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IAB Full Year 2016 and Q4 2016 Internet Advertising Revenue Report
IAB/PwC Internet Advertising Revenue Report Detailed Analysis
April 2017
Full Year 2016 and Q4 2016
David Silverman, Partner, PwC
PwC
IAB Internet Advertising Revenue Report
2016 full year results
www.pwc.com
www.iab.com
Any trademarks included are trademarks of their respective owners and are not affiliated with, nor endorsed by, PricewaterhouseCoopers LLP.
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Agenda
1
April 2017
Survey methodology
2016 full year results
Full year and quarterly trends
Advertising formats
Digital video
Social media
Digital Audio
Pricing models
Industry category spending
About PwC
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Survey Methodology
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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 (desktop and mobile) advertising revenues;
• Making the survey as inclusive as possible, encompassing all forms of internet advertising, including websites, consumer online services, ad networks and exchanges, mobile devices; 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 advertising revenues.
• Conducts a quantitative mailing survey with leading industry players, including web publishers, ad networks, commercial online service providers, mobile providers, and other online media companies.
• Requests and compiles several specific data items, including monthly gross commissionable advertising revenue by industry category and transaction.
• Acquires supplemental data through the use of publicly disclosed information.
• 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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Annual revenues totaled…
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April 2017
In b
illi
on
s
$59.6
$72.5
FY 2015 FY 2016Source: IAB Internet Advertising Revenue Report, FY 2016
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Annual revenues totaled $72.5 billion in 2016
Online advertising revenue increased $12.9 billion in 2016
In b
illi
on
s
$59.6
$72.5
FY 2015 FY 2016
21.8%
Source: IAB Internet Advertising Revenue Report, FY 2016
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April 2017
Fourth quarter revenues totaled…
In b
illi
on
s $17.4
$21.6
Q4 2015 Q4 2016Source: IAB Internet Advertising Revenue Report, FY 2016
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April 2017
Fourth quarter revenues totaled $21.6 billion in 2016
Revenue in Q4 2016 was $4.2 billion higher than in Q4 2015
In b
illi
on
s $17.4
$21.6
Q4 2015 Q4 2016
24.3%
Source: IAB Internet Advertising Revenue Report, FY 2016
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Strong growth between Q3 2016 and Q4 2016
In b
illi
on
s $18.2
$21.6
Q3 2016 Q4 2016Source: IAB Internet Advertising Revenue Report, FY 2016
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Source: IAB Internet Advertising Revenue Report, FY 2016
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Strong growth between Q3 2016 and Q4 2016
In b
illi
on
s $18.2
$21.6
Q3 2016 Q4 2016
18.9%Revenue in Q4 2016 was $3.4 billion higher than in Q3 2016
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Source: IAB Internet Advertising Revenue Report, FY 2016
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Quarterly growth continues upward trendQuarterly growth comparison, 1996–2016
In b
illi
on
s
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16.9
21.2 23.4 22.7
26.0
31.7
36.6
42.8
49.5
59.6
72.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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2016 showed record revenuesAnnual revenue 2006-2016
Source: IAB Internet Advertising Revenue Report, FY 2016* CAGR: Compound Annual Growth Rate
In b
illi
on
s
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2016 showed record revenuesAnnual revenue 2006-2016
In b
illi
on
s
16.9 21.2 23.4 22.7 25.4
30.1 33.2 35.7 37.0 38.9 35.9
0.6
1.6
3.4
7.1
12.5
20.7
36.6
16.9
21.223.4 22.7
26.0
31.7
36.6
42.8
49.5
59.6
72.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mobile
Non-Mobile
87%MobileCAGR
6%Non-mobileCAGR
Source: IAB Internet Advertising Revenue Report, FY 2016* CAGR: Compound Annual Growth Rate
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Historical Revenue Concentrations
Source: IAB Internet Advertising Revenue Report, FY 2016
70% 69% 71% 71% 71% 71% 73% 71% 71% 74% 74%
10% 8% 8% 8% 8% 7% 7% 8% 8%9% 10%
19% 23% 22% 21% 21% 21% 21% 22% 21% 17% 17%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
% OF REVENUETop 10 11 to 25 The Rest
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Source: IAB Internet Advertising Revenue Report, FY 2016
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Historical trends in internet advertising formatsRevenue share by major ad formats, 2008–2016
0%
10%
20%
30%
40%
50%
60%
Mobile Search Banner Digital Video Other
2008 2009 2010 2011 2012 2013 2014 2015 2016
% o
f to
tal
re
ve
nu
e
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Distributing Mobile across formats demonstrates its importance to Search and Display
24%
12%
7%6%
51%
Search Banner Video Other Mobile
Formats –2016(Mobile separated)
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April 2017Source: IAB Internet Advertising Revenue Report, FY 2016
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48%
31%
13%
8%
Search Banner Video Other
Distributing Mobile across formats demonstrates its importance to Search and Display
Formats –2016(Mobile separated)
Formats –2016(Mobile included)
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April 2017Source: IAB Internet Advertising Revenue Report, FY 2016
24%
12%
7%6%
51%
Search Banner Video Other Mobile
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50%
31%
10%
9%
Search Banner Video Other**
2016 saw Video grow and Search take a slight stumble
Formats –2015(Mobile included)
Formats –2016(Mobile included)
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April 2017Source: IAB Internet Advertising Revenue Report, FY 2016
48%
31%
13%
8%
** Other includes: Classifieds, Lead Generation, and Audio
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Digital video – The gap between formats is closingDigital video ad revenues, 2015 – 2016
Source: IAB Internet Advertising Revenue Report, FY 2016
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April 2017
In b
illi
on
s
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Social media demonstrated continued growthSocial media ad revenues, 2012 –2016
Source: IAB Internet Advertising Revenue Report, FY 2016
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* CAGR: Compound Annual Growth Rate
In b
illi
on
s
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Social Media and Mobile ImpactPercentage of Revenues 2012 - 2016
Source: IAB Internet Advertising Revenue Report, FY 2016
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April 2017
8%11%
14%
18%
22%
9%
17%
25%
35%
51%
0%
10%
20%
30%
40%
50%
60%
2012 2013 2014 2015 2016
% of Total Revenues
Social Mobile
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Digital audio makes its report debutDigital audio ad revenues, 2016
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April 2017
In m
illi
on
s
Source: IAB Internet Advertising Revenue Report, FY 2016
Digital audio generated $1.1B in FY 2016; mobile represented 81% of the total
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33%
65%
2%
2015
Impression-based Performance-based
Hybrid
Total – $59.6 billion Source: IAB Internet Advertising Revenue Report, FY 2016
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April 2017
Impression-based pricing showed slight uptickInternet ad revenues by pricing model, 2015 vs. 2016
Total – $72.5 billion
35%
64%
1%
2016
Impression-based Performance-based
Hybrid
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Historical pricing model trendsInternet ad revenues by pricing model, 2005–2016
46% 48%
45%
39%37%
33%31% 32% 33% 33% 33%
35%
41%
47%
51%
57%59%
62%65% 66% 65% 66% 65% 64%
13%
5% 4% 4% 4% 5% 4%2% 2% 1% 2% 1%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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
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April 2017
Source: IAB Internet Advertising Revenue Report, FY 2016
PwC
4%5%5%
8%
6%
9%9%
12%13%
21%
EntertainmentPharma &Healthcare
MediaConsumerElectronics &
Computers
ConsumerPackaged
Goods
Leisure TravelTelecomAutoFinancialServices
Retail
FY 2016
Internet ad revenues by major industry category
% o
f to
tal
re
ve
nu
e †
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April 2017
† Amounts do not total to 100% as minor categories are not displayed.
Source: IAB Internet Advertising Revenue Report, FY 2016
PwCPwCOctober 2015
For information, contact one of the following PwC professionals:New York
David SilvermanPartner, Assurance [email protected]
Russ SapienzaPartner, Advisory [email protected]
Brian GaffneyManager, Advisory [email protected]
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Technology and Entertainment, Media, and Communications practicesContacts
April 2017