Advertising is essential to the success of the European digital market. It has a key role in helping fund digital content, services and applications, making them widely available at little or no cost, as well as driving growth in the digital sector. As Europe is seeking to define a strategy to unleash the potential of digital for growth and jobs, IAB Europe calls upon European institutions to formally recognise digital advertising as a major lever for a successful digital economy.
The wider digital ecosystem is fundamentally based on advertising, from media and content creators to search and email providers as well as social networks and apps. For example news sites, video platforms, mapping services, price comparison websites are mostly funded by advertising. In 2014, digital advertising powered the European internet economy to the tune of €30.7 billion
Digital has become the primary way of consuming media for a growing part of the population – mostly younger demographics that are “digital natives” but also early digital adopters from other age categories. There is a rich literature demonstrating that uptake of the Internet is driven by the massive values. European consumers receive from educational, informational, and entertainment web services that are supported by advertising. A McKinsey study released in 2010 estimated that value at €69 billion.
Digital advertising is continuously driving more money into the digital economy. In 2006, the value of the EU market stood at €6.6 billion, versus €27.3 billion in 2013. This is an increase in spend of €20.7 billion and translates into a compound annual growth rate of 22.5%, or an average €3.0 billion per year. With a growth rate of 11.9% in 2013 compared to a mere 0.1% increase in overall EU GDP, the digital advertising sector continues to outperform the overall EU economy. In addition research shows that half of the money spent by brands on digital advertising is new investment, rather than cannibalising spend that would otherwise have gone to offline advertising.
Digital has democratised advertising, making it a real opportunity for SMEs to use advertising to increase promote their products. Deloitte (2013) estimates that an additional €1 spent by an SME on advertising would benefit an SME nearly eight times as much relative to its size as an equivalent £1 spent by a larger firm. By enabling them to reach the right audience at the right time and in the right setting, digital advertising helps SMEs scale up both nationally and globally. SMEs providing online services such as small publishers or blogs can also use advertising as source of revenue by displaying ads on their sites.