Clipperton Finance, a leading corporate finance firm focusing on tech and media, recently published a whitepaper evaluating the trends and opportunities in the online advertising space. According to Clipperton, online advertising is still going strong, demonstrating robust growth (CAGR 02 – 11 of 24%) which is expected to continue for the foreseeable future. Not surprisingly, search has been the biggest beneficiary of this growth and continues to be the leading segment with 60% of online ad spend vs 40% for display. However, the discrepancy between internet time allocation in total media time and online revenues still continues to persist, with internet of time allocation at 36% and online advertising at only 19% of total ad spending. Do they expect this to change? Yes, although according to one particularly interesting piece of info provided, some of the opportunity will be unrealisable as not all of the time spent online is actually spent on ‘advertisable’ sites. In fact, they estimate that people 1) spend approximately 27% of their time on non-advertisable sites and 2) are only receptive to ads up to 50% of the time they spend online. Undoubtedly, advertisers are aware of this and, as a result, are still apprehensive about putting a higher proportion of their budgets into online ads. Regardless, even when accounting for this decrease in addressable opportunity, Clipperton still expects global online advertising to reach €100B by 2014.
So what will drive ad sector growth and help to narrow the discrepancy gap over the next few years? Although online advertising growth has largely been driven by performance based advertising, they expect that “brand-oriented’ marketing will become an increasingly important part of the mix. More specifically, they’re anticipating that as technologies improve, even more sophisticated targeting and customisation capabilities and measuring tools will emerge. This will enable online advertisers to create tailored, highly-focused, and, ultimately, more effective campaigns that manage to result better convergance of branding and performance advertising. Clipperton highlight a few players that are likely to play an integral part in this transition, of which a good number are French, including Criteo, NextPerformance, and Ezakus in the area of Targeting, Alenty in the area of Measurement, At Internet and Weborama in Advertising Platforms, Advideum and StickyadsTV in Format: Video, and Ad4Screen in Mobile. Although many of these firms (with the exception of Criteo) are small, all are showing healthy growth and, as this paper suggests, will hopefully have an important role to play as the online ad sector continues its robust evolution.
This whitepaper is jammed packed with useful info, particularly on French and other European players in this space, so make sure to check it out here.