IAB Forecast Affirms Ad Spend Momentum Fueled by Europe
Ad spending in Europe for 2007 is predicted to reach $16.6 billion, representing a year-over-year increase of 38 percent.
Forecasted figures from the IAB Europe released yesterday again suggest that European online ad spending is rapidly catching the U.S..
The predictions state that the total online ad spend in Europe during 2007 will reach $16.6 billion, representing a year-over-year increase of 38 percent, up from $11.5 billion in 2006.
As ad spending in Europe is set to increase rapidly, the more mature U.S. market is slowing. Online ad spending in the U.S. is predicted to reach $20 billion in 2007 compared to $18.5 billion in 2006, representing relatively meager 6 percent year on year growth, according to the IAB Europe. If these predictions are correct, the market gap between Europe and the U.S. in total online ad revenues would be narrowed to around $3 billion, down from nearly $7 billion in ’06.
The numbers are “conservative,” said IAB Europe Project Manager Catherine Borrel, who collated the data and put together the spending forecast.
The IAB predictions echo those published in ZenithOptimedia’s forecast report earlier this month, stating that 2007 will be a period of dramatic growth for emerging European markets, and sustained growth in more mature ones. As did Zenith, the IAB attributes this growth to higher levels of broadband penetration and increased advertiser confidence in online.
The total spend prediction was formed using data provided by twelve IAB branches in Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Spain, Slovenia and the U.K. Each Bureau estimated the rate of growth in online advertising in their territory for 2007. This increase was then applied to the value of that market, for which figures were obtained from the IAB Europe’s 2006 Advertising Expenditure report.
The year-over-year increase of 38 percent is a weighted average for all the countries that participated in the 2006 study. The 2007 forecasts include data from the three new participating countries: Norway, Turkey and Poland. These accounted for a forecast total of $722 million.
National IABs throughout Europe do not use the same methods for data collection, however. As a result the 2006 report made use of the dominant methodology which based measurements on gross revenue from display ads, classifieds, search and e-mail.
Again, not every IAB collects data for all these formats, so estimates were made in these instances. For example, France, Germany and the U.K. accounted for 75 percent of the total spend for 2006, all of which provided actual data on all four formats. As a result, the estimated data should not have a significant effect on the total spend figure.
In their 2006 report, the IAB vowed to address this issue of inconsistent measurement methodologies stating, “The aim going forward is to find ways to improve comparability of online ad spend figures across Europe, ensuring that ad spend projects keep up with developments in the local markets.”
The IAB Europe will publish their actual numbers for this year in their 2007 Advertising Expenditure report, which is to be released in June 2008 at the Interact conference in Berlin.
