Internet advertising

Playing field

Internet advertising continues to be a major growth driver of total advertising revenues. Growth in Internet advertising is only partially offset by declines in other market segments. As consumers continue to shift their attention towards digital and mobile media, more advertising spending is moving towards platforms that deliver ads to consumers in such a context. Just like all markets in Western Europe, the trend towards Internet advertising has a large impact on European media companies including publishers and broadcasters.

Paid search advertising continues to hold the largest share, accounting for a projected 45% of total Internet advertising revenues in 2018 (across both wired and mobile).

As Internet advertisements shift more toward mobile to follow the path of consumer attention, we expect an annual growth of 28.5% for this category in 2018.

What’s new?

The industry is moving further towards personalised and identity-focused advertising. Technologies such as data analytics enable advertisers to manage advanced cross-platform tracking and dynamic ad personalisation, which are essential building blocks of today’s data-driven business models.

The industry is not only having tailwind. Legislation and trust are important aspects the industry needs to address in order to remain successful.

The European General Data Protection Regulation (GDPR), which came into effect on 25 May 2018, has had a significant impact on the Internet advertising ecosystem. Many websites were shut down. Applications were temporarily or structurally shut off for European customers. We also see companies applying a defensive approach to comply with GDPR, such as asking web visitors to change the cookies settings as they wish, thereby effectively stimulating a kind of ad-blocker.

In light of discussions on data-usage and privacy, De Persgroep Nederland, Sanoma Media Netherlands and Telegraaf Media Groep have initiated “NLProfiel”. The objective is to deliver an integrated platform with digital profile data to facilitate advertisers to drive data-driven marketing activities in compliance with GDPR.

The industry is facing a growing amount of negative publicity related to content – content is deemed offensive, unreliable or sensational. Consumers are losing confidence in certain digital platforms and are therefore becoming more cautious and selective about where to gather information. Advertisers and consequently publishers are facing challenges as they don’t want their brands to be associated with this type of content.

Next to brand safety, players across the digital advertising ecosystem need to address advertiser concerns over ad fraud, the quality of measurement, audience data, and allow advertisers to see exactly how their budgets are spent.

As advertisers are debating the effectiveness of online advertisements, different approaches are being used in an attempt to improve and prove the effectiveness. Examples include storytelling, branded entertainment, voice-activated marketing and contextual advertising. Technology such as mobile ID matching, geolocation and passive metering will facilitate new ways to measure behaviour.

Internet advertising market (€ millions)
Netherlands   Forecast data
  2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 18-22
Paid search Internet advertising revenue 517 554 571 612 636 658 677 693 706 717 2.4%
y-o-y growth   7.2% 3.1% 7.2% 3.9% 3.4% 3.0% 2.3% 1.9% 1.6%  
Classified Internet advertising revenue 191 206 225 245 259 269 277 284 291 297 2.8%
y-o-y growth   7.9% 9.2% 8.9% 5.7% 3.9% 3.0% 2.5% 2.3% 2.2%  
Display Internet advertising revenue 457 460 443 459 451 455 460 462 465 467 0.7%
y-o-y growth   0.7% -3.7% 3.6% -1.7% 1.0% 1.0% 0.5% 0.6% 0.4%  
Other display Internet advertising revenue  409 402 370 367 342 332 323 316 309 303 -2.4%
y-o-y growth   -1.7% -8.0% -0.8% -6.8% -3.0% -2.5% -2.2% -2.1% -2.0%  
Video Internet advertising revenue 48 58 73 92 109 124 136 146 155 163 8.4%
y-o-y growth   20.8% 25.9% 26.0% 18.5% 13.4% 10.3% 7.0% 6.5% 5.1%  
Total Wired Internet advertising 1,165 1,220 1,239 1,316 1,346 1,382 1,414 1,439 1,462 1,481 1.9%
y-o-y growth   4.7% 1.6% 6.2% 2.3% 2.7% 2.3% 1.8% 1.6% 1.3%  
Mobile paid search Internet advertising revenue 27 55 102 143 190 242 296 357 403 446 18.6%
y-o-y growth   103.7% 85.5% 40.2% 33.1% 27.1% 22.3% 20.5% 12.9% 10.8%  
Mobile display Internet advertising revenue 63 122 172 224 300 370 439 505 566 622 15.7%
y-o-y growth   93.7% 41.0% 30.3% 34.0% 23.2% 18.6% 15.1% 12.1% 9.9%  
Mobile other display Internet advertising revenue 47 94 135 173 232 282 332 382 432 482 15.8%
y-o-y growth   100.0% 43.6% 28.2% 34.0% 21.6% 17.7% 15.1% 13.1% 11.6%  
Mobile video Internet advertising revenue 16 28 37 51 68 88 107 123 134 140 15.4%
y-o-y growth   75.0% 32.1% 37.8% 34.2% 28.4% 21.2% 15.1% 9.1% 4.6%  
Total Mobile Internet advertising 90 177 274 367 491 612 734 861 969 1,068 16.8%
y-o-y growth   96.7% 54.8% 34.0% 33.7% 24.7% 20.0% 17.3% 12.5% 10.3%  
Total Internet advertising 1,255 1,397 1,513 1,683 1,837 1,994 2,194 2,301 2,430 2,549 6.8%
y-o-y growth   11.3% 8.3% 11.2% 9.1% 8.6% 7.8% 7.1% 5.6% 4.9%  

Outlook

Based on the daily news, it is tempting to focus on the downsides of Internet advertising. However, many studies also prove the success of Internet advertising. We expect continued growth across wired and mobile Internet advertising revenues.

While wired Internet claims the most paid search ad revenue, its expected growth for the next five years is far behind mobile paid search ad sales, being the single most rapidly growing area of advertising in the Netherlands. A 16.8% CAGR for mobile advertisements far exceeds the 1.9% for wired advertisements. Advertisers in the Netherlands are increasingly seeing the value of advertising against the online video content and are redefining their advertising mix in favour of mobile advertisement as a result.

Although Internet advertising spend has expanded in the past few years and continues to grow, a fall in annual growth is expected in the next few years from 8.6% in 2018 to 4.9% in 2022, primarily driven by the flattening growth of wired internet advertising. Consumers are increasingly moving from PC towards mobile browsing, which drives the continued mobile consumption growth.

Together, both wired and mobile video Internet advertisement revenues will be worth 303m by 2022 – meaning one in every twelve euros spent on Internet advertising in the Netherlands will be on Internet video.

We expect that the debate surrounding trust in digital advertising, regarding both the impact on brands and their effectiveness, to result in certain advertisers limiting the speed of moving from offline to digital advertising. In the long term, however, the move towards Internet advertising will continue at a high pace, and Internet advertising will easily exceed 41.9% of total advertising in 2022.

Contact us

Chantal Buné

Senior Manager, PwC Netherlands

Caroline Prince

Associate, PwC Netherlands

Tel: +31 (0)88 792 23 90

Arakel Yousif

Manager, PwC Netherlands

Tel: +31 (0)88 792 43 90

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