AdEx Benchmark: Europe’s online ad market reaches Euro21bn, with one of 5 advertising Euros going to online

Creativity, Digital & Media

Europe’s online advertising market grew 14.5% year-on-year, to Euro 20.9bn, while the overall European advertising market – excluding online – grew just 0.8% in the same time period, according to IAB Europe’s annual AdEx Benchmark survey, the  guide to the state of the European online advertising market. Released at IAB Europe’s Interact conference in Barcelona, the report 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 have 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.

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.

Daniel Knapp

Head of Advertising Research

IHS Screen Digest

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, with its ability to convey brand messages making 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 is also gaining traction in CEE markets as 5.8% in Poland indicates. In Germany and the UK video has already crossed Euro 100m threshold, with UK market worth Euro 126M and German one – Euro 117M.

While mobile advertising is still a nascent format, with mobile display spend contributing 1-3% of online Display ad spend, it is growing rapidly. This way, on the 9 markets  that reported mobile display advertising for both 2010 and 2011, the average growth rate was of 45.6%.

Paid-search continued to grow double-digit at 17.9% in 2011 and 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.

With a 15.3% growth, display 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.

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

Alain Heureux

President & CEO IAB Europe

IAB Europe’s AdEx Benchmark is compiled by IHS Screen Digest and covers the entire European region, from the mature markets of Western and Northern Europe to the emerging markets in Eastern and Southern Europe for the calendar year 2011.  The data has been compiled by IAB Europe based on information provided by the national IAB offices around Europe, than processed and analyzed by IHS Screen Digest.

The report includes market size and value information for the full membership of the IAB Europe in 2011 including 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 2011 January-December. This is the sixth edition of AdEx,  which began in 2006.