The study represents the first serious attempt to detail online advertising’s contribution to the overall EU economy measured in jobs.
Online advertising generated € 30.7 billion of revenue for European publishers in 2014, nearly a third of total advertising revenue. Looking purely at digital publishing (as opposed to traditional and digital combined), advertising is by far the most important source for funding journalistic content, providing 75% of all online revenues.
Similarly, the buoyant mobile content market depends on advertising. In 2015, advertising replaced paid-for app revenues as the top revenue source.
Digital is now the second largest advertising sector in Europe, behind only television. By the end of 2015, it is predicted to pull ahead of TV in at least the most advanced EU markets.
By funding the Internet, online advertising provides European consumers with a wide range of educational, scientific, informational and entertainment services at little or no cost.
Online advertising also acts as an incubator for high-end data analytics and other digital skills that can then be deployed elsewhere in the economy. “As advertising becomes increasingly data-driven and technology-centric, the sector is at the forefront of hiring and nurturing talent that possesses the skills to transform and future-proof other industries”, said Townsend Feehan, CEO of IAB Europe.
Some of these skills are those that are required to deliver a new way of buying and selling online advertising – “programmatic” – an umbrella term for automated transactional mechanisms using data and software. “Programmatic has emerged as a key growth area, and Europe has already shown that it can produce world-leading talent in this space”, noted Feehan.
"This study highlights the significant contribution of digital advertising to the economy, and the UK plays a huge part in that – in 2014 over £7billion was spent on online advertising in the UK, the largest market in Europe" IAB UK CEO Guy Phillipson stated.
Advertising is the lifeblood of the digital economy, providing a vital revenue stream for many online businesses and paying for much of the content and services online that are widely available to people at little or no cost. It’s important that the UK Government takes a lead on digital issues in Europe to ensure that consumers are protected, and to avoid over-regulation that could stifle growth and innovation, Phillipson commented.
In the study, IAB Europe makes recommendations for policy-makers seeking to protect the benefits accruing to users from the advertising-funded Internet, and digital innovation in Europe. These recommendations include a call for data protection rules that match regulatory scrutiny to actual risk to consumers better than the texts currently under negotiation between the EU institutions.
*The term « gross value added » denotes a firm’s turnover minus what it pays its suppliers. The GVA of all of the firms in a given industry can be added up. The total sum across the economy – that is, adding up all industries – is roughly equivalent to the economy’s gross domestic product or GDP (GDP is equivalent to the sum of all industries’ GVA plus taxes and minus subsidies). A further explanation of the term may be found here.