In their second annual report released this week, IAB and Deloitte announce their findings for ad-spend in the Netherlands in 2011. This year’s edition relies on data supplied by 40 companies.
Roel van Rijsewijk, Deloitte Online Business Innovation, comments: “2011 has been a great year for online advertising, despite turbulent economic conditions and declining consumer confidence in the last six months. These conditions did have an effect on the expectations of the respondents for 2012; they do not see the double digit growth rates of last year repeated in 2012. To maintain current growth rates in 2012, Dutch online publishers and networks will have to make the most out of the possibilities of automated trading platforms, be able to compete with TV for brand advertising budgets and effectively promote in-app advertising on tablets with advertisers.”
Deloitte collected data covering 79% of the market with missing participants’ data estimated based on previous figures, desk research, expert opinions, industry databases and regression modeling. The report’s initial findings were verified with industry experts, media buyers, and selected publishers, with final findings cross-referenced and validated with respondents.
Eric Snelleman, GroupM, Head of Digital Trading, responds: “We are pleased with this IAB report as it confirms a growth that is in line with our annual global media forecast. A growth that still outperforms other media, however not growing as fast as before. To accelerate growth we think the industry should now make sure marketing-driven thinking is fully merged with technology solutions to further drive, enhance and develop digital advertising.”
Despite slow economic growth and declining consumer confidence, the Dutch online advertising market was over €1bn in 2011 – a year on year uplift of 12%. However, the lagging economy has an effect on the outlook for 2012; participants expect growth to slow to 7.7% for 2012.
The online display number of €336 million is up 11% on last year’s figure. Automated trading technologies are on the rise with 36% of total display revenue (€121 million) generated through some kind of non-guaranteed pricing mechanism. It must be noted that this number only accounts for revenues resulting from sales without an upfront agreed upon price. And probably represents most indirect sales channels.
Ad revenues received by Dutch publishers through their mobile websites and in-app advertising on smartphones and tablets remains small.
Search is still dominant in the online advertising market, earning half of total ad-spend. Display is where the Dutch publishers and networks need to get their fair share.
The economy is growing at a steady pace as Dutch GDP is expected to grow at a steady 1.4% for the coming two years. Following the sharp recovery in 2010 in the advertising market, future growth is expected to be more in line with GDP.
Expected growth for the total advertising market in the Netherlands in 2012 is 2.1%. The online advertising market is expected to become the largest market in 2012, with newspapers and magazines expected to continue their steady decline. Radio, however, is expected to remain stable through 2012 and outdoor is expected to grow steadily.
As consumers spend more time online, advertisers are expected to respond similarly to rebalance the value of different media types.
Despite their reported steady decline, print still has a dominant position in the advertising market, with a relatively large share compared to the total time spent on this media. To respond to this discrepancy, forecasts predict a steady decline of advertising income for newspapers and magazines.
Traditional radio is expected to decline in its share of total time-spend, but will be compensated by online music services such as Spotify and Pandora. Upside potential in SoA is limited due to the nature of the medium and is expected to stabilise.
Linear TV in the Netherlands is likely to have a strong year due to major media events such as the Olympics and European Championships; major advertisers may increase spend on TV advertising as cost per reach (CPR) is still relatively cheap.
As you would expect, time spent online will increase over the next few years with video and social being the big drivers. It is expected that advertising budgets will shift in line with this increase in time-spend. More than half of display advertising revenues come from traditional embedded formats. Mobile websites and in-app advertising is still relatively small comapare dwith the rest of the market; within apps, tablets have a 36% revenue share while there are 6.4 times more smartphone devices then tablets.
Joris van Heukelom, IAB, Chairmam, comments: “On the one hand we can conclude that publishing for tablets, which is dominated by Apple, is still in the beginning of its lifecycle. But the promise is huge. If you focus on the advertising-value of publishing on tablets you only can conclude it’s remarkably high. I assume that next years’ ad-spend study will show remarkable growth in this category”
Consumer goods takes position as top spender amongst publishers, while financial services spending moves to a second position.
Revenue per payment model
The CPM payment model maintains a leading position as the preferred revenue model for display advertising. Revenue breaks down as follows:
– CPM… 51%
– CPS… 19%
– Fixed Fee… 12%
– CPC… 9%
– CPL… 7%
– Other… 2%
A significant portion of sales is not realised through traditional rate cards, but through using an automated trading mechanism.
Mark Stockx, Telegraaf Media Nederland, Sales Director Digitaal, comments: “2012 is going to be the year where automated trading really becomes part of a total integrated marketing solution. Automated trading has developed far from remnant inventory and moves to premium partnership solutions ranging from awareness to performance and ultimately delivering true ROI for our clients. The publishers that really get the ultimate mix between branded content, premium formats & inventory and performance driven solutions is up for a great year.”
Of the total reported online advertising spend in 2011, €117m was generated through affiliate networks.
Gagandeep Sethi, Deloitte Consulting, Strategy “Companies expect a weighted growth rate of 7.7% in 2012; a clear downward revision of expectations voiced in H1 2011 of 20%.
For 2012, CPM remains the main payment model and is expected to grow the most. Retail is expected to grow the most in spend. Expectations of growth of in-app advertising are limited, display and classifieds, directories and listings revenues are expected to grow from €538m to €580m in 2012.
Roel van Rijsewijk, Deloitte Online Business Innovation, comments: “The growth rate in 2012 for display advertising could be more than expected, driven by a slight shift away from keyword advertising.”
Looking for more information on the emerging data-driven display space in the Netherlands? The IAB Netherlands is hosting an event on automated trading on May 09 in Amsterdam. Tickets are now on sale.