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IAB 2009 AdEx report: Online advertising is an expanding market

Experian Panorama





In the midst of all the financial and economical turmoil, there is one market in Europe that has shown not only resiliency, but also capacity for growth. Online advertising spending in Europe reached in 2009 14.7€ billion, a year-per-year growth of 4.5%, from 13.2€ billion in 2008, as reported in the IAB AdEx 2009 report, published in September 2010. It’s still a very concentrated market, though: the top 6 markets account for 76% of the total value of the market, and some countries, like Croatia, Slovakia and Romania even experienced small declines.

The online and digital economy continues to be a driver for growth in the complicated European economical scenario. While advertising spending in offline media like newspapers, TV or radio is shrinking, online ad expenditure is growing year after year, closing the gap with the US market where online advertising represented 16.3€ billion in 2009. In Europe, online advertising accounts for 16.5% of total media spend, as an average, but this figure varies wildly at a country level.

The key online advertising markets in Europe are, not surprisingly, UK, Germany and France, which account for 64% of the European market, and are the only ones where the expenditure is over a billion Euros. If we include the next three biggest markets, Italy, Netherlands and Spain, these top 6 markets concentrate 76% of the online advertising expenditure. This means there are a lot of countries with untapped potential. Turkey, for example, has a higher population than UK or France, but only accounts for 1% of the online ad expenditure in Europe. Similarly Poland, Romania and even Italy all have room for growth in the next few years, and they may be already on the right path: in 2009 Poland grew 13% and Turkey 12% compared to 2008.

Context: how big is online advertising?

The IAB forecasted an important milestone to be achieved this year, as 10 countries would surpass the 10% of total media spend accounted to online advertising. But in fact in 2009 15 countries achieved this mark, twice than in 2007. From these 15 countries, 5 even surpassed the 20% mark: UK, Denmark, Norway, Sweden and the Netherlands.

Search advertising is still king

Search engine advertising accounts for the majority of investment, with a solid health: it accounted for 46% of online ad expenditure, with 10% growth from 2008. Display advertising, on the other hand, experienced flat growth (0.3%) and even negative growth in some mature markets, as UK (-5%) or France (-6%). Given the current economic climate, it’s no surprise advertisers opt for formats with high and measurable return of investment, at the expense of branding.

However, the format that was most impacted by the current crisis is the Classifieds & Directories sector, shrinking 1.4% overall, as a result of the impact of the crisis on real estate and recruiting.

Forecasting 2010 results

As advertising markets have already started to recover in Europe, the IAB forecasts a 10.8% year-per-year growth of the online advertising market, outperforming all other media categories.  Online advertising growth will be particularly strong in Central and Eastern Europe.

Regarding formats, display will bounce back, with a 7.9% growth, but search will continue to dominate, with a 15% year-per-year growth.

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