This document summarizes the findings of the IAB Adex Benchmark 2012 study on the European online advertising market. It found that the total value of the European online ad market in 2012 was €24.3 billion, an 11.5% increase from 2011. Search advertising continued to be the largest format with 48.8% of total online ad revenues, though display and classifieds/directories also saw strong growth. Mobile revenues remain a small percentage of total online but are growing significantly. The outlook suggests continued growth in online advertising driven by expanding access to fixed and mobile internet across devices.

1. IAB Adex Benchmark 2012
Daniel Knapp, IHS Electronics & Media

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ABOUT THE STUDY

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A meta-analysis of online ad spend in Europe
RATECARD
Campaigns x
Ratecard
GROSS
Revenue Billed
NET
Revenue Billed
No Agency commissions

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Horizontal expansion: country coverage
2006: 13 countries
2008:19 countries
2012: 26 countries

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26 countries in 2012
• Austria
• Belgium
• Bulgaria
• Czech Republic
• Croatia
• Denmark
• Finland
• France
• Germany
• Greece
• Hungary
• Ireland
• Italy
• Netherlands
• Norway
• Poland
• Russia
• Romania
• Serbia
• Slovenia
• Slovakia
• Spain
• Sweden
• Switzerland
• Turkey
• UK

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Vertical expansion: format granularity & context

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BIG PICTURE & CONTEXT

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The value of the European online ad market 2012
€24.3bn

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Eurozone volatility casts spell on media economy…
-8%
-6%
-4%
-2%
0%
2%
4%
6%
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
GDP growth in Europe
Eurozone GDP Growth y-o-y France GDP Growth y-o-y
Italy GDP Growth y-o-y Germany GDP Growth y-o-y
Source: IHS

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…industrial production & household consumption are
good indictators for advertising market prospects…
-15%
-10%
-5%
0%
5%
10%
15%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
UK advertising revenue growth
Actual NAR growth (yoy) Projected NAR growth (yoy)
Source: IHS Electronics & Media

11. …tectonic shifts are characterizing ad markets…
11
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Indonesia Argentina China Brazil Russia Mexico UK Germany France Spain Italy
CAGR of Total Media Ad Revenue (2011-2017)
Source: IHS Electronics & Media

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…but European online ad growth continues at a
double-digit rate
21.8
24.3
0
5
10
15
20
25
30
2011 2012
Total online advertising (€bn)
11.5%

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Indeed, online is more resilient to macro-pressure
than other media
2.5%
9.4%
3.8%
-5.2%
2.9%
-4.0%
9.5%
26.6%
11.5%
-1.7%
7.2%
-0.4%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
WE CEE Total
2012: economic & advertising growth
GDP Total excl. Online Online Total
Source: IAB Europe & IHS Electronics & Media

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Overall ad spend shows volatility, TV is resilient,
online shows linear growth trajectory
0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010 2011 2012
Ad spend per capita by medium
Online ad spend per capita TV ad spend per capita Total ad spend per capita
Source: IAB Europe & IHS Electronics & Media

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There is no single factor for print decline & online does
not absorb all print revenue, but budgets do migrate
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010 2011 2012
Ad spend per capita
Online ad spend per capita Print ad spend per capita
Source: IAB Europe & IHS Electronics & Media

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In 6 years online more than doubled its share of all
media revenue: 1 in 4 ad €s go to online in 2012
10.3%
19.0%
25.6%
0%
5%
10%
15%
20%
25%
30%
2006 2009 2012
Online market share of ad budgets: total Europe

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Online for the first time overtakes print newspaper ad
spend & becomes 2nd biggest media category in Europe
0.6
4.6
6.3
8.7
19.3
24.3
28.1
0 5 10 15 20 25 30
Cinema
Radio
OOH
Magazines
Newspapers
Online
TV
2012: European advertising market share by medium
Note: Source for non-online ad revenue is IHS. Print ad spend excludes direct mail.
Source: IAB Europe & IHS Electronics & Media

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Small number of markets make largest contribution
to European ad spend
46.0%
69.5%
78.3%
86.7%
95.5%
0%
20%
40%
60%
80%
100%
Top 2 Top5 Top 7 Top 10 Top 15
Share of European online ad revenue by market

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Russia climbs up to 4th largest spender as remaining top
10 maintain their position in the European ranking
6,642
4,551
2,770
1,536 1,418 1,207
920 841 617 591
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Total online ad spend (€m)

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What is driving growth?
• Both emerging markets growing from low basis and established markets that
demonstrate sustainability of online ad momentum
• Video
• Mobile
• RTB has the potential to be a driver
• Social networking sites
• Europeanisation and consolidation of classifieds & directories
• Localisation & individualisation of search, mobile search

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CEE leads growth, but remarkable is the
sustainability of growth in mature markets
12%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Online ad growth

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Bulgaria
Croatia
Czech Republic
Denmark
Finland
France Germany
Greece
Hungary
Ireland
Italy
Netherlands
Norway
Poland
Romania
Russia
Serbia
Spain
Austria
Belgium
Sweden
Switzerland
Turkey
UK
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 20 40 60 80 100 120
Online ad spend per capita (€)
Onlineadmarketgrowth
Note: country bubbles represent market size

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Bulgaria
Croatia
Czech Republic
Denmark
Finland
France Germany
Greece
Hungary
Ireland
Italy
Netherlands
Norway
Poland
Romania
Russia
Serbia
Spain
Austria
Belgium
Sweden
Switzerland
Turkey
UK
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 20 40 60 80 100 120
Online ad spend per capita (€)
Onlineadmarketgrowth
Note: country bubbles represent market size

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FORMATS

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Search outperforms, display still high single digit,
classifieds & directories pick up pace
17.9%
15.3%
5.7%
14.5%
15.5%
9.1%
6.3%
11.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Search Display Classifieds & directories Grand total
Year-on-year growth by format
2011 2012

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Search remains strongest segment in 2012
47.1% 48.8%
32.7% 32.4%
19.6% 18.5%
0%
20%
40%
60%
80%
100%
2011 2012
Format shares of online
Others Classifieds and directories Display Search

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Display growth shows few strong outliers above
average rate, yet more outliers below average rate
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%

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Online video is now 13% of all online display…
13%
0%
5%
10%
15%
20%
25%
Italy Spain European
average
Poland UK Finland Russia Sweden Turkey
Online video share of display

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…but range of growth varies tremendously…
50.6%
-50%
0%
50%
100%
150%
200%
250%
Online video growth

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…and so do absolute video market sizes
0
20
40
60
80
100
120
140
160
180
2012: size of online video advertising by market

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Mobile revenues are becoming significant, but are
still lagging behind consumption
5%
0%
2%
4%
6%
8%
10%
12%
14%
Mobile display share of total online display
2011 2012

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Role of video & mobile as drivers becomes
apparent if factoring them out of display
-30%
-20%
-10%
0%
10%
20%
30%
40%
Online display growth
display display excl. video display excl. video and mobile

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Classifieds & Directories sees group of countries
with strong positive outliers above average rate
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Classifieds & directories growth
Note: Russia not measured for classifieds & directories

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Majority of markets outperform average search
growth, largest search market just shy of average
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Search growth

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OUTLOOK

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What may the future hold? Addressable market is
not only growing in mobile, but fixed-line as well…
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fixed Broadband penetration of households (%)
France Germany Italy Spain UK Nordics total Western Europe
Source: IHS Electronics & Media

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…yet the emerging multi-device landscape creates
new opportunities
0 100 200 300 400 500
PC
Connected TV sets
Games consoles
Blu-ray disc players
STBs
Tablets and eReaders
Smartphones
Western Europe: Connected Devices (m)
2016
2012
Source: IHS Electronics & Media

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Thank you!
daniel.knapp@ihs.com
@_dknapp