Internet advertising

Playing field

Internet advertising continues to grow apace as media players and advertisers shift greater attention to online distribution channels and increasingly connected consumers further prioritise smartphones over traditional media. With new types of connected devices such as smart speakers and smart TVs changing the way consumers interact with digital media services and content, new pockets of competition are emerging. The increased levels of attribution, measurement and targeting offered by Internet advertising, coupled with an increased integration with commerce, means that it will continue to account for a greater proportion of the overall ad spend over the next five years.

Growth in the Netherlands is expected to slow to 2023 as inventory supply increases, prices in more valuable segments such as video fall, and digital accounts for a greater proportion of overall ad budgets, which are expanding at a much slower rate and are more susceptible to macroeconomic pressures. Nevertheless, Internet advertising will continue to grow relatively robustly, with a CAGR of 5.7% to 2023 to reach €2.6bn in 2023.

Internet advertising

What’s new?

Internet advertising is often regarded as a duopoly between Google and Facebook. Much of this is due to their respective scale, not just of audiences but also ad technology, network infrastructure and user data. To give an idea of the challenge facing local players, in February 2019 Buy-media.nl, an online platform supported by eight Dutch companies including FD Mediagroep, Sanoma and Telegraaf Media Groep, was shuttered. The platform, which was designed to improve standardisation by bundling advertising activities, had only been operative for twelve months, with “insufficient traction” cited as the reason for closure.

Concerns over privacy and brand safety have impacted the dominant US players over recent years, although both have been quick to respond by stepping up third-party verification and privacy-focused initiatives. Nevertheless, this has given prospective competitors some optimism, but most still lack the scale to fully compete. This is driving consolidation as competitors seek to match Google and Facebook in terms of scale and vertical integration, both of which are highly important to advertisers looking to navigate an increasingly complex landscape.

New technologies will drive search activity

AI and voice searching will innovate the search market, but are yet to be utilised to their full potential. Voice search became more accessible to consumers in the Netherlands in 2018, when Google’s digital assistant began supporting the Dutch language. Amazon is yet to launch this capability on Alexa. 

Increased penetration of voice-AI-capable devices will also drive activity and awareness of smart speakers is growing in the Netherlands, with Google’s Home and Mini devices being the most commonly owned devices. 

Voice searches for products and services are gaining traction. However, many consumers still don’t feel comfortable about using commands for shopping and payments, and delivering paid search ads to screenless devices remains a challenge, with incumbents struggling to monetise this so far. 

Internet advertising market (€ millions)

Netherlands Historical data Forecast CAGR%
  2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2019-23
Paid search Internet advertising revenue 554 571 612 631 642 651 660 669 677 685 1.3%
   y-o-y growth   3.1% 7.2% 3.1% 1.7% 1.4% 1.4% 1.3% 1.2% 1.1%  
Classified Internet advertising revenue 206 225 245 259 262 267 272 277 280 284 1.6%
   y-o-y growth   9.2% 8.9% 5.7% 1.2% 2.1% 1.8% 1.6% 1.4% 1.2%  
Display Internet advertising revenue 460 443 459 451 433 421 414 412 409 407 -1.2%
   y-o-y growth   -3.7% 3.6% -1.7% -3.9% -2.9% -1.6% -0.5% -0.7% -0.5%  
Other display Internet advertising revenue 402 370 367 342 314 292 276 264 254 246 -4.8%
    y-o-y growth   -8.0% -0.8% -6.8% -8.3% -7.0% -5.5% -4.1% -3.9% -3.3%  
Video Internet advertising revenue 58 73 92 109 120 129 138 147 155 161 6.2%
   y-o-y growth   25.9% 26.0% 18.5% 9.7% 8.2% 7.0% 6.5% 5.1% 4.2%  
Wired Internet advertising 1,220 1,239 1,316 1,341 1,337 1,340 1,347 1,357 1,366 1,375 0.6%
    y-o-y growth   1.6% 6.2% 1.9% -0.3% 0.2% 0.5% 0.8% 0.6% 0.7%  
Mobile paid search Internet advertising revenue
55 102 143 190 261 325 389 444 492 534 15.4%
    y-o-y growth   85.5% 40.2% 33.1% 37.2% 24.6% 19.7% 14.1% 10.8% 8.5%  
Mobile display Internet advertising revenue
122 172 224 300 362 428 498 562 620 675 13.3%
   y-o-y growth   41.0% 30.3% 34.0% 20.5% 18.4% 16.3% 12.8% 10.3% 8.9%  
Mobile other display Internet advertising revenue 94 135 173 232 267 305 341 374 406 433 10.1%
   y-o-y growth   43.6% 28.2% 34.0% 15.1% 14.1% 12.0% 9.7% 8.5% 6.5%  
Mobile video Internet advertising revenue 28 37 51 68 95 124 157 188 214 242 20.6%
   y-o-y growth   32.1% 37.8% 34.2% 38.7% 30.5% 26.7% 19.6% 13.9% 13.4%  
Mobile Internet advertising 177 274 367 491 623 754 887 1,006 1,112 1,209 14.2%
   y-o-y growth   54.8% 34.0% 33.7% 27.0% 21.0% 17.7% 13.4% 10.5% 8.7%  
Total Internet advertising 1,397 1,513 1,683 1,832 1,960 2,093 2,234 2,364 2,478 2,584 5.7%
   y-o-y growth   8.3% 11.2% 8.8% 7.0% 6.8% 6.7% 5.8% 4.8% 4.3%  

Source: PwC, Ovum, IAB Europe. Note: Because we rounded off amounts and percentages throughout this Outlook, tables may not sum to 100%.

Outlook

Data protection regulation looks beyond GDPR

The EU's General Data Protection Regulation (GDPR) was the first mover in a global trend of data privacy and protection regulations. Consumers are becoming increasingly aware of, and more vocal about, data privacy issues, and governments are refreshing outdated policies as a result. 

The Netherlands was the first country to announce its GDPR violation policy in early 2019, introducing four categories of fines in the case of breaches: in July 2019, the Dutch Data Protection Authority (DPA) issued its first fine. 

Additionally, the DPA responded to complaints from Dutch Internet users who were being denied access to websites after declining to be tracked by “cookies”. The DPA stated that “if a website asks for permission for tracking cookies and someone is refused access to the website…people give up their personal data under pressure and that is unlawful”. 

As regulations become more complex, organisations are maturing their compliance programmes to focus on global requirements rather than GDPR specifically, paving the way for an approach which identifies the core underlying principles of data protection and privacy.

Measurement solutions will provide greater clarity for advertisers

New contexts for interacting with digital content, services, and commerce are not just changing the way in which consumers act, but are also changing the advertising landscape. The increasing amount of data-generating consumer touchpoints are making measurement techniques more complicated, with different brands, agencies and vendors adopting multiple approaches on what to measure and how to do so.

Advertisers also remain concerned about the reliability and transparency of digital display ad measurement, which is becoming more convoluted as programmatic trading becomes the norm. High-profile controversies where advertisers have found their display ads running next to questionable content have dented trust in the industry.

There is a growing trend towards “attribution” solutions in the industry, which help identify the marketing channel responsible for a purchase or conversion. While this has been estimated in previous years, new tools are emerging which are offering more clarity and accuracy, enabling marketers to work out which touchpoint is the most valuable to their business.

At a time when it is possible to measure almost everything about an ad – viewer engagement, how long it was viewed for, who viewed it, when it was viewed – it is important to consider how this data can be utilised to produce positive business outcomes. If not, advertisers are expecting media owners to conform to performance indicators that are not necessarily useful.

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Colin Toh

Director, PwC Netherlands

Tel: +31 (0)61 206 69 31

Casper Scheffer

Partner, PwC Netherlands

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