garage in Luxembourg, its success was not that certain, but it was driven by a strong pioneering spirit.

You obviously need a leap of faith to build new things which don’t seem feasible at first. For us, it’s clear that we want to be strong as a European TV network, but at the same time, we need to move heavily into online video content and also media technology. It’s very similar to the launch of commercial television in Europe in the 1980s.

Secondly, future monetisation strategies require thinking outside of the box. When we acquired SpotX some years ago, programmatic advertising was seen as threat to traditional sales. We took that risk, and see the benefits and the know-how transfer in our organisation today. We have continued on this path by investing in more ad-tech driven businesses like Smartclip, Videoamp and Clypd.

Thirdly, it’s about people and skills. Today we already have hundreds of digital native managers, software engineers and data-scientists in our Group.

All of these elements are key to delivering a future-proof strategy.

Bio: 

Rhys Noelke, Senior Vice President Strategy, RTL Group

Rhys Noelke is Senior Vice President Strategy at RTL Group’s Corporate Center in Luxembourg. RTL Group is the leading European entertainment network with 60 TV channels, 31 radio stations, the worldwide production company FremantleMedia as well as digital businesses across the Group and in US.

Website: www.rtlgroup.com

Twitter: @rtlgroup

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