Estimate of total EEA market size based on a combination of different sources, including IAB, Jupiter, Enders, OVK, Zenith, Gemius (Europe) and PwC, taking for each country the highest market size estimate available from any of these reports, with corrections for those countries in which Google’s 2006 search revenues exceed the size of the search segment as reported by Jupiter.
The notifying party's estimate was actually made for the total non-search market segment, not only including contextual and display ads, but also classifieds and e-mail. The notifying party estimated this broader non-search market segment to have a size of EUR 5.6 billion. For the division of the total online advertising market into search advertising and non-search advertising, the notifying party referred to Jupiter data, according to which search advertising accounts for 41%, classifieds for 14% and display ads for 42% of this market. Therefore, when excluding classified ads, the parties' estimate of the non-search segment results in a total market size of EUR 4 billion.
The market reports available to the notifying party are those produced by Jupiter, Zenith, Enders, IAB search, PwC, OVK, Nielsen, Forrester, Adex, Gemius and Emarketer.
The notifying party estimated the value of the total EEA online advertising market in 2006 at approximately EUR 9.8 billion14, of which online search advertising accounted for EUR 4.1 billion and online non-search advertising (contextual and display ads) accounts for EUR 4 billion15. This estimate of EUR
billion for the size of the total online advertising market significantly exceeds the 2006 market size reported by all available third party studies or reports16. The market size reported by third party reports varies between approximately EUR 5 billion and EUR 8 billion. The notifying party has maintained that most, if not all, available market reports suffer from a common flaw as they consistently underestimate the size of the online advertising industry, noting, in particular, that they only cover a limited number of EEA Member States and that for some of the reported countries there are other market studies which report a significantly higher market size. Moreover, in a number of countries, Google's search advertising gross revenues exceed the total search advertising market size estimated by at least one market report17.
However, the Commission has not been in a position to fully verify the notifying party’s arguments in this respect in the course of its market investigation. Therefore, as a reasonable alternative to the parties’ submissions, in the present decision the Commission has taken a more realistic approach and used the market size of EUR 8 billion reported by PWC in a study commissioned by IAB Europe18. This report covers a large number of European countries and appears to be based on plausible methodological assumptions. If the IAB figure were to correctly reflect the total size of the EEA online advertising market in 2006, search advertising would represent EUR 3.2 billion19 and non-search advertising
Jupiter report. Other market reports do not distinguish between search and non-search advertising.
“European Internet Advertising Expenditure Report 2006”, A report prepared by PwC for IAB Europe.
According to the IAB report, the search advertising segment accounts for 45% of the total European online advertising market. However, with regard to Google, IAB could not separate search and non- search revenues because, when passing on revenues to advertiser members of AdSense, Google does not distinguish between revenues from sales through AFS (intermediated search) and revenues from sales through AFC (intermediated non-search or contextual ads). The percentage of 45% for the search segment reported by IAB thus includes Google's (intermediated) sales of contextual ads. The correct size of the search segment according to IAB is therefore 40% of the total online advertising market of EUR 8 billion