Online advertising spend across Europe shows strong growth for another year considerably above GDP, but not all players share this growth
The latest AdEx Benchmark report published by IAB Europe shows that in 2016 online advertising spending across Europe reached a new high of €41.8 Billion, a rise 12.2% on 2015 and this compares favourability as an industry to GDP growth across the EU of 1.8% (EU commission). This growth also hides a polarisation across the industry with the top players in the market independently reporting revenue growth of around 50% indicating much slower growth in the long tail of available media properties
It’s not only online that has grown in 2016
Across all media, 2016 saw a new high for advertising spend, the last peak being in 2008.
Since 2008 although online has grown each year traditional media has been declining and offset overall industry growth. In 2016 a combination of strong online growth and a smaller decline in traditional media revenue has created this new market high. Within this TV and OOH also grew but less than digital with print seeing the most significant decline.
The largest markets still dominate but smaller and CEE markets show the highest % growth
At a market level the UK is the largest market with €14.1Bn of online advertising spend in 2016, to put this dominance in perspective this is as large as the next 3 markets combined, Germany, France and Russia. Digital ad spend per person in the UK is the highest at around €218 compared to the next largest market Germany at €73. As the largest market the UK also saw the highest increase in absolute spend up €1.7Bn however there is a different picture when looking at percent increases. Here growth is led by CEE markets, the top being Romania seeing a 37% increase and Slovenia growing 33%.
Advertising growth is influenced by formats.
Advertising formats influence overall growth figures. The growth in Mobile spend averages +53% across the region with even the lowest growth markets increasing by 25%. The top 3 growth markets being Serbia +327%, Romania +191% and Czech Republic +156%
Mobile’s share of online spend has jumped nearly 10 percentage points and now accounts for 33% of all spend across the region. Mobile advertising spend is very polarised by market with the UK (the largest market) accounting for 45% of all mobile spend across the region and the top 3 markets UK, France and Germany accounting for 71% of Mobile spend.
The pattern of market strengths for mobile differs compared with total online spend with France in second place above Germany and Italy the third largest market jumping above Russia.
The growth in Mobile spend averages +45% across the region. The smaller CEE markets led the growth in mobile as in total online ad spend; the top 3 growth markets being Serbia +327%, Romania +191% and Czech Republic +156%
Video advertising grew 21% and now accounts for 18% of all display advertising with all but one market achieving double digit growth. Growth is again dominated by smaller markets; Slovenia 121%, Serbia +103% and Ireland +92% and total spending is dominated by the larger markets but less polarised than with mobile.
The UK is the largest where video accounts for 28% of total online spend followed by Italy at 12% and Germany at 11%.
The flip side of this exceptional growth in Mobile and Video is a decline in desktop banner expenditure which is particularly evident in the UK, Italy and France.
The outlook ahead.
- It is expected that 2017 will see further double-digit growth +10% over 2016 but the concentration of this growth amongst fewer players will accelerate. It is noted that Zenith recently downgraded their 2017 forecast for the UK to 0.9% growth compared to 9.6% in 2016 and compared to 2.4% in 2017 for the rest of Western Europe This drop in UK growth will impact overall adspend in Europe lower for 2017.
- Video will increase in relevance for consumer attention with an increase in live video particularly for sports and user generated content. Marketers will increasingly demand audio on video as a measurement mechanic.
- Looking further ahead there is an expectation that regulation will have a material impact on the future health of the market. The impact for GDPR that will come into force in 2018 and may reflect change in the 2018 figures. Time will tell.
To download a copy of the report click here. You can also use this link to register for a webinar on the results hosted by IAB Europe on the 18th of July 2017.
The AdEx Benchmark study has collected online advertising spend data across Europe for 11 years and is based on reported data from 27 local IAB’s. The estimates are based on local IAB insight in collaboration with IHS Markit and based on IHS advertising Intelligence Service & macro-economic research group.
