The Evolution of the Content and Digital Media Ecosystem: Online Media and Advertising

Rory Murphy
The Evolution of the Content and Digital Media Ecosystem: Online Media and Advertising


Part 2 of a 4-part series

The content and digital media sector continues to grow at a rapid pace and is making companies look closely at the platforms that support their businesses. Working with specialist research company, IHS Screen Digest, Equinix examined how the industry is changing.

In part 2 of our blog series, we examine how advertising is driving much of the value of the online content sector.


The online media and advertising sector is one such area which has seen rapid growth over the last few years. A drive for diversification of revenues away from the stagnating traditional TV advertising and publishing landscapes has helped to stimulate growth in the online advertising world.

Accompanied by better addressability and measurement systems, favourable demographic usage, and new advertising formats, online advertising was worth €12bn in net revenues across UK, Germany, France, Netherlands and Switzerland in 2011, and we expect this to rise to an aggregate €15bn by the end of 2014.

While much advertising revenue is locked up within search advertising – Microsoft and smaller search providers – display advertising is seeing growing spend. Newspaper sites, online video services and even retailer websites are all contributing to increased marketer spend in the online display sector.

Emerging technologies such as real-time bidding are helping to accelerate the value of the display advertising sector. Real-time bidding allows marketers to bid, in real-time, for a web user’s attention.

Web users are segmented based on the site they’re visiting, their past browsing history and other factors, and marketers compete to place adverts around content which these users are viewing, based on pre-set criteria which match the user characteristics.

Like financial trading, real-time bidding is a high-frequency trading mechanism and fast, reliable connections are important for bidder positioning.

While a relatively small proportion – circa 15 per cent – of the online display advertising market is now trading through real-time bidding, the advantages provided by the technology – largely increasing the monetisation of existing inventory – mean that it is an attractive solution for publishers.

Much has been made of the growing consumption of video content via the Internet , and although there is a great deal of hype surrounding usage that still only represents just a few percent of total TV viewing, most major TV companies now have online video services of some form.

The vast majority of public service and key commercial broadcasters in Europe have their own online catch-up offers, providing access to programming 7-14 days post-broadcast. It is these services which are driving both consumption of online video, and the bulk of the value of the online video sector through advertising.

IHS Screen Digest estimates that in 2011, online TV services generated €0.5bn in revenue across the major Western European markets, and anticipates a further 35 per cent growth through 2012.

Nonetheless, there are challenges for the sector to overcome if the medium is ultimately to replace traditional TV.

Fragmentation of end-user devices is one of the current hurdles faced by the sector. While organisations such as the BBC have the resources to optimise their online services to ensure they are available on a wide range of different consumer devices, other more commercially-minded companies are having to prioritise development for a smaller number of the more popular devices.

Standards may provide one solution for this issue, with initiatives such as HbbTV allowing content companies to develop services which simultaneously meet the specifications of multiple devices, while at the same time, third party providers of online video platforms such as Brightcove are developing solutions which manage delivery to a wide range of different devices.

Coming up in part 3: How Online Games and Gambling are Evolving