The Interactive Advertising Bureau Europe is currently holding its annual Interact Congress, an event that brings together the main protagonists of the European digital industry here in Brussels. For the occasion, IAB Europe in conjunction with PriceWaterhouseCoopers today released the findings of its annual advertising expenditure survey for the year ending December 2008. The gist: growth in digital advertising significantly slowed down last year, especially in more mature markets, and the outlook for this year is grim.
In 2008 the total European online advertising market, or at least the 19 markets analyzed by IAB Europe and PwC, was worth €12.9 billion (approx. $18 billion) with a like-for-like growth rate compared to 2007 of 20%. For comparison, online advertising grew 10.6% in the United States in 2008 (outpacing TV) and was worth €16.6 billion ($23.4 billion). However, the 20% growth figure paints a better-looking picture than the harsh reality, which is that it is far below previously stated expectations, of course caused by the crumbling of the global economy and the huge strain it has put on digital advertising spending worldwide.
If you look at the top 10 markets in Europe, year-on-year growth rates were under 20% more often than not. Considering the fact that these markets account for about 93% of the total value of the market, the following chart doesn’t accurately reflect the slowed growth because it over-accentuates the massive growth in Slovenia, Poland and Austria.
Broken down by formats, search remains the leading format in Europe with the strongest year-on-year growth rate (26%), accounting for 43% of online ad expenditure in the countries measured and a value of €5.6 billion. After search come classifieds, with growth rates of 17.4% bringing it to 26% share of total ad spend and a market value of €3.8 billion.
Alain Heureux, President and CEO of IAB Europe, acknowledges that while the overall picture in Europe is one of growth, what is clear from these figures is that 2008 was a tough year for online advertising. And if you thought that trend was going to reverse this year, Eva Berg-Winters, Senior Manager at PwC, is here to put you back with your feet on the ground:
“2009 is set to be a difficult year for online advertising. Decline is likely in a number of mature markets and, where there is still growth, we expect it to be much lower than previously.”
In the U.S., IAB as recently as last week reported that online advertising declined 5% in the first quarter of 2009 to $5.5 billion, compared to the first quarter of 2008. Industry revenues were down an even steeper 9.8 percent sequentially from the fourth quarter’s $6.1 billion.