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UK Online Adspend Study Results for the full year 2005

UK Online Adspend Study Results for the full year 2005

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UK Online Adspend Study Results for the full year 2005

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  1. UK Online Adspend StudyResults for the full year 2005 Prepared by PricewaterhouseCoopers for the IAB

  2. Welcome Richard Eyre, Chairman IAB UK

  3. 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

  4. Agenda • Study methodology • UK online adspend – headline results • Online in context • The digital media mix • Industry categories • In summary • Questions & answers

  5. Methodology

  6. 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. • 78 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.

  7. Research participants Ad2-one Adept Scientific Adlink Advertising.com AdvivaAOL AskJeeves Associated New Media Autotrader BBC BMJ Bolt Blue BSkyB Channel 4 Chrysalis Radio Classic FM CNet Condenast Confetti Dennis Interactive Dixons Economist EMAP Faversham House Group Financial Times Find.co.uk Findaproperty Fish4 Five Friends Reunited GCap Radio Google Guardian Habbo Handbag Haymarket IPC Media IPT ITN ITV iVillage Jetix Jobs.ac.uk Jobsite Loot Lycos Manchester Online Media Brokers Memedia Miva Moneyextra Monster MSN National Magazines Net Communities Netrecruit News International Overture Real Media Reed Business Information Reuters Scotland Online Sift SRH Telegraph Tesco Tiscali Tradedoubler UK Net Guides Unanimis Upmystreet Valueclick Virgin Radio Wanadoo WME Workthing Yahoo! Yell …Plus further recruitment sites, courtesy of WARC Representing thousands of UK websites

  8. Important information regarding Google • In May 2005, in compliance with SEC rules, Google Inc began to publicly disclose its UK revenues for the first time, because the UK accounts for more than 10% of its total global revenues. • From June 2003 to June 2005, the survey has estimated Google UK revenues based on a conservative extrapolation from the company's last submission of data to the survey in 2002, using the average rate of market growth. • The actual rate of growth of Google UK has exceeded the rate of growth in the market, and therefore the survey has increasingly underestimated the total market size. • These results now reflect the publicly available figures, and in order to provide a consistent view of market growth we have used the information newly available from Google to restate total market size since 2003. • The survey does not include any estimated revenues for non-participants, and represents the aggregation of information submitted directly by companies to the survey team, or, in the case of Google alone, publicly available information about UK revenues.

  9. Revising the market value ‘01 ‘02 ‘03 ‘04 ‘05 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  10. UK Online Adspend StudyResults for the full year 2005 Prepared by PricewaterhouseCoopers for the IAB

  11. £1,366.4mmarket in 2005

  12. 2005 vs. 2004 65.6% increase An increase of £541.3m on comparable full year results

  13. Online advertising almost £400m a quarter ‘01 ‘02 ‘03 ‘04 ‘05 £ millions Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  14. Online in context… Breaking market trends in the UK ad industry

  15. Market share nears 8%Full year 2005 Internet 7.8% Total advertisingmarket £17.4bn Source: PricewaterhouseCoopers / Internet Advertising Bureau / The Advertising Association / Radio Advertising Bureau / WARC

  16. Online drives the whole marketYear on year growth for 2005 Total advertising market growth = 2.5% Source: PricewaterhouseCoopers / Internet Advertising Bureau, The Advertising Association / WARC

  17. Online’s share growth accelerates Market Share Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

  18. Television Press - Display Direct Mail Press - Classified Internet Outdoor Radio Online’s ascendancy continues £ millions N.B. WARC Recruitment data included from 2003 Source: PricewaterhouseCoopers / Internet Advertising Bureau / Advertising Association / Radio Advertising Bureau / WARC

  19. Online in contextFull year 2005 £m

  20. Summary – Full year 2005 • Online advertising driving growth of the entire media market • Internet advertising shot past the £1bn mark in 2005 to reach £1,366.4m • Online achieved a share of 7.8%, up almost 3 points from 2004 (4.9%) • The market grew 65.6% year on year, maintaining the strong growth of previous waves. • Online now closing the gap on national press

  21. Summary – H2 2005 • In the second half of the year, online advertising was worth £735.9m • The internet’s share of all advertising expenditure actually reached 8.4% • Revenues are tracking at nearly £400m a quarter

  22. The digital media mix The developing mix of ad products

  23. The digital media mix% share of revenues for the full year 2005 Full year total – £1,366.4m IAB 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. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  24. The digital media mixAll groups of formats have experienced actual growth +79% +44% +62% £ millions IAB 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. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  25. £224.4m £20.5m £15.7m £8.8m £55.6m £10.9m £ 182.0m £80.3m £768.3m The digital media mix% share of revenues for 2005 IAB 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. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  26. The digital media mixAll formats have experienced actual growth, especially paid-for search listings £ millions IAB 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. Source: PricewaterhouseCoopers / WARC recruitment classifieds / Internet Advertising Bureau

  27. Search: constant growth £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

  28. 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 Source: Yahoo! Search Marketing, ISOBAR, UDA research 2005

  29. Classifieds: seasonality emerging £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

  30. Display: breadth of formats £m Source: Internet Advertising Bureau / PricewaterhouseCoopers

  31. £m Tenancies rocket in 2005 Tenancies quadrupled from 2004 to 2005 Source: Internet Advertising Bureau / PricewaterhouseCoopers

  32. Why tenancies are popular • The advertiser benefits from increased traffic volume. • The website benefits from an improved depth of content

  33. Formats summary – 2005 • Revenues increased across all formats, except for sponsorships as revenues gravitated towards tenancies • With revenues of £768m, search maintained its dominant position • YoY, display was up 44% to £336m while search increased by 79% and classifieds grew by 62% to £262m • Classifieds: recruitment increased by 50% to £182m and other classifieds grew by 99% to £80m

  34. Industry categories

  35. Recruitment sector leads the market in the second half of 2005 Recruitment & Finance continue to dominate the online advertising market IAB estimates for actual ad spend by industry are based on samples of categorised net revenue from key IAB members provided by PwC. The ranking now shows Telecoms as a separate category (previously included in Business & Industrial). Data excludes unclassified figures and covers 55% of online revenues in H2 2005. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  36. Automotive and Entertainment & Media are catching up with the perennial leaders IAB estimates for actual ad spend by industry are based on samples of categorised net revenue from key IAB members provided by PwC. The ranking now shows Telecoms as a separate category (previously included in Business & Industrial). Data excludes unclassified figures and covers 55% of online revenues in H2 2005. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  37. Spotlight on Entertainment • Entertainment and media saw the most significant growth • The category was up +4 points to 10.2% of the market in the second half of 2005 • Television and film advertisers drove innovation in rich media. They capitalised on broadband’s ability to engage consumers through the use of video-streaming and sophisticated ads IAB estimates for actual ad spend by industry are based on samples of categorised net revenue from key IAB members provided by PwC. The ranking now shows Telecoms as a separate category (previously included in Business & Industrial). Data excludes unclassified figures and covers 55% of online revenues in H2 2005. Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

  38. Entertainment & Media campaign MTV Starzine – Creative Showcase winner, September 2005

  39. Industry sectors summary – H2 2005 • The top 3 categories accounted for over half of online ad spend (51.9%) and continued to be led by Recruitment (+0.5 point), followed by Finance and Automotive • Finance (-6.6 points) and Technology (-2.4 points) showed signs of saturation while Automotive (+1.9 points) and Entertainment & Media (+4 points) strengthened their positions • Consumer goods and retail remained shy (although their small share loss did not equate to a decline in revenues)

  40. Overall Summary

  41. Overall summary • Online ad spend leaps by 66% year-on-year in a relatively flat total media market • £1,366.4m spent across the twelve months to December 2005 • 7.8% share of advertising revenues in 2005 • With a share of 8.4% in the second half of 2005, online is less than 2 share points away from National Press

  42. Overall summary • Search, display and classifieds have all experienced impressive growth • Fourteen record-setting quarters in succession • While Recruitment retains the pole position, Entertainment & Media and Automotive are the share point winners

  43. The next milestone £2 billion • A real possibility within the next 12 months • This would make online bigger than national press

  44. Online closes on national press £m

  45. Our thanks to… All the companies taking part, representing thousands of websites and to Paul Pilkington Director Colin Macleod Research Director Paul Taylor Production Editor &

  46. UK Online Adspend StudyResults for the full year 2005 Prepared by PricewaterhouseCoopers for the IAB For more information info@iabuk.net 020 7886 8282