Ad Spend Study 2011

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  • 1. interactiv advertisin bureau IAB report on online ad-spend 2011March 2012
  • 2. Introduction andsummaryIAB report on online ad-spend 2011 2
  • 3. IntroductionThis is the second year IAB and Deloitte are publishing the online advertising spendreport for The Netherlands. The 2010 FY and 2011 H1 reports received positiveresponse from the community and the current edition – which covers 2011 FY – hasyet greater participation from key industry partners. Joris van Heukelom Roel van Rijsewijk IAB | Chairman Deloitte Online Business Innovation This years edition relies on data supplied by a record 43 companies, which has “It is quite clear that Digital media “2011 has been a great year for online allowed us to obtain a more accurate view of the market. We also conducted is becoming a grown up industry. advertising, despite turbulent economic validation discussions on the preliminary results with a number of parties in the Nevertheless we keep showing double conditions and declining consumer market. digit growth. This, next to the fact confidence in the last six months. These that the Tablet Ecosystem seems conditions did have an effect on the Based on the additional input received, we have had to restate the 2010 figures very promising, both for publishers expectations of the respondents for slightly downwards, due to better reporting from affiliate marketing players. and advertisers, provides a strong 2012; they do not see the double digit Further, based on input from survey participants we have made some changes in foundation for further expansion growth rates of last year repeated in the categories and set up of the study. of Digital within the total Media- 2012. To maintain current growth rates ecosystem in the coming years.” in 2012, Dutch online publishers and networks will have to make the most out of the possibilities of automated trading platforms, be able to compete with TV for brand advertising budgets and effectively promote in-app advertising on tablets with advertisers.“ Emile van den Berg IAB | Research & Standards “Once more, thanks to even more participants than last time, Deloitte managed to pull together a complete and comprehensive report overviewing the ad spends in our industry.”IAB report on online ad-spend 2011 3
  • 4. Our methodology Collection Deloitte collected data covering 79% of the market* Missing participants’ data estimated based on previous figures, desk research, Estimation expert opinions, industry databases and regression modeling Conversation Initial findings verified with industry experts, media buyers, and selected publishers Validation Final findings cross-referenced and validated with respondents Publication All findings presented to the IAB and industry participants* Note: Based on STIR market estimateIAB report on online ad-spend 2011 4
  • 5. Executive summary Despite slow economic growth and declining consumer confidence, the Dutch online advertising market was over €1 b in 2011, a year on year uplift of 12% Gagandeep Sethi Ad revenues received by Dutch publishers However, the lagging economy has Deloitte Consulting | Strategy through their mobile websites and in-app an effect on the outlook for 2012; advertising on smartphones and tablets is participants expect growth to slow to “The growth of the online advertising still very small 7.7% growth for 2012 market in 2010 has continued for a large part throughout 2011” Eric Snelleman GroupM | Head of Digital Trading “We are pleased with this IAB report as it confirms a growth that is in line with our annual global media forecast. A growth that still outperforms other media, however not growing as fast as before. To accelerate growth we think the industry should now make sure Automated trading technologies are Search is still dominant in the online marketing driven thinking is fully on the rise with 36% of total display advertising market earning half of total merged with technology solutions to revenue generated through some kind ad spend. Display is where the Dutch further drive, enhance and develop of non-guaranteed pricing mechanism publishers and networks need to get digital advertising.” their fair shareIAB report on online ad-spend 2011 5
  • 6. BackgroundIAB report on online ad-spend 2011 6
  • 7. Dutch economyThe Dutch economy is expected to experience slow growth over the next two years.Comments Dutch GDP projections (€b)• The economy seems to keep an easy 650 6% pace as the Dutch GDP is expected 625 to grow at a steady 1.4% for the 3% coming two years 600 576 0% 575 567• Following the sharp recovery in 551 560 550 542 2010 in the advertising market, -3% future growth is expected to be 525 more in line with GDP -6% 500 475 -9% 450 -12% 425 400 -15% 2009 2010 2011 2012F 2013F GDP GDP Growth rate YoY Total advertising growth rate YoYNote: Real GDP based on constant pricesSource: IMF, Zenith optimedia December 2011,SPOT TV Jaarrapport 2011, PwC Entertainment& Media Outlook 2011-2015, Radio AdviesBureau, Deloitte analysisIAB report on online ad-spend 2011 7
  • 8. Dutch advertising marketTV and online are expected to grow the most in both absolute and relative terms.Comments Estimated advertising market (€m)• Expected growth for the total advertising market in 5,000 The Netherlands in 2012 is 2.1% 4,095 4,183 6• The online advertising market is expected to become 4,028 5 5 4,000 158 165 the largest market in 2012 150 235 230 233• Newspapers and magazines are expected to continue 484 452 their steady decline 547 3,000• Radio is expected to remain stable through 2012 1,091 965 1,059• Outdoor is expected to grow steadily 2,000 1,088 1,045 1,177 1,000 1,068 1,189 954 0Note: TV excludes Online TV AdvertisingSource: Zenith optimedia December 2011, SPOT TV Jaarrapport 2011, PwC 2010 2011 +2.1% 2012FEntertainment & Media Outlook 2011-2015, Radio Advies Bureau, Company Cinema Radio TV Internetannual reports, Deloitte analysis Outdoor Magazines NewspapersIAB report on online ad-spend 2011 8
  • 9. Time spendAs consumers spend more time online, advertisers are expected to respond similarly torebalance the value of the different media types.NL Advertising Trends Time spend vs Share of Advertising spend (2011)*Newspapers/Magazines Indicative direction and speedPrint still has a dominant position in the advertising market, with a relatively large 50share compared to the total time spent on this media. Forecasts show a steadydecline of advertising income for newspapers and magazines. 45 Share of Advertising spend (%) 40RadioTraditional radio is expected to decline in its share of total timespend, but will 35 Newspapersbe compensated by online music services such as Spotify and Pandora. Upsidepotential in SoA is limited due to the nature of the medium and is expected to 30stabilize. Internet 25 TVTVLinear TV in the Netherlands is likely to have a strong year due to major media 20events such as the Olympics and European Championships; major advertisers may Magazines 15increase spend on TV advertising as cost per reach is still relatively cheap. 10InternetTime spent online will increase over the next few years with video and social being 5 Radiothe big drivers. It is expected that advertising budgets will shift in line with thisincrease in time spend. 0 0 5 10 15 20 25 30 35 40 45 50 Time spend (%)Note: Share of Advertising based on collected 2011 data; Time spend based on most recent availablefindings from SPOTSource: Trends tijdsbesteding 2010 SPOT, Zenith optimedia December 2011, SPOT TV Jaarrapport *  efinitions: Share of Advertising spend is the ratio of advertising revenue of a particular media type to the sum of revenue of all selected media types. D2011, Radio Advies Bureau, Deloitte analysis Time spend is the ratio of time spend on a particular media type to the sum of time spend on all selected media types.IAB report on online ad-spend 2011 9
  • 10. Consumer confidenceThe decline in consumer confidence has had little direct impact on online advertisingspend sofar. Display advertising revenue vs. consumer confidence €m 40 40 0 31 31 28 26 27 29 28 30 25 24 24 23 -10 20 -20 10 -30 0 -40 Jan Febr Mar Apr May June July Aug Sept Oct Nov Dec 2011 €m 40 35 0 28 29 30 26 25 25 26 -10 22 22 23 21 20 20 -20 10 -30 0 -40 Jan Febr Mar Apr May June July Aug Sept Oct Nov Dec 2010 Consumer confidence Advertising incomeSource: CBS, Deloitte analysisIAB report on online ad-spend 2011 10
  • 11. 2011 ResultsIAB report on online ad-spend 2011 11
  • 12. Online advertising marketThe Dutch online advertising market was almost €1.1b in 2011, a year on year upliftof 12%.Frank Goebbels Revenue by advertising category (€m)Omnicom | Strategy & DevelopmentDirector“Adwords costs have increased 202tremendously due to high bidding; 192 Searchdisplay stands to benefit in the shortterm from higher prices on search Displaykeywords” 2011 2010 €1,068 Classifieds, directories €954m 460 530 and listingsHein Asser 336Magna Global | Contracting Director 302“Advertisers are buying more butspending relatively less on displayadvertising leading to limited growth inthe segment” +12%* Search revenues is our estimation of all revenue of Google and its competitors in The NetherlandsNote: Display revenue includes some double counting from search related revenues; Classifieds,directories & listings estimated based on a limited number of data points; Display and Classifieds,directories & listings data for 2010 restated based on revised revenues figures from respondents andadditional data from new respondentsSource: Survey respondents, Annual reports; Deloitte analysisIAB report on online ad-spend 2011 12
  • 13. Details display advertisingMore than half of display advertising revenues come from traditional embeddedformats. Display advertising breakdown by format Other 12% Interruptive formats 8% 31% 2011 Display formats Video 9% 50% Embedded 61% formats 10% Textlinks 19% (incl. AdSense)Note: Embedded formats are for example Display Classifieds, Searchtraditional banners and skyscrapers directories andSource: Survey respondents, Deloitte analysis listingsIAB report on online ad-spend 2011 13
  • 14. Display revenue per mediumMobile websites and in-app advertising is small; within apps, tablets have a 36%revenue share while there are 6.4 times more smart phone devices then tablets.Display advertising revenue per medium Number of devices 7Joris van Heukelom 6.4IAB | Chairman 6“On the one hand we can conclude 3%that publishing for tablets which is 5dominated by Apple is still in the Devices (x1m)beginning of its lifetime-cycle. But 9% 4the promise is huge. If you focus onthe advertising-value of publishing 36%on tablet you only can conclude that 3it is remarkably high. I assume that Mediums In-appnext years’ adspend study will show 2remarkable growth in this category.” 88% 64% 1.0 1 0 Website/browser Smartphone Smartphones E-mail TabletsNote: In-app only includes revenues from Tabletsurvey respondents and excludes revenues from In-app / Mobile websiteplayers such as Google and AppleSource: Survey respondents, Emerce.nl,Deloitte analysisIAB report on online ad-spend 2011 14
  • 15. Power ratio display advertisingPublishers vary in reach and performance in capturing advertising spend with marketleaders capturing the most relative value through niche focus.Comments Power ratio display advertising 12.4• Share of Advertising spend is the ratio of respondent revenue to Low 12 the sum of revenue of included Average respondents High SoA / SoV• Share of Visitors is the ratio of 10 respondent unique visitors to the sum of unique visitors of included respondents 8• The power ratio is calculated by 6.0 dividing Share of Advertising spend by Share of Visitors 6• Publishers with a specific target audience received a high advertising share relative to their visitors’ share 2.9 3.0 4• 4 publishers have an extraordinary share of advertising compared to 1.8 1.9 their reach 1.0 1.1 1.2 2 0.3 0.5 0.6 0.7 0.8• 6 publishers have below average 1.0 advertising performance compared to their reach 0 1 2 1 1 1 1 2 2 1 1 1 1 1 1 Number of publishersNote: Unique visitors are according to STIRdefinitions of visitors over 13 years of ageSource: STIR 2011, Survey respondents,Deloitte analysisIAB report on online ad-spend 2011 15
  • 16. IndustriesConsumer goods takes position as top spender amongst publishers while Financialservices spending moves to a second position. Top five industries by revenue share 2011 2010 Change Consumer goods 17% Consumer goods 10% 7% Financial services 14% Financial services 9% 5% Telecom 10% Telecom 9% 1% Online retail 9% Online retail 3% 6% Automotive 7% Automotive 11% -4% Travel 7% Travel 4% 3% Hardware & electronics 4% Hardware & electronics 5% -1% Public sector 3% Public sector 3% 0% Personal care 3% ICT Services 2% Fashion 2% Retail 2% Retail 2% 0% Free time 2% Free time 4% -2%Note: Excluding classifieds, directories & Energy 1% Energy 2% -1%listings, search and industry category other;2011 included 3 new categories – ICT Services,Fashion and Personal care; 2010 shares updatedto include additional respondentsSource: Survey respondents, Deloitte analysisIAB report on online ad-spend 2011 16
  • 17. Revenue per payment model Roel van RijsewijkThe CPM payment model maintains a leading position as the preferred revenue model Deloitte Online Business Innovationfor display advertising. “As we move towards more automated trading, CPM is becoming the default currency.”Display advertising revenue per payment model51% 19%CPM CPS 9% 2% CPC Other 7% 12% CPL Fixed FeeSource: Survey respondents, Deloitte analysisIAB report on online ad-spend 2011 17
  • 18. Sales mechanism and channelsA significant portion of sales is not realized through traditional ratecards but throughusing an automated trading mechanism.Mark Stockx Display advertising revenue by price mechanism Revenue per channelTelegraaf Media NederlandSales Director Digitaal“2012 is going to be the year whereautomated trading really becomes partof a total integrated marketing solution.Automated trading has developed far 2% 11%from remnant inventory and moves to 12%premium partnership solutions ranging 36%from awareness to performance andultimately delivering true ROI for our 2011 2011 45% Third partiesclients. The publishers that really gets 19%the ultimate mix between branded 44%content, premium formats & inventory 67% 64%and performance driven solutions is upfor a great year.” Guaranteed Direct sales Automated trading agenciesNote: Guaranteed revenues defined as salesfrom upfront agreed upon price, for example Non-guaranteed Media agencies Ad network / saleshousebased on a ratecard. Non-guaranteed revenues Third partiesresulting from sales without an upfront agreed Agency trading desksupon price, for example exchange tradedinventory. Ad network / ad exchangeSource: Survey respondents, Deloitte analysisIAB report on online ad-spend 2011 18
  • 19. Affiliate marketingOf the total reported online advertising spend in 2011, €117m was generated throughaffiliate networks.Bas Rogaar Spend on affiliate marketing (€m) Affiliate revenue by publisher modelAffilinetTaskforce Affiliate marketing 4% 7% 3%“The historical participation of all 117mrelevant market players to the IAB 12%– Deloitte ad-spend study will havea positive impact on the furtherdevelopment and transparency of thishighly innovative and dynamic sector Publisher model 6%within the online marketing landscape.” 48% 20% Search (SEO/SEA) Comparison sites Cashback and loyalty Advertising networks Social Media Coupon codes Topic publishersNote: Division of revenue by publisher modelbased on data from an estimated 50% of thetotal marketSource: Survey respondents; Jochem VroomAffiliateblog/Imbull BV; Deloitte analysisIAB report on online ad-spend 2011 19
  • 20. OutlookIAB report on online ad-spend 2011 20
  • 21. Revenue growth expectationsRespondents predict a 7.7% market growth in 2012 weighted by respondent revenues.Gagandeep Sethi Survey respondents growth expectationsDeloitte Consulting | Strategy Low“Companies expect a weighted growth Averagerate of 7,7% in 2012; a clear downward Highrevision of expectations voiced in H12011 of 20%.” Weighted average growth expectation* 2012 expectations 2% 4% 5% 7,7% 8% 10% 12% 15% 18% 20% 45% 50% number of respondents 1 1 3 1 2 13 2 3 1 3 1 1 (total of 32)* Growth expectation calculated by weightingresponses with company revenue Source: Survey respondents; Deloitte analysisIAB report on online ad-spend 2011 21
  • 22. Sector growth expectations vs actual resultsOnline retail and Consumer goods were the sectors that have grownmost in online ad spend in 2011, as expected by the participants inthe last survey. Expectation of growth in 2011 by industry 3% 3% 2% 2% 2% Online retail Consumer Travel Retail Financial goods services Actual change in share of total market by industry in 2011 8% 6% 4% 3% 0% Online retail Consumer Travel Retail FinancialSource: Survey respondents, Deloitte analysis goods servicesIAB report on online ad-spend 2011 22
  • 23. Growth expectations 2012For 2012, CPM remains the main payment model and is expected to grow the most.Retail is expected to grow the most in spend. Expectations of growth of in-appadvertising are limited. Growth expectations for 2012 CPM 14% Retail 9% Website 13% CPS 6% Online retail 4% Mobile website 9% Fixed Fee 4% Fashion 3% In-app 3% CPC 3% Consumer Goods 2% E-mail 2% CPL 3% Telecom 2% Payment model Industry MediumSource: Survey respondents, Deloitte analysisIAB report on online ad-spend 2011 23
  • 24. Revenue forecast Roel van RijsewijkDisplay and classifieds, directories and listings revenues are expected Deloitte Online Business Innovationto grow from €538m to €580m in 2012. “The growth rate in 2012 for display advertising could be more than expected, driven by a slight shift awayDisplay and classifieds forecast 2012 (€m) from keyword advertising.” 210 192 202 2012F Display 2010 2011 €580 €494 €538 Classifieds 302 336 370Source: Survents respondents, Deloitte analysisIAB report on online ad-spend 2011 24
  • 25. AppendixIAB report on online ad-spend 2011 25
  • 26. Methodology Online advertising market Search and classifieds estimates • Over 40 companies reported their data based on the questionnaire. • Due to limited availability of company data we had to estimate the market size for search and classifieds based on market data • The data gathered comprises 79% of total reach (based on STIR) • Together with the taskforce search from the IAB we defined the search market • The figures are drawn up on the basis of site declaration and have not been and estimated the market size audited • Google regulations forbid commenting on our search market estimates • Wherever needed we have used tools such as regression analysis to make estimations regarding total market • The classified market is based on public available market estimates. Due to limited data points, current classified market size could not be verified • Based on the information provided by survey participants, figures have been adjusted for double counting when possibleIAB report on online ad-spend 2011 26
  • 27. Definitions Categories Payment models • Display • Fixed Fee: Payment model based on a fixed fee - Embedded formats (banners, buttons, skyscrapers etc) - Interruptive formats (rich media, over the page, page take-over etc) • CPM: Cost per Mille = Payment model where the advertiser pays per thousand - Tekstlinks (incl. AdSense) viewers - Video (pre-/mid-/ postroll) - Other uncategorized display advertising • CPC: Cost per Click = Payment model based on the number of clicks on an advertisement • Online classifieds, directories & listings - B2B • CPL: Cost per Lead = Payment model that is based on the number of leads - B2C generated. A lead is an online conversion where the consumer shares its contact - C2C details and indicates to be interested • CPS: Cost per Sale = Payment model based on the number of sales generatedIAB report on online ad-spend 2011 27
  • 28. List of survey participants Name of company Name of company 1 Adfab 23 NDC Mediagroep 2 Adfactor  24 NRC Media 3 Adlantic 25 OMG/Netdirect 4 Admitter Nederland 26 RTL Nederland 5 Affiliate4You 27 Sanoma Media 6 Affilinet Nederland 28 SBS 7 Bannerconnect 29 Ster 8 Beslist.nl 30 Sulake 9 Cleafs 31 TAPPS 10 ClickDistrict 32 Telegraaf Media Groep 11 Daisycon 33 Tibaco 12 De Persgroep Advertising 34 TradeDoubler 13 Digimo Media 35 Viacom International Media Networks Northern Europe 14 FD Mediagroep 36 Videostrip 15 Funda Real Estate 37 VNU Media 16 HDC Media 38 WebAds Interactive Advertising 17 Hi-media Nederland 39 Koninklijke Wegener 18 IDG 40 YD 19 Kluwer Media 41 Young Advertising 20 Lumata 42 Zanox M4N 21 Marktplaats Media 43 Zoom.in 22 MicrosoftIAB report on online ad-spend 2011 28
  • 29. Data sources Company / Organization Website 1 Affiliate blog www.affiliateblog.nl 2 CBS www.cbs.nl 3 Comscore  www.comscore.com 4 Emerce www.emerce.nl 5 Forrester www.forrester.com 6 Google www.google.com 7 Imbull www.imbull.nl 8 IMF www.imf.org 9 PwC www.pwc.nl 10 Radio Advies Bureau www.rab.fm 11 SPOT www.spot.nl 12 STIR www.stir.nl 13 Zenith Optimedia www.zenithoptimedia.comIAB report on online ad-spend 2011 29
  • 30. Contact details For questions concerning this research feel free to contact: Roel van Rijsewijk Lauren van der Heijden Deloitte Online Business Innovation IAB Nederland Tel: +31 (0)6 52 615 087 Tel: +31 (0)85 401 0802 Email: rvanrijsewijk@deloitte.nl Email: lauren@iab.nl Roel is a Director with the Risk Services practice from Deloitte with more than Dutch IAB research includes the IAB / Deloitte Ad Spend Study, all IAB 10 years of experience in risk consulting for companies  in the Technology, Media commissioned research and assisting IAB members with their research projects. & Telecommunications (TMT) industry. Roel leads one of Deloitte’s main innovation Also responsible for shaping the IAB knowledge base so that it meets members’ projects on ethics and trust in a digital world and is co-founder of Deloitte’s Online needs moving forward. Business Innovation group. Gagandeep Sethi Deloitte Consulting | Strategy Tel: +31 (0)6 13 127 167 Email: gasethi@deloitte.nl Gagandeep Sethi is a Manager in the Corporate Strategy practice of Deloitte Consulting Netherlands with more than 10 years of experience within the Technology, Media & Telecommunications (TMT) industry.IAB report on online ad-spend 2011 30
  • 31. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 182,000professionals are committed to becoming the standard of excellence.This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of thispublication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. Noentity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.© 2012 Deloitte The Netherlands