Online advertising in the UK

Online advertising in the UK

A report commissioned by the Department for Digital, Culture, Media & Sport January 2019

Stephen Adshead, Grant Forsyth, Sam Wood, Laura Wilkinson

plumconsulting.co.uk

About Plum Plum is an independent consulting firm, focused on the telecommunications, media, technology, and adjacent sectors. We apply extensive industry knowledge, consulting experience, and rigorous analysis to address challenges and opportunities across regulatory, radio spectrum, economic, commercial, and technology domains.

About this study This study for the Department of Digital, Culture, Media & Sport explores the structure of the online advertising sector, and the movement of data, content and money through the online advertising supply chain. It also assesses the potential for harms to arise as a result of the structure and operation of the sector.

Plum Consulting 10 Fitzroy Square London W1T 5HP T +44 20 7047 1919 E info@plumconsulting.co.uk

Online advertising in the UK

Contents

Executive summary

5

Introduction

5

Taxonomy of online advertising

6

Market size and growth

7

Value chain and roles

8

Market dynamics

11

Money flows

12

Data flows

14

Ad flows and control points

16

Assessment of potential harms

17

1 Introduction

20

1.1 Terms of reference

20

1.2 Methodology

20

1.3 Caveats

20

1.4 Press publishers

21

1.5 Structure of this report

21

2 Taxonomy of online advertising

22

2.1 Online advertising formats

22

2.2 Targeting of online advertising

33

2.3 Future developments

34

3 Market size and growth

35

4 Value chain and roles

40

4.1 Overview of the online advertising value chain

40

4.2 The development of programmatic display advertising

42

4.3 Open display market value chain

45

4.4 Programmatic trading paths

51

5 Market dynamics

53

5.1 Overview

53

5.2 The role of major US internet companies

53

5.3 Publishers and social media platforms

56

5.4 Programmatic display intermediaries

58

5.5 Media agency services

61

6 Supply chain analysis

62

6.1 Money flows

63

? 2019 Plum Consulting

Online advertising in the UK

6.2 Data flows

72

6.3 Ad flows and control points

82

7 Assessment of potential harms

86

7.1 Potential individual harms

86

7.2 Potential societal harms

95

7.3 Potential economic harms

98

Appendix A Market share data

106

Appendix B Glossary

107

Appendix C Gaps in the available data

109

? 2019 Plum Consulting

Online advertising in the UK

Executive summary

Introduction

The Department of Digital, Culture, Media & Sport (DCMS) commissioned Plum Consulting to provide an independent analysis of the structure of the online advertising sector; the movement of data, content and money through the online advertising value chain; and potential harms that can arise from online advertising. This work feeds into the Cairncross Review into the sustainability of the UK press sector and the Government's Digital Charter work programme to ensure the UK is the safest place to be online and the best place to start and grow a digital business.

The project was conducted in November and December 2018 and involved a short review of publicly available information and interviews with 24 industry stakeholders. There is limited available data about the UK online advertising market ? consequently, we have made indicative estimates of certain data, such as market shares and money flows. The online advertising market is highly complex ? consequently, we have had to generalise and simplify in order to provide this baseline research. The market is evolving at a fast pace - this report presents a snapshot of the market at the time of writing.

? 2019 Plum Consulting

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