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IAB/PwC Digital Advertising
Revenue Report
April 2015
2014 Full Year and Q4 2014
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2014 IAB/PwC Digital Ad Revenue Report
Agenda
1
Welcome
2014 Full Year and Q4 Digital Ad Revenue Highlights
Sherrill Mane, SVP Research, Analytics & Measurement,
IAB
Detailed Analysis of IAB PWC 2014 Full Year and Q4
Report
David Silverman, Partner, PriceWaterhouseCoopers
POV from Magna Global on US Digital Media
Vincent Letang, EVP Director of Global Forecasting,
Magna Global
Q & A
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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Important Note on Q&A
We will open a voice line for journalists to ask
questions at the end of the presentations.
IAB members should ask questions using the WebEx
user interface–Please type questions
into the Chat box on the WebEx user interface
at any time during the presentations.
● We will create a queue and answer as
many questions as possible following the
presentations.
● Additional press questions should be directed
to Laura Goldberg: [email protected]
● Additional questions from IAB members
should be directed to Kristina Sruoginis:
p 2 IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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IAB/PwC Digital Ad Revenue Report
Highlights
April 2015
2014 Full Year and Q4 2014
3
Sherrill Mane SVP, Research, Analytics and Measurement, IAB
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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2014 Interactive Advertising Sets
New Revenue Records
4
2014 annual US interactive ad revenues broke
$49 billion, marking the fifth consecutive year of
double-digit annual growth.
● This represents a 16% (or $6.7 billion) increase from 2013’s
$42.8 billion.
Mobile closes 2014 with stellar growth and
substantial share of total digital ad dollars.
● Mobile at $12.5 billion now accounts for 25% of digital ad
revenue, making it the second largest format measured.
● Annual ad revenue grew $5.4 billion or 76% over YAG.
● Fairly even split between search (48%) and display-related
(49%) indicates that both are driving the growth.
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
*
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Fifth Consecutive Record Breaking Year
Digital video remains the fastest growing format of
the non-mobile display-related market, climbing 17%
to $3.3 billion from $2.8 billion in 2013.
And, with a nominal 1% growth rate, banners
garnered $8.1 billion for a 16% share of interactive
ad dollars.
Search, at 38% of total digital ad revenue, grows 3%,
earning $19.0 billion.
With growth of 57% over 2013, social media ended
2014 with $7.0 billion in ad revenue
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report6
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Fourth Quarter 2014 Interactive
Advertising Sets More Records
Fourth quarter 2014 revenue of $14.2 billion
represents the best quarterly result ever for US
interactive advertising.
● This is a 16.9% increase over same time last year ($12.1 billion
in Q4 2013)
Interactive advertising growth continues to
outperform the total media market based on both
Nielsen and Kantar estimates for Fourth Quarter and
Full Year 2014
6IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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2014 Annual Revenue Growth
7
$ B
illio
ns
Sources: IAB Digital Advertising Revenue Report, 2014 Full Year and 4th Quarter Report; The Nielsen Company, MonitorPlus (Standard
Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Apr. 2014; Kantar Press Release Apr. 2014 2014
The Nielsen Company
estimates total media
revenues grew 1%
over 2013 to
$124.8 B; Kantar
Media estimates a
0.7% increase to
$141.2B
$42.8
$49.5
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
2013 2014
Total Media Ad Revenue Growth
(2013 vs. 2014)
Digital Ad Revenue Growth (2013 vs. 2014)
16%
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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8
Early Internet and Mobile Ad Revenue
Growth Rates Outpace Cable and Broadcast TV
Comparative U.S. Advertising Media Annual
Ad Revenue Growth For First 5 Years
($ Billions)
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
$0
$2
$4
$6
$8
$10
$12
$14
Broadcast TV*(1949-52)
Cable TV*(1980-83)
Internet*(1996-99)
Mobile(2010-14)
Year 1 Year 2 Year 3 Year 4 Year 5
110% CAGR
135% CAGR
79% CAGR
69% CAGR
Compound Annual Growth Rate (CAGR)
Sources: IAB/PwC Internet Ad Revenue Report, FY 2014; McCann-Erickson
*Adjusted for Inflation
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9
Q4 2014 Revenue Compared With Q4 2013$
Bill
ion
s According to Nielsen,
total media revenues
grew 2% from
Q4 2013 to Q4 2014.
Kantar Media
estimates a 1.6% decrease.
$12.1
$14.2
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
Q4 2013 Q4 2014
Total Media Ad Revenue Change
(Q4 '13 vs. Q4 '14)
Digital Ad Revenue Growth (Q4 '13 vs. Q 4 '14)
17%
Sources: IAB Digital Advertising Revenue Report, 2014 Full Year and 4th Quarter Report; The Nielsen Company, MonitorPlus
(Standard Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Apr. 2014; Kantar Press Release Apr. 2014
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
1Q_12 2Q_12 3Q_12 4Q_12 1Q_13 2Q_13 3Q_13 4Q_13 1Q_14 2Q_14 3Q_14 4Q_14
Finance / Insurance / Investment
Automotive
Family & Lifestyles Home and Fashion
News & InformationCorporate Information
Entertainment
Search Engines / Portals & Communities
SQAD Copyright(c) 2009-2015 SQAD LLC - All Rights Reserved
Display: Eight Category Avg. CPM Trend Weighted Average of all Buys in WebCosts Placed within the Quarter
2012 – 2014 (as of March 2015)
WebCosts Exclusive Subscriber Report
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$11.82
$11.61
$11.35
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
WebCosts Display Composite Average CPM
Fifty Same-Site Comparative Report
2012 2013 2014
WebCosts Display Composite Average CPM
Fifty Same-Site Comparative Report
11SQAD Copyright(c) 2009-2015 SQAD LLC - All Rights Reserved
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$21.46
$21.28
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
WebCosts In-Stream Video Composite
Average CPM Fifteen, Same-Site, Comparative Report
2013
2014
SQAD Copyright(c) 2009-2015 SQAD LLC - All Rights Reserved
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13
Key Takeaways Brand spend continues to rise
● In 2014, non-mobile display-related ad formats* increased 5% over
year ago to $13.5 billion
● Non-mobile display-related ad formats* revenue growth driven by:
● Banners up 1% to $8.0 billion;
● Digital video exhibits 17% increase, rising to $3.3 billion
● With relatively flat CPMs in display including video, most likely
garnering brand dollar shifts in spend from other media
Dollars shifting from other media into digital
● Revenue growth way ahead of the overall market and TV (national,
spot and cable) continues, unabated, even in winter Olympics and
mid term elections year
● Mobile likely garnering incremental spend
*Note: Display-related ad formats are defined as: banner ads, digital video commercials, rich media, and sponsorships.
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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14
Key Takeaways● Negligible change in advertising verticals’ contribution to digital
revenue with Retail still leading at 21%
● Consumer Packaged Goods account for 6%, down from 7% in 2013
● Kantar Media notes that in 2014
● Overall, across media, CPG spend declined – Personal Care Products down
2% and Food+Candy down 3.2%
● Spending by Top 10 advertisers dropped 4.2%
● Mid sized advertisers continue to grow spend, up 4.6% in 2014
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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Detailed Analysis
IAB/PwC 2013 Internet Ad Revenue Report
April 2015
2014 Full Year and Q4 2014
15
David SilvermanPartner, PriceWaterhouseCoopers
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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PwC
IAB internet advertising revenue report
2014 full year results
www.pwc.com
www.iab.net
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PwCPwC
Agenda
17
April 2015
Survey methodology
2014 full year results
Full year and quarterly trends
Advertising formats
Social media
Pricing models
Industry category spending
Historical advertising growth of media
About PwC
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PwCPwC
Survey Methodology
18
April 2015
Survey Scope
The IAB Internet Advertising Revenue Report is part of an ongoing IAB mission to provide an accurate barometer of Internet advertising growth.
To achieve differentiation from existing estimates and accomplish industry-wide acceptance, key aspects of the survey include:
• Obtaining historical data directly from companies generating Internet/online/mobile advertising revenues;
• Making the survey as inclusive as possible, encompassing all forms of internet/online advertising, including websites, consumer online services, ad networks, mobile devices and e-mail providers; and
• Ensuring and maintaining a confidential process, only releasing aggregate data.
Methodology
Throughout the reporting process, PwC:
• Compiles a database of industry participants selling internet/online and mobile advertising revenues.
• Conducts a quantitative mailing survey with leading industry players, including web publishers, ad networks, commercial online service providers, mobile providers, e-mail providers and other online media companies.
• Acquires supplemental data through the use of publicly disclosed information.
• Requests and compiles several specific data items, including monthly gross commissionable advertising revenue by industry category and transaction.
• Identifies non-participating companies and applies a conservative revenue estimate based on available public sources.
• Analyzes the findings, identifies and reports key trends.
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PwCPwC
Annual revenues totaled $49.5 billion in 2014
19
April 2015
Online advertising revenue increased 15.6% in 2014.
In b
illi
on
s $42.78
$49.45
FY 2013 FY 2014Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC 20
April 2015
Annual revenues totaled $49.5 billion in 2014
Online advertising revenue increased 15.6% in 2014.
In b
illi
on
s $42.78
$49.45
FY 2013 FY 2014
15.6%
Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC 21
April 2015
Fourth quarter revenues totaled $14.15 billion in 2014
Revenue in Q4 2014 was 16.9% higher than in Q4 2013.
In b
illi
on
s
$12.11
$14.15
Q4 2013 Q4 2014Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC 22
April 2015
Fourth quarter revenues totaled $14.15 billion in 2014
Revenue in Q4 2014 was 16.9% higher than in Q4 2013.
In b
illi
on
s
$12.11
$14.15
Q4 2013 Q4 2014
16.9%
Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC 23
April 2015
Strong Growth between Q3 2014 and Q4 2014
Revenue in Q4 2014 was $1.94 billion higher than in Q3 2014.
In b
illi
on
s
$12.21
$14.15
Q3 2014 Q4 2014Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC
Source: IAB Internet Advertising Revenue Report, FY 2014
24
April 2015
Strong Growth between Q3 2014 and Q4 2014
In b
illi
on
s
$12.21
$14.15
Q3 2014 Q4 2014
15.9%Revenue in Q4 2014 was $1.94 billion higher than in Q3 2014.
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PwCPwC
Source: IAB Internet Advertising Revenue Report, FY 2014
25
April 2015
Quarterly growth continues upward trendQuarterly growth comparison, 1996–2014
In b
illi
on
s
$14
Q4 2014 revenues crossed $14 billion
for the first time
’97 ’98 ’99 ’09’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’10 ’11 ’12 ’13 ’14’96
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PwCPwC 26
April 2015
2014 shows record revenuesAnnual revenue 2005-2014
In b
illi
on
s
12.5
16.9
21.223.4 22.7
26.0
31.7
36.6
42.8
49.5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Internet
Source: IAB Internet Advertising Revenue Report, FY 2014* CAGR: Compound Annual Growth Rate
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PwCPwC 27
April 2015
2014 shows record revenuesAnnual revenue 2005-2014
In b
illi
on
s
12.5 16.9
21.2 23.4 22.7 25.4
30.1 33.2
35.7 37.0
0.6
1.6
3.4
7.1
12.5
12.5
16.9
21.223.4 22.7
26.0
31.7
36.6
42.8
49.5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Mobile
Non-Mobile110%MobileCAGR
10%Non-mobileCAGR
Source: IAB Internet Advertising Revenue Report, FY 2014* CAGR: Compound Annual Growth Rate
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PwCPwC
$19.0
$2.7$1.9
$12.5
$3.3
$8.0
$0.8 $1.4
3% 4%7%
76%
17%
1% 1%
6%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$-
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
Search Classifieds &Directories
Lead Generation Mobile Digital VideoCommercials
Banners Ads Sponsorship Rich Media
2014 Revenue 2014 vs. 2013 % Growth
Source: IAB Internet Advertising Revenue Report, FY 2014
28
April 2015
Mobile shows the strongest YoY growthAdvertising formats – 2014 results and growth rates
In b
illi
on
s
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PwCPwC
Source: IAB Internet Advertising Revenue Report, FY 2014
29
April 2015
Historical trends in internet advertising formatsRevenue share by major ad formats, 2006–2014
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Search Mobile Banner Classifieds Digital Video LeadGeneration
Rich Media
2006 2007 2008 2009 2010 2011 2012 2013 2014
% o
f to
tal
re
ve
nu
e
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PwC
Distributing Mobile across formats demonstrates its importance to Search and Display
38%
27%
10%
25%
Search Display Other Mobile
Formats –2014(Mobile separated)
30
April 2015Source: IAB Internet Advertising Revenue Report, FY 2014
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PwC
Distributing Mobile across formats demonstrates its importance to Search and Display
38%
27%
10%
25%
Search Display Other Mobile
Formats –2014(Mobile separated)
Formats –2014(Mobile included)
31
April 2015
50%
40%
10%
Search Display Other
Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC
Social media demonstrates continued growthSocial media ad revenues, 2012 –2014
Source: IAB Internet Advertising Revenue Report, FY 2014
32
April 2015
In b
illi
on
s
* CAGR: Compound Annual Growth Rate
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PwCPwC
Source: IAB Internet Advertising Revenue Report, FY 2014
33
April 2015
Performance-based pricing shows slight uptickInternet ad revenues by pricing model, 2013 vs. 2014
Total – $42.8 billion Total – $49.5 billion
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PwC
Historical pricing model trendsInternet ad revenues by pricing model, 2005–2014
46% 48%
45%
39%37%
33%31% 32% 33% 33%
41%
47%
51%
57%59%
62%65% 66% 65% 66%
13%
5% 4% 4% 4% 5% 4%2% 2% 1%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CPM Performance Hybrid
% o
f to
tal
re
ve
nu
e
Note: Pricing model definitions may have changed over the time period depicted both within the survey process and as interpreted by respondents
34
April 2015
Source: IAB Internet Advertising Revenue Report, FY 2014
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PwC
4%5%5%
7%6%
9%9%
12%13%
21%
4%5%5%
6%7%
8%9%
12%13%
21%
EntertainmentPharma &Healthcare
MediaConsumerElectronics &
Computers
ConsumerPackaged
Goods
Leisure TravelTelecomAutoFinancialServices
Retail
FY 2014 FY 2013
Internet ad revenues by major industry category$42.8 B in 2013 vs. $49.5 B in 2014
% o
f to
tal
re
ve
nu
e †
35
April 2015
† Amounts do not total to 100% as minor categories are not displayed.
Source: IAB Internet Advertising Revenue Report, FY 2014
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PwCPwC
Historical advertising growth of mediaComparative U.S. advertising media annual ad revenue growth for first 5 years (In billions)
36
$0
$2
$4
$6
$8
$10
$12
$14
Broadcast TV*(1949-52)
Cable TV*(1980-83)
Internet*(1996-99)
Mobile(2010-14)
Year 1 Year 2 Year 3 Year 4 Year 5
110% CAGR
135% CAGR
79% CAGR
69% CAGR
Compound Annual Growth Rate (CAGR)
Sources: IAB/PwC Internet Ad Revenue Report, FY 2014; McCann-EricksonSources: IAB/PwC Internet Ad Revenue Report, FY 2014; McCann-Erickson
April 2015*Adjusted for Inflation
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PwCPwCOctober 9, 2013
For information about our New Media Group, contact one of the following PwC professionals:New York
David SilvermanPartner, Assurance [email protected]
Russ SapienzaPartner, Advisory [email protected]
Stephanie FaskowManager, Advisory [email protected]
37
PwC New Media GroupContacts
April 2015Source: IAB Internet Advertising Revenue Report, FY 2014
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POV from Magna Global
on US Digital Media
April 2015
2014 Full Year and Q4 2014
38
Vincent LetangEVP, Director of Global Forecasting, MagnaGlobal
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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40
+ Insert
client logo
About MAGNA Intelligence
• MAGNA Intelligence is a division of MAGNA GLOBAL (IPG Mediabrands), focusing on market research and forecasting.
• We analyze and forecast: net advertising revenues, ad costs and inflation, market profiles, media consumption, technology trends (e.g. programmatic).
• Scope: all media categories, 73 countries.
• We invented it: we started adspend forecasting 65 years ago in the US (Bob Coen).
• We are trusted: primary source of Wall Street’smedia analysts. Quoted by WSJ, Bloomberg, AdExchanger etc.
Media Economy Reports
Inflation Forecasts Programmatic Report
Ad Spend Forecasts
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41
169
161
168
192
100
110
120
130
140
150
160
170
180
190
200
US Market ForecastLong Term Trend: 2015 will Barely Catch up with Pre-Recession Highs
Long Term Ad Spend Forecasts (All Media, excl. P&O) (yoy %)
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42
US Market ForecastLong Term Trend: Total Spend will Re-Accelerate in 2015-2016
4.5%
1.7%
4.1%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-15%
Long Term Ad Spend Forecasts (All Media, excl. P&O) ($bn)
Incl. P&O2014: +3.0% 2015: +2.7%
-7%
10%
-7%
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43
US Market ForecastDigital Media Now Concentrate all the Growth
Ad Spend Growth by Media Category (excluding P&O)
4.5%
17%
1%
4%
-7%
-1%
4%
1.7%
15%
-3%
0%
-11%
-3%
1%
4.1%
19%
-3%
0%
-11%
-2%
1%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Total (Exc. DM) Total Digital Total TV OOH
2013 2014 2015
Total Traditional Print Radio
Incl. P&O2014: +3.0% 2015: +2.7%
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44
US Market Forecast Mobile, Social, Video will Continue to Drive US Digital Spend
US Digital Ad Spend: Growth by Format/Platform
16%
47%
7%
0%
39%
19%
53%
8%
0%
10%
20%
30%
40%
50%
60%
Search Video Display Other Social Total Digital Mobile Desktop
2013 2014 2015
76%
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45
US Market ForecastMobile Digital Ad Revenues will Catch-up with Desktop by 2018
US Digital Media – Mobile vs Desktop ($b)
37
1219
2633
42
52
33
36
37
40
42
43
43
43
0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015 2016 2017 2018 2019
Mobile Desktop
$49bn
$95bn
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46
US Market Forecast85% of Display-Related Inventory will be Traded Programmatically by 2019
US Programmatic Forecasts
24%30%
36%41%
46%52%
56%
25%
32%
33%
33%
32%
30%30%
51%
37%31%
26%22%
17% 15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016 2017 2018 2019
RTB Non-RTB Traditional
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US Market ForecastAcceleration in the Shift to Digital: 2014 a Tipping Point?
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
2011 2012 2013 2014 2015 2016
Digital National TV Other
Market Share Gains/Losses by Media Category (% vs. pvs year)
Reading: in 2011, print, radio and OOH media combined lost 3.5% in market share compared to the previous year, while digital media captured an extra 3% and television captured 0.5%.
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48
66
49
0
10
20
30
40
50
60
70
80
90
100
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Television
Digital
Other
US Market ForecastDigital Media to Become #1 Media Category in 2016
Advertising Revenue by Media Category: LT Forecast ($bn)
68
95
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Global ForecastDigital Media is Already Bigger than TV in 14 Other Markets
40%
28% 28%
37%
22%
18%
30%
46%
39%
41%
31%
44%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
US UK Netherlands China Germany Denmark
TV Digital (incl. online video)
Share of Total Advertising Revenues in Selected Markets (2014)
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Global ForecastDigital Media is Already Bigger than TV in 14 Other Markets
Share of total advertising Revenues in Selected Markets (2014)
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51
Global ForecastSearch will Remain the #1 Format but Video & Social will Grow Faster
Global Digital Ad spend by Format ($b)
61 70
80 90
99 108
118
28 29
31 32
33 34
35
10
17
23
29
36
43
51
8
11
15
20
25
32
39
0
50
100
150
200
250
300
2013 2014 2015 2016 2017 2018 2019
Search Display Social Video Other
$142bn
$256bn
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Questions?
Please type questions into the Chat box
on the WebEx user interface at any time
during the presentations.
● We will create a queue and answer as
many questions as possible following the
presentations.
● Additional press questions should be
directed to Laura Goldberg:
● Additional questions from IAB members
should be directed to Kristina Sruoginis:
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report
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FOLLOW-UP QUESTIONS:
Additional questions from IAB members
should be directed to Kristina Sruoginis:
Additional press questions should be directed
to Laura Goldberg:
Reports (from 1996 to present) can be found at: http://www.iab.net/adrevenuereport
IAB 2014 Full Year and Q4 2014 Digital Advertising Revenue Report