The European digital advertising market is now worth €48 billion according to IAB Europe’s AdEx Benchmark study which has been measuring the size of the market and analysing key trends since 2006. The AdEx Benchmark Report demonstrates the scale of the contribution made by digital advertising to the European economy and highlights the role of innovation in delivering growth to this constantly-evolving industry.
The first and perhaps most obvious trend to observe is the continued growth of digital. In 2017 digital advertising grew by 13.2% and indeed this is the twelfth consecutive year of growth observed in the study. Only once has that growth dropped below 10% – in 2009, a market low year for the entire advertising industry. If we look back at 2006, digital was still in an emerging phase standing at €6.7 billion in value. Since then it has increased by €41.6 billion, doubling in size over the last five years alone. Digital has emerged from being a new format, the new kid on the block, to being the driver for overall growth as other media progress on their own digital journeys. The AdEx Benchmark Report enables us to see the breadth and variety of the European digital advertising markets. The largest market is the UK, standing out as an example in terms of size and continued growth, yet also providing an indicator of the potential for other markets to follow given the appropriate structural and economic conditions. The top ten markets in the study represent over 85% of total spend, yet the smaller remaining 17 markets outpace the leaders with a doubly high growth rate.
Digital advertising falls into three categories: display, search and classified. These formats grew strongly on desktop in the early years but now the growth has shifted to mobile. Display advertising shows the strongest current growth with a €2.5 billion net addition in 2017 to total €19.3 billion. Media consumption is of course shifting to mobile and the majority of this display growth came from increased investment in mobile display formats, surging by 41.8% in 2017 to €8.1 billion. In effect, within twelve months mobile display increased its share of total display from approx. 1/3 to over 40% of the market. Social is also important as a key driver of display, and has grown this year from 55% share of display to 68%.
There has been a recent strong emergence of digital video display advertising accounting for over 10% of total digital advertising for the first time this year. With an annual growth rate of 35% video display is growing at around four times the pace of non-video display. Looking at the two different types of video, in-stream and out-stream, out-stream has shown the strongest growth and overtaken in-stream this year as the dominant format (55% share this year compared with 42% last year).
Search advertising totalled €21.9 billion in 2017, its performance-based model showing resilient growth yet again. As seen in display, mobile was responsible for growth; mobile search increased by 31.1% to €8.6 billion. This was driven by both improved ad rates for mobile, which have traditionally lagged behind desktop rates, and greater volumes of mobile search queries by consumers as search habits shift further to mobile devices. On average mobile search is still slightly lower as a percentage of total search (39.3%) than mobile display as a percentage of total display (42%). However, four markets are now mobile search first (in that the mobile share of their search market exceeds 50%): Serbia, Ireland, Turkey and Russia.
According to IAB Europe’s European Programmatic Market Sizing Report the programmatic advertising market reached a value of more than €8 billion in 2016 which means that half of European display ad revenue is now being traded programmatically. Programmatic is now a key imperative for advertisers, agencies and publishers alike and IAB Europe’s Attitudes to Programmatic Report shows how programmatic is being used for competitive advantage and how attitudes, adoption and strategies are evolving. Drivers for the buyside to invest in programmatic have evolved from factors such as targeting efficiency and lower cost of media acquisition to reflect a more sophisticated use of programmatic in order to achieve better data quality and increased control of media and inventory. On the sell-side, nearly three quarters of publishers are now investing in programmatic due to client demand and half of publishers see programmatic as an opportunity to gain competitive advantage.
There is no doubting the fact that digital media consumption is still growing and ever changing. In the 2000s advertisers sometimes struggled to embrace the pace of change and take advantage of the opportunities to engage with consumers in this new world. Yet now they are developing much more sophisticated techniques: creating digital-first ads whether short or long form, using data in a more sophisticated way to reach their intended audiences, providing an improved user experience with better-curated content, and facilitating an easier user journey, from e-commerce sites to their own websites for example.
A quality future
During this extended period of growth, the data available to advertisers has multiplied and ad-tech tools and services have burgeoned. This has brought both opportunities and challenges and the industry has taken steps to educate the market and to build a sustainable future. As regards data protection, IAB Europe has created a Transparency and Consent framework to support the digital advertising ecosystem in meeting requirements relating to user consent under the General Data Protection Regulation (GDPR). There is a major focus on delivery of quality both inside the industry and in terms of delivering a quality product for the consumer. Data validation techniques have improved and so have methods of processing and interpreting that data. Stakeholders have moved towards traditional brand metrics such as brand awareness and purchase intent as well as quality metrics such as targeting accuracy, brand safety and viewability. Industry-wide independent accreditation and verification systems continue to broaden, and initiatives such as the European Viewability Initiative have taken first steps towards creating a harmonised quality environment across the region. Great content and user experience together with transparency and choice are now the benchmark for this industry in its quest to deliver value to the consumer and support the European digital economy.
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