Inside Digital Intelligence | Executive summary | Strategy support for our partners | Internet advertising trends and data: web advertising growth, online advertising market share, migration of advertising from newspapers, rise of search engine advertising, UK internet advertising, European internet advertising | Analysis and insights | Related digital articles
Digital Intelligence: Online advertising
Internet advertising in the UK and Europe

2009: Special report

Digital Strategy Consulting

Since 2000 I've been tracking the growth of digital advertising, and this edition of Digital Intelligence focuses on markets across Europe, tracing recent trends, forecasts and key issues. It's the pilot of a new service several people asked me for, so let me know if it's useful.

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This Special Report from Digital Intelligence contains just under 100 stories, graphs and links, and if you'd like to receive other specialist briefings on topics from social media to Twitter, ecommerce to mobile marketing then simply tell me what you'd like:

It's been fascinating to collate because it shows that whether the advertising climate is strong or in recession, migration to the web is unstoppable. It also shows that in the UK and across the rest of Europe we're only part of the way to a new balance of marketing, with no slowdown in the pace of change.

I hope you enjoy the edition, and look forward to hearing about topics you'd find useful for the next Special Report.

Best for your digital strategy

Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting


Executive summary

Today's online advertising market in Europe: a snapshot

Globally around 9% of all advertising budgets now go online, but the UK remains a trend-setting market currently at over 20% with the web overtaking television. The UK is also by far the largest online advertising market in Europe - of the €12.9bn spent online last year, £3.35bn was spent in the UK. In almost every country search engines continue to the biggest-riser, with video and social media following albeit from a lower starting point. The focus of classified advertising has now shifted from print to the web, with jobs, accommodation, cars, travel, personals etc all finding a more efficient home online for both the buyer and seller.

Forecast: continued migration, worse to come for TV and print media owners
Our 3 year medium term forecast is that the web will account for a third of all advertising spend in the UK (by the end of 2012). Our short term forecasts are that in spite of recession online ad growth continues to be strong across Europe this year, though at less than 10% it will fell like a massive change from previous years. Advertising rates continue to fall in all media, and in this buyers market the biggest effects of recession are yet to be felt offline where TV and print publisher revenues will continue to decline sharply throughout 2009.

Our forecast is that 2010 bring stability and recovery in the second half, but with the ad market very different and much smaller, lower levels of revenue will make it uneconomic for many offline media owners to continue. Closures and consolidations continue, with clear polarisation between multi-nationals that enjoy significant economies of scale, and small national niche players that will have to find smarter models. As pressure increases on independent and national web publishers, further significant cuts in editorial and content budgets for both online and offline media are inescapable. The wave of consolidations and closures will continue through to the end of 2010 with print titles that relied on classified advertising hardest hit.

Three year outlook: trends though 2012
Here are ten key trends we've been tracking, that we continue to be critical drivers for online advertising growth and the migration of marketing throughout our medium term forecast:

  1. Search swells further
    In spite of the massive size already, the switch to search engine marketing continues, with high emphasis on both paid-for clicks and position in natural search results
  2. Video and television migrate
    A rapid increase in the volume of video content online as key demographic groups migrate to web-based viewing rather than traditional television; within this mobile will play a significant role as new generation handsets roll out
  3. Smarter social media marketing
    Strong migration away from classic advertising to smarter and more engaging social media formats from branded content to sponsorships and social applications
  4. Mobile web arrives (and this time it's for real!)
    After the false promises of WAP, mobile portals and first generation mobile broadband, the new generation phones and apps stores finally unlock the long awaited step-change in the use of mobile content, mobile web, mobile social media and geo-location based advertising
  5. Affiliates evolve
    Individuals becoming affiliates within expanded affiliate and social networks
  6. Ad-effectiveness falls
    Continued erosion in advertising effectiveness as consumers become even more adept at ad avoidance
  7. Retail consolidation and structural change
    The natural consolidation of a cluttered retail market with fewer, more globalised stores and strategies
  8. Classified migration
    Completion of the migration process to a stable level where 85% of classified volumes are web-based
  9. Analytics-driven pricing
    Widespread adoption of more effective trading mechanisms based on the real and long term value of leads
  10. Auction based trading and transparent pricing models
    The structural change triggered by Google's self-service and auction models will finally spill over into the wider online media market, with highly transparent pricing and a critical mass of auction-based trading platforms

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Internet advertising trends, data and growth

Newsquest: classified revenue collapse continues

16 July 2009 -
The collapse of classified advertising revenues has been accelerated by recession, but in spite of the hopes of most publishers they will never recover - and the pricing structures for online classifieds will never make up for the shortfall. More...

36% of all UK adspend to be online by 2013
16 June 2009 - PricewaterhouseCoopers's (PwC) latest Entertainment and Media Outlook report predicts that online advertising in the UK will take 36% of all adspend by 2013. More...

European online adspend grew 20% in 2008
11 June 2009 -
The latest European online advertising study from IAB and PricewaterhouseCoopers (PwC) has revealed that online adspend grew 20% during 2008 to reach €12.9bn (£11bn). More...

Internet advertising: Europe
Total online advertising in Europe 2007-2008

Digital Strategy - Internet advertising, Europe 2007-2008

Internet advertising: Europe
Growth in online advertising categories across Europe in 2008

Digital Strategy - Internet advertising, Europe 2008

Internet advertising: European markets
Online advertising spend growth slows in maturing markets, December 2007-2008

Digital Strategy - Internet advertising, European markets 2007-2008

Online display ad activity up 21% in first third of 2009
04 June 2009 -
Nielsen Online have released new research which shows that activity in the UK's online display advertising sector grew 21% year-on-year in the first four months of 2009. More...

Internet advertiser volumes: UK
Online display advertising sectors and volumes of campaigns: January-April 2009

Digital Strategy - Internet advertiser volumes, UK January-April 2009

YouTube trials pre-roll ads with British broadcaster content
21 May 2009 - YouTube has begun to trial pre-roll ads around content from British broadcasting partners. More...

Mobile: UK ad revenues almost £30m
13 May 2009 - The first survey of UK mobile advertising revenue is now published, and the magic number weighed in at £28.6m. More...

Mobile digital advertising spend: UK
Mobile ad spend creeps into the digital media mix, 2008

Digital Strategy - Mobile digital advertising spend: UK

British gamers "highly receptive" to in-game advertising
12 May 2009 - A new study from Continental Research has shown that British gamers are highly receptive to dynamically served ads which appear during games. More...

70% of European advertisers increase online ad budgets
22 April 2009 - The annual Internet Ad Barometer report from the European Interactive Advertisers Association (EIAA) has found that 70% of European advertisers intend to increase their online adspend during 2009
. More...

Global online adspend to grow 8.6% as total media budgets fall
14 April 2009 - The latest forecast from ZenithOptimedia predicts that global media spend will decrease by 6.9% during 2009
. More...

Bellwether report sees signs of confidence
06 April 2009 - The IPA's latest Bellwether survey indicates that the rate of adspend budget cuts slowed in Q1 2009
. More...

Television advertising icon Kellogg's change channels
01 April 2009 - It's a stepchange for the brand. More...

Online ad expenditure up 17% to reach £3.35bn in 2008
01 April 2009 - Online adspend in the UK grew 17.1% during 2008 to reach £3.35bn, a year-on-year increase of £540m, according to IAB UK's bi-annual online advertising expenditure study
. More...

Online advertising spend: UK
Online adspend growth in the UK: 17.1% during 2008, reaching £3.35bn
Digital Strategy - Online advertising spend: UK

Online advertising spending: UK
Online advertising rises to 19.2% of all UK advertising during 2008
Digital Strategy - Online advertising spending: UK

Online advertising spending: UK
Online advertising: growth slows as media markets tumble in 2008
Digital Strategy - Online advertising spending: UK

Online adspend up 17% in 2008
16 March 2009 - The latest Quarterly Survey of Advertising Expenditure study from the Advertising Association shows that online adspend reached £3.3bn during 2008 - an increase of 17.3%
. More...

Google trials behavioural advertising
11 March 2009 - Google has launched a trial of behavioural targeted display advertising across its content network and YouTube. More...

IAB launches behavioural targeting good practice guide
05 March 2009 - IAB UK has published a new set of guidelines on behavioural targeting
. More...

IAB study shows when consumers are most receptive to online ads
19 February 2009 - A recent survey by Lightspeed Research and the IAB UK has found that consumers are most receptive to online ads whilst researching and shopping
. More...

Receptivity of the online audience

Digital Strategy - Receptivity of the online audience

Forrester predicts 10% growth for European online adspend
06 February 2009 - Despite the effect of the global economic crisis, Forrester still expects European online adspend to grow 10% during 2009, reaching €14.8bn (£13.2bn) by 2013
. More...

Bellwether report find marketing budgets slashed
15 January 2009 - The latest quarterly Bellwether report from the Institute of Practitioners in Advertising (IPA) has recorded its worst ever results in its nine year-history. More...

Advertising recession in the UK
Companies planning to reduce advertising spend in the UK Q3-Q4 2008

Digital Strategy - Advertising recession in the UK

UK online adspend set to slow
05 December 2008 - GroupM have forecast that online adspend in the UK will slow significantly during 2009. More...

Key Note survey forecasts strong growth for online advertising
31 October 2008 - A new study from Key Note predicts that online adspend will continue to show strong growth through the rest of 2008 and into 2012. More...

Bellwether Report finds online sector still positive
13 October 2008 - The latest Bellwether Report from the Institute of Practitioners in Advertising (IPA) has found that 35% of companies revised their marketing budgets down in Q3 against only 12% reporting a rise. More...

UK online adspend keeps rising as total ad market drops
07 October 2008 - The latest IAB/PwC figures show that online advertising in the UK grew 21% year-on-year in the first half of 2008 to reach £1.7bn as the total ad market fell 0.7% to £9bn. More...

WARC: UK online adspend to remain strong
01 September 2008 - A new study from the World Advertising Research Centre (WARC) remains confident that the UK online advertising market will remain strong in the face of the global economic slow-down. More...

Advertising spend migration: UK
Rapid changes in advertising mix as budgets switch online from classic media

Digital Strategy - Advertising spend migration: UK

Online advertising spend trends: UK
Advertising recession: shifts in spend by sector

Digital Strategy - Online advertising spend trends: UK

Online adspend now greater than mainstream TV
14 August 2008 - The summer report from the UK government's Ofcom group revealed a stark picture of a nation migrating into the digital networked society. More...

88% of UK searches looking for branded terms
14 August 2008 - New research from Hitwise shows that UK internet users are moving away from generic search terms such as "cheap flights" in favour of brand names and terms. More...

Search engines and brand volumes: UK
Percentage of search terms including brand names for the top 2,000 search queries in the UK - a key insight for search engine optimisation

Digital Strategy - Search engines and brand volumes: UK

Most popular branded search terms in the UK
Top 10 search terms in UK that include brand names, May 2007-2008

Digital Strategy - Most popular branded search terms in the UK

Online remains on top as UK marketing budgets cut
14 July 2008 - The IPA's latest Bellwether report has found that online remained the only marketing sector not to experience budget cuts during Q2. More...

UK comes first in Western Europe for mobile advertising
20 June 2008 - 65% of all mobile phone ad requests in Western Europe come from the UK. More...

Mobile advertising volumes: Europe
Mobile advertising volumes as measured by requests per country

UK online on course to overtake TV during 2008
18 June 2008 - Enders Analysis predicts that internet advertising will overtake TV as the UK's biggest ad platform during 2008. More...

Online taking over 50% of UK marketing budgets
13 June 2008 - New research from Clash-Media has found that over half of an average marketer's budget is now dedicated to online marketing. More...

Online adspend breaks £3bn barrier in UK
10 June 2008 - Total online adspend surpassed £3bn for the first time during 2007 according to new figures from the Advertising Association and WARC. More...

Advertising expenditure shifts: UK
Internet ad expenditure leaps 40%, May 2008

Digital Strategy - Advertising expenditure shifts: UK

European online adspend up 40%
03 June 2008 - The latest IAB Europe / PwC figures show that online adspend in Europe grew 40% during 2007 to reach €11.2bn (£8.9bn) - from €7.2bn (£5.7bn). More...

Online advertising spending: US and Europe
US and European online advertising spend comparison, 2006-2007

Digital Strategy - Online advertising spending: US and Europe

Online advertising spend market share in Europe
Internet advertising share of total advertising market in each country

Digital Strategy - Online advertising spend market share in Europe

Online advertising spend per capita: US and Europe
Spend per user (euro)

Digital Advertising - Online advertising spend per capita: US and Europe

Ireland: offline sales influenced by online ads
23 May 2008 - The latest "State of the Net" report by AMAS suggests that Irish consumers are highly influenced by online ads. More...

Microsoft launches mobile display ads
21 May 2008 - Microsoft has now enabled advertisers to run banner ads on Windows Live Messenger and Windows Live Hotmail. More...

New portal offers ad-funded mobile games
21 May 2008 - has launched offering over 40 mobile phone games for free in exchange for receiving mobile ad messages. More...

TV ads more effective in conjunction with online
07 May 2008 - A new joint study from the Internet Advertising Bureau (IAB) and Thinkbox has found that consumers who see an advert both online and on television are more likely to purchase products than those who have only seen an ad on one of those media. More...

Advertising budgets tighten as economic confidence falters
14 April 2008 - The following story in the FT isn't unexpected, but it does have some uncomfortable implications for classic media and dotcoms alike. More...

UK online adspend grew 38% during 2007
7 April 2008 - Online adspend in the UK grew 38% last year to reach £2.813bn - an annual increase of £797m. More...

Preview ReportRead Digital's commentary and analysis of the latest IAB UK / PricewaterhouseCoopers market study

UK online adspend set for £5bn by 2012
28 March 2008 - Online adspend in the UK is set to reach £3.4bn this year, up 27% from 2007 according to new findings from eMarketer. More...

Online advertising spend forecast: UK
Search engine advertising to take 60% of UK online ad spend by 2012

Digital Strategy - Online advertising spend forecast in the UK

Print publishing sector: ad revenues sliding for another decade
21 January 2008 - Another depressing report for the print publishing industry as the latest WARC figures point to an acceleration in the contraction of the newspaper ad industry. More...

Mobile marketing set to take off
15 January 2008 - The Mobile Marketing Association (MMA) has released its inaugural Mobile Attitude and Usage Study covering five markets in Western Europe. More...

Digital ad revenues to overtake TV by next year in UK
03 January 2008 - GroupM predicts that UK digital advertising revenues will eclipse TV ad revenues by next year. More...

Advertising spend by media: UK
Digital advertising revenues to overtake TV by next year in UK

Digital Strategy - Advertising spend by media in the UK

Advertising spend by media: UK
Digital ad revenues to overtake TV by next year in UK

Digital Strategy - Advertising spend by media in the UK

Google to bring Print Ads to UK
30 December 2007 - Google is planning to launch its Print Ads service in the UK. More...

Bellwether Report finds 6% of UK adspend going online
15 October 2007 - Online has grabbed its biggest ever share of the UK's total adspend according to the latest quarterly Bellwether Report from the Institute of Practitioners in Advertising. More...

UK online ad spend: biggest leap yet
02 October 2007 - Today's new figures confirm the switch to online continues to accelerate in Europe's lead media market. More...

Blyk offers free calls in exchange for advertising
25 September 2007 - Ad-funded mobile network Blyk has launched in the UK. More...

Analysis and insights

Digital Strategy - Profiling the world's leading digital ad economyProfiling the world's leading digital ad economy
The switch to online advertising has not slowed down in Europe's largest digital media market. Online ad budgets continued to grow around 40% year-on-year, with the internet overtaking press classifieds for the first time and on course to overtake television in 2009. More...

Digital Strategy - Getting to grips with online media planningGetting to grips with online media planning
Online marketing presents a richer choice of media formats, targeting and messaging than any other media channel. Harnessing this potential involves building on the principles of traditional media planning and using new toolkits, and matching the right formats and sites with the right media properties - all in a market that offers a daunting array of options. More...

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Danny Meadows-Klue
"Europe is leading the world in online advertising, yet we're still less than half way through the massive structural shift in marketing. In three years the web will be taking a third of all ad spend."
Danny Meadows-Klue
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