€30bn net addition to the European online ad market in 10
years…
| 1
6.6 9.2
14.5 15.8 18.8
21.9 24.4
28.6 32.1
36.2
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 2011 2012 2013 2015 2015
Total online advertising spend (€bn)
Source: IAB Europe for 2011-2015; 2006-2011 retropolated based on IHS growth rates
CAGR (2006-2015):
+20.5%
€30b
n
…in an otherwise flat media advertising market
| 2
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Digital Traditional
Ad spend by category in Europe in 2015 (€bn)
Source: IAB Europe for online and IHS for all other media © 2016 IHS
Online has overtaken TV to become the largest advertising
medium in Europe
| 3
0.7
5.2
7.5
25.5
33.3
36.2
0 5 10 15 20 25 30 35 40
Cinema
Radio
OOH
TV
Online
2015 2014
Ad spend by category in Europe in 2014 and 2015 (€bn)
Source: IAB Europe for online and IHS for all other media
Strong growth across Europe in 2015…
| 4
29
.0%
22
.3%
21
.8%
21
.6%
20
.4%
20
.0%
19
.7%
18
.7%
18
.2%
18
.0%
16
.9%
15
.3%
14
.2%
13
.7%
13
.3%
13
.1%
12
.8%
11
.2%
10
.4%
9.7
%
8.4
%
8.0
%
7.6
%
7.5
%
6.8
%
5.6
%
0%
5%
10%
15%
20%
25%
30%
35%
Irela
nd
Bulg
aria
Pola
nd
Slo
ven
ia
Slo
vakia
Sw
ede
n
Turk
ey
Sw
itze
rla
nd
Cro
atia
Spa
in
UK
No
rwa
y
Russia
Hung
ary
Denm
ark
Euro
pe
Austr
ia
Serb
ia
Italy
Belg
ium
Neth
erla
nds
Fin
land
Fra
nce
Germ
any
Bela
rus
Czech R
ep
ub
lic
Online advertising year-on-year growth in 2015 (%)
Source: IAB Europe and IHS
…at all levels of market maturity and market size
| 5
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Finland France Germany
Hungary
Ireland
Italy Netherlands
Norway
Poland
Russia
Serbia
Slovenia
Spain
Austria
Belarus
Sweden Switzerland Turkey
UK
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
- 20 40 60 80 100 120 140 160 180 200
Online ad spend per capita (€m)
20
15
ye
ar-
on
-ye
ar
gro
wth
(%
)
Source: IAB Europe and IHS
Display continues to drive online advertising growth
| 6
14.9%
3.6%
13.0% 11.9%
15.2%
5.8%
10.8% 11.6%
17.4%
4.9%
12.6% 13.1%
0%
5%
10%
15%
20%
Display Classifieds & Directories Paid-for-search Total
2013 2014 2015
Year-on-year growth (%)
Source: IAB Europe and IHS
Video is an increasingly important part of display
| 7
32
.1%
28
.3%
25
.1%
20
.0%
19
.8%
18
.1%
18
.0%
18
.0%
16
.8%
16
.7%
16
.0%
15
.9%
15
.3%
15
.1%
14
.7%
14
.4%
12
.8%
10
.1%
8.7
%
8.5
%
8.4
%
8.4
%
8.1
%
5.5
%
0%5%
10%15%20%25%30%35%
Bulg
aria
Russia
Sw
itze
rla
nd
Italy
Sw
ede
n
Irela
nd
Belg
ium
UK
Neth
erla
nds
Euro
pe
Fra
nce
Spa
in
Pola
nd
Germ
any
Cro
atia
Austr
ia
Turk
ey
Fin
land
Denm
ark
Hung
ary
Czech R
ep
ub
lic
No
rwa
y
Slo
ven
ia
Bela
rus
Video share of Display in 2015 (%)
Source: IAB Europe and IHS
€2.3bn
Mobile accounts for a quarter of all European display ad
spend, approaching 50% in most advanced markets
| 8
43
.1%
37
.5%
36
.8%
33
.0%
29
.5%
27
.5%
26
.1%
25
.4%
20
.9%
20
.6%
19
.6%
10
.9%
9.6
%
8.5
%
8.5
%
8.0
%
7.9
%
7.3
%
5.1
%
4.4
%
2.9
%
2.6
%
0%5%
10%15%20%25%30%35%40%45%50%
UK
Irela
nd
Norw
ay
Italy
Neth
erla
nds
Fin
land
Sw
ede
n
Euro
pe
Fra
nce
Pola
nd
Hung
ary
Germ
any
Russia
Cze
ch R
ep
ub
lic
Denm
ark
Serb
ia
Austr
ia
Spa
in
Cro
atia
Turk
ey
Bela
rus
Bulg
aria
2012 2013 2014 2015
Mobile share of Display (%)
Source: IAB Europe and IHS
€3.5bn
Drivers
• Programmatic and automation
• Proliferation of e- and m-commerce
• Rise of online video consumption
• Growth in premium video inventory – attracting TV budgets
• Improvement in ad quality
• Shift to a mobile-first advertiser mentality
• Social media advertising
• Native advertising
• Sports events in 2016
• Favourable macro-economic climate
Hurdles
• Ad blocking
• Viewability & fraud
• Lack of applied data strategy
• Lack of digital currency
• Fragmentation of ad tech value chain
• Desktop to mobile migration
Macroeconomic environment and adverse
political conditions
• Regulatory uncertainty & restrictions
• Asymmetric competition with US
Drivers and hurdles as reported by local IABs
| 9
© 2015 IHS
Key numbers at a glance
10
€46bn invested in online
advertising
€31bn revenue generated
by publishers
30.4% of all ad revenue
generated online
€22bn direct GVA to EU-28
economy
€113bn GVA to EU-28
economy incl. indirect
effects
€473bn GVA contribution to
EU-28 economy incl.
wider ripple effects
0.9m jobs directly in EU-28
online ad industry
1.4m jobs supported by
wider online ad
industry
5.4m jobs supported if
broader effects taken
into account
© 2015 IHS
Overview of economic impact flows of advertising
11
Audience-relatedeffectsAdvertising-relatedactivities
Skills,Industrydevelopment,R&D,infrastructure,etcSpill-overeffects
Extrajobssupportincreasedconsumerdemandforgoods/servicesacrosstheeconomyInducedeffects
PublishersConsumers
Advertisingservices
Brands
SuppliersSuppliersSuppliers
Adsales AdspendDirecteffects
Indirecteffects
SuppliersSuppliersSuppliers
© 2015 IHS
Indicative estimates of jobs supported by online advertising in EU-28
countries in 2013
12
0.91.4
5.4
0.4%
0.6%
2.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
(b)Advertising
activities-
direct
(c)Advertising
activities-
extended
(d)Overallimpact
%ofEU
employment
Jobs(million)
© 2015 IHS
Indicative estimates of GVA supported by online advertising in EU-28
countries in 2013
13
22 44
288113
473
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0
100
200
300
400
500
(b)Advertising
activities-
direct
(c)Advertising
activities-
extended
(d)Overallimpact
%ofEU
GVA
GVA(€bn)
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Good news, bad news
Digital economy is top of the agenda in Brussels
Online advertising is under intense regulatory scrutiny
Strong focus on data protection & narrative of tough legal framework => consumer trust => digital economy
Political process can throw up surprising outcomes
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Key EU dossiers that will affect online advertising Data protection (GDPR, Cookie Directive, Privacy
Shield) Digital contracts Online platforms Audio-visual media services Directive revision Broad review of consumer protection rules
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Data protection
General Data Protection Regulation (GDPR) of 2016 Broad definition of personal data – almost everything!
Arguably narrower legal bases => lack of legal certainty
Consent especially looks problematic – will ads-only model survive?
Fines for non-compliance up to 4% of annual worldwide turnover
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Data protection
General Data Protection Regulation (GDPR) of 2016 One-stop-shop (or not!) for enforcement
New transparency requirements
Jurisdictional clarification – anyone targeting or profiling a natural person physically in the EU
Regulation v directive
Regulation will only be applicable as from May 2018
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Data protection (cont’d)
ePrivacy Directive (“Cookie Directive”)
Here we go again!
Wider scope than GDPR – includes non-personal data
ePD can be read to make consent the one and only legal basis for online
IAB Europe arguing that cookie rule is no longer needed – minority view for now
DG CNECT clearly taking aim at OBA
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Data protection (cont’d)
Safe Harbour / EU – US Privacy Shield
EU Court threw out Safe Harbour in 2015
US and EU Commission have agreed replacement text
Text already challenged on EU side
Commission aiming for sign-off in June
Agreement looks vulnerable to legal challenge
Status of BCRs & Model Clauses unclear
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Contracts for the supply of digital content “Full harmonisation” for digital contracts
Introduces novel concept of data as a “counter-performance” comparable to money, with similar remedies
Key issue is physical restitution / giving back of data automatically generated in the course of a contract, including non-personal data
Obligation goes well beyond GDPR, would be disproportionately onerous and technically impossible
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Other DSM dossiers - online Platforms, AVMS, review of consumer acquis
Online advertising platforms called out but not regulated – for now
AVMS will extend offline advertising content rules online
Review of consumer acquis may encourage all-up coherence but digital contracts is already on the table
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Ad blocking from a policy & regulatory point of view
Ad blocking detection is not illegal!
Urgent need to help policymakers understand how advertising supports media plurality & independence
To get involved, reach out to your national and EU-level trade bodies!
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Conjunction of strong regulatory scrutiny and rise of ad blocking must be an opportunity!
Urgent need to help policymakers understand: How digital advertising works What it does and does not entail WRT processing of personal
data How it supports media plurality & independence
Double down on self-regulation – making transparency & control even easier
Op-eds, letters to the EU institutions, blogposts, etc. to educate users, EU & national officials, influencers about value of advertising to EU consumers & citizens
Digital Advertising in the EU Economy IAA What’s Coming Next, Paris, 15th June
Thank you for your attention.
Daniel Knapp, Senior Director, Advertising, IHS Technology
Townsend Feehan, CEO, IAB Europe