This year the 2016 Annual Leadership Meeting focused on exploring the path to the “Next $50 Billion.” We asked members of the IAB Global Network to share their insights on what they believe will pave the way to doubling ad revenue in their countries. Here is what they had to say:
United Kingdom
Guy Phillipson, CEO, IAB UK
With U.K advertising revenues totaling £8 billion in 2015, reaching 60% to 70% of that will happen as mobile becomes the dominant digital medium, and time spent online increases by 50% over the next five years. The first slice of growth will come from mobile, social, and video in particular. After that, the explosion of paid content and native (which should be immune to ad blocking) will grow—including newer applications like AR, VR, and IoT. Finally we’ll see much more IP based digital outdoor and addressable TV, as nearly all media becomes digital and screen based.
Obviously ad blocking is the greatest hindrance to growth, along with ad fraud and the last yards on Viewability. But there is still an issue with network creative agencies (i.e. not the digital specialists) really driving digital. And there is still an educational job to do amongst some of the less progressive brands.
Mexico
Gabriel Richaud, Director General, IAB Mexico
In Mexico, we are expecting to see the figures for the digital advertising industry reach above $800 million by mid June, when we will release the PwC report for 2015. IAB Mexico celebrated its first ten years in 2015, and by 2020 we should be above $1 billion in revenue for the digital advertising industry. The participation of our members’ and the key decision making executives in setting the agenda of IAB is key for the future of our market.
The IAB Mexico Board of Directors see IAB Mexico as a key factor in the development of the interactive industry, reinforcing its role as a guiding organization with its four strategic pillars: Promotion (video, mobile, programmatic), Best Practices (education and standards), Protection (fighting fraud, lack of transparency), and Prevention (self regulation, Ad Choice, etc.)
Mexico is facing several challenges similar to the rest of the world related to the lack of understanding and knowledge of key digital advertising topics. Very few executives in the local ecosystem (advertisers, agencies, platforms, publishers) are well informed and prepared to face these challenges.
We work a lot in training and education, and we see the IAB Digital Media Sales Certification as a good tool that will help us raise the bar and also identify those participants that will contribute to the industry’s development.
Norway
Kenneth Eriksen, Managing Director, INMA/IAB Norway
The currency boom of the U.S. dollar, and relative decline of the Norwegian krone, will reflect a serious decline in ad spend, as measured in USD, but we will see a growth when measured in NOK.
Norway has ad spend of approximately 5 billion NOK ($575M). I predict it will take us less than five years to reach 10 billion NOK.
This growth will come from several factors combined. Money will shift from other channels because of the possibilities in mobile, data, and programmatic.
Too many disruptive changes are happening at the same time, and we have been too slow to adjust to them. New business models need to be fully shaped and the large companies that dominate the market will have to change the way they are organized, the way they work, and the skills they need to have in order for growth to happen.
Brazil
Cristiane Camargo, Executive Director, IAB Brazil
In Brazil, we are around 9.2 billion reals, which translates to about 2.1 billion USD. The first step to reaching the next 9 billion reals is education in many ways:
More reliable data: Google and Facebook do not report their numbers, yet they are among the biggest players. IAB Brazil is working hard to deliver more transparency to the market. For example, this year we will launch a research department to dive deep into this topic.
Education of the basics: There are thousands of students graduating without any basic knowledge of digital. We need to train the young to build a more prepared and professional workforce for our market.
Education for senior level management: Unfortunately (or not), Brazil is a TV passionate country! And many CMOs do not understand what it means to be out of TV. It is just a matter of time though, as we are around 45% of the Brazil population outside internet. Also, CFOs need to know more about digital marketing to deliver more ROI.
Legislation: We have laws that dictate that all media buys must go through agencies, and agencies must be paid a percentage of the media bought and sold. Since offline spaces are more profitable for agencies, they still direct more buying offline. Legislation is now under strong pressure from buyers, so maybe we will have great news in changes in this area in the next few years.
Canada
Sonia Carreno, President, IAB Canada
The next $4 billion in Canada will come from the following areas of growth: mobile, video, and innovation in standards.
The continued growth of mobile is evident as advertisers shift spend to more closely reflect time spent, and to take advantage of a platform that is location aware, transaction-capable, and the hub of social and communications activity.
Innovation is needed in the area of ad formats that adhere to the LEAN principles, i.e. cinemagraphics.
We anticipate continued strong growth in video as advertisers and their creative partners are empowered with technology and platforms that permit high quality and timely video production, (e.g. Periscope and 360 immersive content). Without the need for high cost studios, post-production facilities, and full flexibility in deciding length of content, advertisers are free to explore different ways of engaging the consumer.
In order to see this growth, there are areas that need work:
With the accelerating shift to Programmatic buying, there is a demand for supply chain transparency and integrity– implementing TAG in Canada. We need to manage through the inevitable rise of CPM due to constricted quality inventory (demand for 100% viewable impressions and much less tolerance for non-human traffic).
Ad blocking–everything from educating Canadian consumers to ensuring that publishers are doing their very best to improve the user experiences on their sites.
Other challenges include: Catching up to mobile as the platform revenue currently lags audience penetration and usage; solving for tight video ad inventory; more quality video content; continued work with policy makers in areas of privacy and security; and walled gardens’ predominance in the market hurting innovation.
Austria
Andreas Janzek, Sales Manager, Kleine Zeitung
Austria will reach its next $700 million when media buyers are convinced of the benefits of merging mobile and desktop into multi-device campaigns and thus monetizing the increased traffic coming from mobile devices, and leveraging the still dormant potential of SMEs for digital marketing.
Austria still has a very high share of traditional media with print spend of approximately 50% of total ad revenues.
Online advertising hasn’t reached its full potential yet with only a 16% market share. We need more budget shifts to digital from traditional media.
China
Chen Yong, Secretary General, IIACC/IAB China
With internet advertising revenues totaling close to $32 billion this year in China, we see mobile, data, and technology services paving the way towards the next $10 billion. Mobile is already around $3.5 billion. Industry estimates show it will reach $6 billion by the end of 2016, yet most of the ad revenue growth will come from desktop. Data and technology represent the new revenue opportunity. Industry growth will also rely on the adoption of technical standards, which is a top priority for IAB China.
A big challenge is that data remains within the walled gardens of big media companies. Unless it is available in the marketplace, it is hard for advertisers investing in technology services to utilize this data for marketing purposes.
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