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UK Online Adspend Study Results for the full year 2005. Prepared by PricewaterhouseCoopers for the IAB. Welcome. Richard Eyre, Chairman IAB UK. Background. Census of all major UK online media owners Official Advertising Association figures since 1997 Information collected each half year

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uk online adspend study results for the full year 2005

UK Online Adspend StudyResults for the full year 2005

Prepared by

PricewaterhouseCoopers for the IAB

welcome

Welcome

Richard Eyre, Chairman IAB UK

background
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
agenda
Agenda
  • Study methodology
  • UK online adspend – headline results
  • Online in context
  • The digital media mix
  • Industry categories
  • In summary
  • Questions & answers
a brief history
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.
research participants
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

important information regarding google
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.
revising the market value
Revising the market value

‘01

‘02

‘03

‘04

‘05

£ millions

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

uk online adspend study results for the full year 200510

UK Online Adspend StudyResults for the full year 2005

Prepared by

PricewaterhouseCoopers for the IAB

slide12

2005 vs. 2004

65.6% increase

An increase of

£541.3m on comparable full year results

online advertising almost 400m a quarter
Online advertising almost £400m a quarter

‘01

‘02

‘03

‘04

‘05

£ millions

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC

breaking market trends in the uk ad industry

Online in context…

Breaking market trends in the UK ad industry

market share nears 8 full year 2005
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

online drives the whole market year on year growth for 2005
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

slide17

Online’s share growth accelerates

Market Share

Source: PricewaterhouseCoopers / Advertising Association / Internet Advertising Bureau / WARC

online s ascendancy continues

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

summary full year 2005
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
summary h2 2005
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
the digital media mix

The digital media mix

The developing mix of ad products

slide23

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

the digital media mix all groups of formats have experienced actual growth
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

slide25

£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

slide26

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

search constant growth
Search: constant growth

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

search is the gateway to brands
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

classifieds seasonality emerging
Classifieds: seasonality emerging

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

display breadth of formats
Display: breadth of formats

£m

Source: Internet Advertising Bureau / PricewaterhouseCoopers

tenancies rocket in 2005

£m

Tenancies rocket in 2005

Tenancies

quadrupled

from 2004 to 2005

Source: Internet Advertising Bureau / PricewaterhouseCoopers

why tenancies are popular
Why tenancies are popular
  • The advertiser benefits from increased traffic volume.
  • The website benefits from an improved depth of content
formats summary 2005
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
slide35

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

slide36

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

spotlight on entertainment
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

entertainment media campaign
Entertainment & Media campaign

MTV Starzine – Creative Showcase winner, September 2005

industry sectors summary h2 2005
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)
overall summary41
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
overall summary42
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
the next milestone
The next milestone

£2 billion

  • A real possibility within the next 12 months
  • This would make online bigger than national press
our thanks to
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

&

uk online adspend study results for the full year 200546

UK Online Adspend StudyResults for the full year 2005

Prepared by

PricewaterhouseCoopers for the IAB

For more information

info@iabuk.net

020 7886 8282