How Much Of That £709 Million UK Ad Spend Is Going Through Ad Networks?

The IAB released its figures for the UK online advertising market last week. The amount of media spend allocated to online display in 2009 was just over £709 million, 4.4% down on the previous year. Not a bad return given the perilous state of the market in the early months of 2009 when display advertising collapsed. These figures are encouraging: it shows display has weathered the storm and is now set for continued growth over the coming years. The only quibble I have with the IAB stats is the lack of detail in the numbers. How much of this media spend goes directly to publishers? How much goes through ad networks? And how much is being allocated through automated trading platform like exchanges, ad marketplaces and yield optimisers. In fairness to the IAB there are no figures available anywhere on the size of the ad network market here in the UK. So ExchangeWire has decided to collate some hard data and put together figures for the ad net allocation.

Exchangewire estimates – based on information from key industry sources and data from the likes of the IAB, AOP and NMA – that the UK non-premium market is worth about 40% of the current display spend, about £283 million in total. Ad nets get in the region of £240 million – with the remainder going through the automated channels. When I talk about “automated channels” I am referring of course to the likes of Adx, Right Media, Adjug, Admeld, Rubicon, Improve Digital and OpenX.

So how does the breakdown relate to the ad nets’ revenue? Four ad networks dominate the UK display space – MSN, Yahoo, Specific and AOL (Ad.com). Given that the top four do not publish their UK revenues, the general consensus among agency and ad net insiders is that the big four own about 50% of the ad net market - around £120 million. Outside the top ten the rest of the seventy odd ad networks in the UK have an average annual turnover of about 628K. How long before the majority of these operators lose their market share to big technology-driven ad nets – or get crushed by the move to automated trading platforms?

I do think that ad nets will continue to flourish: the barriers to entry are lower than ever given that you can access ad inventory through the exchanges and yield optimisers. You no longer need a publisher acquisition team – buy directly from likes of Admeld and the DoubleClick Ad Exchange. Agencies will continue to buy from ad nets so long as they perform. The ad nets place on the media plan is assured provided it has the technology to optimise.

What happens next? Some predictions for the IAB 2010 report:

- Expect more inventory to flow through the automated channels - particulary DoubleClick Adx and marketplaces like The Orange Ad Market
- Watch the number of “traditional” ad nets whittle dow to a more manageable number - and the arbitragers get squeezed
- Keep an eye on the rise of meta-ad networks (no publisher relationships; aggregates inventory on the exchanges; big on data and optimisation). Search agencies and specialist exchange buying firms fit into this category. Watch them grab market share

Note that all figures are based on data from a number of sources and information gleaned from industry insiders.

The Breakdown Of The £709 Million UK Display Market. How Much Are Publishers Selling Directly? How Much Run Thorugh Ad Nets And Exchanges?

The Breakdown Of The Ad Network Market - Which Is Estimated By ExchangeWire To Be Around £240 Million. Top Ten Ad Nets Versus The Rest.