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WelcomeRichard Eyre, Chairman, IABGuy Phillipson, Chief Executive, IABLaurence Bird, Head of Planning & Research, IABPaul Pilkington, Director, Entertainment and Media Practice, PwC
UK Online Adspend Study Results for the full year 2006
Prepared by PricewaterhouseCoopers for the IAB
Background
• Census of all major UK online media owners
• Official Advertising Association figures since 1997
• Information collected each half year
• Analysis available by
• Format
• Industry category
Agenda
• Study methodology• Market background and trends• UK online adspend – headline results• Online in context• The digital media mix• Industry categories• In summary• Questions & answers
Methodology
A brief history…• The IAB has been working with PWC since 1997 to survey the value of
the online advertising market.• We have run projects in Europe and North America to assess the size
of the interactive media markets.• These figures have become the industry standard for measuring
advertising spend and in the UK are now used by the Advertising Association.
• 102 companies have participated in the survey representing thousands of websites.
• Reported figures are not adjusted to account for other organisations that have not participated.
• Total advertising revenue is reported on a gross basis.
• The figures are drawn up on the basis of site declaration. They cover thousands of UK websites, but by no means all.
Research participantsAcxiom Ad2-one Adept Scientific Adlink Advertising.com Adviva AOL Affiliate Window AskJeeves Associated New Media Autotrader BBC Blue Lithium BMJ Bolt Blue Bounty BSkyB Channel 4 Chinwag Chrysalis Radio Classic FM CNet Condenast Confetti Dennis Interactive DGM Dixons E-circle Economist EDR
EMAP E-Type Euroclick Everyclick Future Publishing Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited GCap Radio Google Guardian Habbo Hachette Fillpacchi Handbag Haymarket IPC
Media IPT i-Points ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Loot Lycos Manchester Online Media Brokers Memedia Miva Monetise Moneyextra Monster
MSN My Space National Magazines Net Communities Netrecruit News International Orange Overture Property Finder Real Media Reed Business Information Reuters Right Move Scotland Online Sift SRH Skupe Teamtalk
Telegraph Tesco Tiscali TMN Media Tradedoubler UK Net Guides Unanimis Upmystreet U Target Valueclick Viacom Brand Solutions Virgin Radio Wanadoo
WME Workthing Yahoo! Yell…Plus further recruitment sites, courtesy of WARC
Representing thousands of UK websites
Market Background
4.66.2
7.28.7
10.712.7
14.2
17.519.1
21.1 22.023.6 24.0 24.6 25.1
27.228.1
29.3 29.830.9
Millions of people
Online audience growing steadily
Dec1996
Dec1997
Dec1998
Dec1999
June 1997
June 1998
June 1999
June 2000
Dec 2000
June 2001
Dec 2001
June 2002
Dec 2002
June 2003
Dec 2003
June 2004
Dec 2004
June2005
Dec2005
Jun2006
Source: Gfk NOP World, To June 2006
89%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q201
Q301
Q401
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Per
cent
age
of h
ome
user
s
Source: BMRB Internet Monitor, Q4 2005 Base: All who have used the Internet at home on a computer in the last month
Broadband access at home
Faster and more convenient broadband access is changing the way the internet is used
57%
37%
38%
36% 27%
5%
0% 20% 40% 60% 80% 100%
Nov. 05
Nov. 06
< 2MB2 MB>2 MB
Base: All broadband users who knew their speed of connection (443)Source: BMRB Internet Monitor Nov 2006
A third have used wireless broadband in the last month
Q. What is the connection speed of your home broadband?
Online second only to TV% of media time for all internet users
7 6
25
27
34
47
17
24
47
TV
Internet
Radio
Newspapers
Magazines
8
23
48
5
16
Weekdays
Saturdays Sundays
Source: BMRB Internet Monitor, Nov 2006 Base: All Internet users aged 15+
Recent headlines
The biggest online Christmas
Plea to agencies
It warns agencies they will no longer be competing solely among themselves, adding ‘Allies may become competitors, advertisers may become suppliers and agencies may become media owners’
They suggest it is time to ditch the traditional description of ‘above the line’ and ‘direct’ for broader definitions such as ‘not-named’ for the former and ‘names’ or ‘personalised’ for the latter
This time last year…
• Online achieved 60% growth to reach 1.4bn for 2005
• We predicted breaking the £2bn barrier by end of 2006…
• But this would mean an increase of 600m – more than the size of radio in itself.
• We also said overtaking National Press was a real possibility
2B or not 2B
That is the question
£2,015.8bn
market in 2006
An increase of £649m year-on-year
41.2% increaseOn a like for like basis
New contributions in 2006 represented £86.4m
2006 vs. 2005
47.4 42.8 36.6 38.9 36.6 45.2 51.1 63.888.0
385.5
105.2
152.1 171.8
224.1
327.0350.5
514.9
303.5
119.7
456.0461.2
583.7
174.6
254.6
0
100
200
300
400
500
600
700
Q101
Q201
Q301
Q401
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Online advertising nearly £600m in Q4£
mill
ions
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
‘01 ‘03‘02 ‘04 ‘05 ‘06
Online in context…
Breaking market trends in the UK ad industry
22.2%
20.8%
16.2%
13.2%
5.3% 3.3% 0.9%
6.7%
TVPress DisplayPress ClassifiedDMInternetDirectoriesOutdoorRadioCinema
Internet 11.4%
Market share over 11%Full year 2006
Total advertisingmarket
£17.6bn
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Directories are estimated.
-7.8%-5.2%
-0.8%
4.0%
41.2%
-2.0%-2.1%-4.7%
PressClassified
Radio TV Direct Mail Cinema PressDisplay
Outdoor Internet
Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / Radio Advertising Bureau/ WARC
Online drives the whole marketYear on year growth for 2006
Total advertising market growth = 1.1%
Mar
ket
Sha
reOnline’s share growth accelerates
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC
2.5%3.3%
4.2%
5.5%
7.3%8.4%
10.4%
12.4%
H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006
21.8%
20.9%
15.2%
13.4%
5.5%3.2% 0.9%
6.7%
TVPress DisplayPress ClassifiedDMInternetDirectoriesOutdoorRadioCinema
Internet 12.4%
Second half market share hits 12.4%A new world record
Total advertisingmarket – H2 06
£8.8bn
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Directories are estimated.
Largest share Anywhere
in the world
0
200
400
600
800
1000
1200
Q198
Q298
Q398
Q498
Q199
Q299
Q399
Q499
Q100
Q200
Q300
Q400
Q101
Q201
Q301
Q401
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Radio
Outdoor
Internet
Press -Classified
Direct Mail
Press - Display
Television
Online’s strong progress continues
£ m
illio
ns
Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARCN.B. WARC Recruitment data included from 2003
Radio
Outdoor
Internet
Press - Classified
Direct Mail
Press - Display
Television
Online overtakes National PressFull year 2006
152.9
581.7812.4 932.5 1,015.8
1,176.2
1,919.8 2,015.82,321.8
3,670.53,904.6
2,782.62,860.1
Cinem
a
Radio
Consu
mer
Mag
azin
es
Outdo
or
Busine
ss M
agaz
ines
Direct
ories
Nation
al N
ewsp
aper
s
Inte
rnet
Direct
Regio
nal N
ewsp
aper
s
Press
Clas
sifie
d Tot
al
Press
Disp
lay T
otal TV
£m
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC / Radio Advertising Bureau. Directories are estimated.
Summary – Full year 2006
• Online advertising driving growth of the entire media market
• Internet advertising breaks the £2bn barrier in 2006 to reach £2,015.8m
• Online achieved a share of 11.4%, up almost 4 points from 2005 (7.8%)
• The market grew 41.2% year-on-year, maintaining the strong growth of previous waves
Summary – H2 2006
• In the second half of the year, online advertising was worth £1,098.6m
• The internet’s share of all advertising expenditure actually reached 12.4%
• Revenues for Q4 nearly £600m – 10 times the size of Q4 2002
The digital media mix
The developing mix of ad products
The digital media mix% share of revenues for the full year 2006
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARCIAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures.
22.5%
18.8%57.8%
0.9%
DisplayClassifiedsPaid for searchSolus
Full year total –£2,015.8m
The digital media mixAll groups of formats have experienced strong growth
335.9262.2
768.3
453.7379.0
1165.6
Display Classifieds Paid for search
2005 2006
£ m
illio
ns
+35%+45%
+52%
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARCIAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures.
The digital media mix% share of revenues for 2006
16.0% 1.0%
0.7%
3.6%
0.8%
0.5%
0.9%
10.7%
6.6%
1.5%
57.8%
Banners / Embedded
Sponsorships
Interruptive formats
Tenancies
Other display
Display ads on email
Solus Email
Recruiment classifieds
Other consumer classif.
B2B Classified
Paid-for search listings
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARCIAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures.
£321.5m
£20.1m
£14.0m
£73.2
£15.8
£9.1
£17.5m
£ 215.2m
£133.2m
£30.6m
£1,165.6m
The digital media mixYear-on-Year Comparison
£ m
illio
ns
Source: PricewaterhouseCoopers / WARC recruitment classifieds / Internet Advertising BureauIAB estimates for actual ad spend by format are based on samples of categorised revenue from key IAB members provided by PwC. Data excludes unclassified figures.
8.89.1
14.0
15.8
17.5
20.1
30.6
73.2
133.2
215.2
321.5
1,165.6
20.5
15.7
10.9
55.6
80.3
182.0
224.4
768.3
Display ads on email
Interruptive formats
Other display
Solus email
Sponsorships
B2B classified
Tenancies
Other consumer classifieds
Recruitment classifieds
Banners / Embedded
Paid-for search listings
20062005
Strong growth of search continues
181.2
248.5
337.0
431.4
531.3
634.3
H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006
£m
Source: Internet Advertising Bureau / PricewaterhouseCoopers
Search is the gateway to brands
• People use search as a stepping stone to find the advertiser’s brand site
• More than 8 out of 10 users rely on a search engine after partially remembering a website address
• At least half of all e-commerce transactions (£30bn in 2006) begin with a search
• Search is now a £1.1bn mediumSource: Yahoo! Search Marketing, ISOBAR, UDA research 2005; Google
Continued growth in further classified
53.8 67.494.4 87.6 102.8 112.314.3
26.0
37.0 43.3
58.774.5
29.9
0.7
0
50
100
150
200
250
H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006
Recruiment classifieds Other consumer classifieds B2B classifieds
£m
Source: Internet Advertising Bureau / PricewaterhouseCoopers
Display: breadth of formats
73.291.4 105.4 119.0
138.9
182.7
237.9
215.9
173.8162.1
136.2
96.7
0
50
100
150
200
250
H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006
Banners / Embedded Sponsorships Interruptive formats
Display ads on email Tenancies Other display
£m
Source: Internet Advertising Bureau / PricewaterhouseCoopers
Formats summary – 2006• Revenues increased across all formats, except for
sponsorships and interruptive formats (pop-ups)
• With revenues of £1,165.6m, search maintained its dominant position
• YoY, display was up 35% to £454m while search increased by 52% and classifieds grew by 45% to £379m
• Classifieds: recruitment increased by 18% to £215m and other classifieds grew by 67% to £133m
Industry categories
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
Recruitment sector continues to lead the market in the second half of 2006
0.3%
0.6%
0.9%
1.0%
1.2%
3.3%
4.4%
4.6%
5.3%
5.8%
8.0%
12.6%
13.4%
13.8%
24.8%
Leisure Equipment
Business & Industrial
Gardening & Agriculture
Classified - Consumer-to-consumer
Government, social, poiltical organisations
Retail
Consumer Goods
Property
Telecoms
Travel & Transport
Entertainment & the Media
Automotive
Technology
Finance
Recruitment
IAB estimates for industry sector shares are based on samples of categorised net revenue from key IAB members provided by PwC. Data excludes unclassified figures and covers 43% of online revenues in H2 2006.
Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC
Automotive and Technology are catching up with the perennial leaders
2.8%
10.1%
10.1%
17.4%
0.6%
0.9%
1.0%
1.2%
3.3%
4.4%
4.6%
5.3%
5.8%
13.4%
1.3%
0.4%
1.2%
2.7%
4.9%
1.2%
6.1%
12.4%
6.9%
22.1%13.8%
24.8%
12.6%
8.0%
Business & Industrial
Gardening & Agriculture
Classified - Consumer-to-consumer
Government, social, poiltical organisations
Retail
Consumer Goods
Property
Telecoms
Travel & Transport
Entertainment & the Media
Automotive
Technology
Finance
Recruitment
H2 2006
H2 2005
IAB estimates for industry sector shares are based on samples of categorised net revenue from key IAB members provided by PwC. Data excludes unclassified figures and covers 43% of online revenues in H2 2006.
Barclays Business
Mercedes A-S
Ikea kitchens
Industry sectors summary – H2 2006
• The top 3 categories accounted for over half of online ad spend (52%) and continued to be led by Recruitment (+2.7 point), followed by Finance and Technology.
• Technology (+6.5 points) and Property (+3.4 points) strengthened their positions to the detriment of Finance (-3.6 points) and Entertainment and Media (-2.1 points).
• Share for Retail, though still small, increased by 0.6 point, while consumer goods declined by 0.5 point.
• Automotive held its position with an increase of 0.2 point year-on-year.
Overall Summary
Overall summary
• Online ad spend leaps by 41.2% year-on-year (on a like-for-like basis) in a relatively flat total media market
• £2,015.8m was spent across the twelve months to December 2006
• 11.4% share of advertising revenues in 2006
• With a share of 12.4% in the second half of 2006, online has overtaken National Press (10.5%) by almost 2 share points.
• Search, display and classifieds have all experienced impressive growth
• Eighteen record-setting quarters in succession
• While Recruitment retains the pole position, Technology and Property are the share point winners
Overall summary
The next milestone
£2.5 billion• A real possibility in 2007 • This would make online bigger than direct
Online poised to overtake direct mail
0
100
200
300
400
500
600
700
800
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Internet Direct Mail
£m
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC
Could online overtake TV by 2010?
0
200
400
600
800
1000
1200
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Internet TV
£m
Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC
All the companies taking part, representing thousands of websites
and to
Our thanks to…
Paul PilkingtonDirector
Colin MacleodResearch Director
UK Online Adspend Study Results for the full year 2006
Prepared by PricewaterhouseCoopers for the IAB
For more [email protected] 7886 8282
Question time