Digital publishers report 14% lift in ad revenues

The online growth in video, recruitment, sponsorship and display advertising helped UK publishers achieve 14% growth in the second quarter of 2013 compared to the same period the previous year, according to a new report by the Association of Online Publishers (AOP).

Tim Cain: head of research at the AOP
Tim Cain: head of research at the AOP

The AOP Digital Publishers Revenue Index Report (DPRI), carried out by Deloitte, is complemented by the AOP Sentiment Index Report. It records publisher sentiment for the coming quarter, showing a strong emphasis on moving away from cost cutting and towards the introduction of new products and services in Q3 2013.

A total of 65% publishing respondents reported positive total advertising growth in the second quarter of 2013, with only 3% reporting negative growth.

Video continues to grow

Online video continues to be the fastest growing advertising format for digital publishers, up 21% year on year. Sponsorship and recruitment continue to perform well, both up 15%. Display grew 12%, while classified advertising revenues were flat during the same period, having previously been in decline during the same period for 2012 versus 2011.

As far as recruitment spend is concerned, the online classifieds category experienced its largest quarterly year-on-year growth since the DPRI began.

Tim Cain, head of research at the AOP, said: "The second quarter ad revenue growth performance reiterates that seen for the first quarter. Once again premium content publishers' performance continues to exceed the online industry as a whole.

"We also see a notable shift in publisher sentiment in the second quarter of 2013 versus the first, away from cost-cutting and towards investment in new products and services, indicating a positive outlook for the coming quarter."

The AOP DPRI Report, carried out by Deloitte, is complemented by the AOP Sentiment Index Report, which questions AOP board members on how they anticipate the market to perform over the coming 12 months.

Ad growth priority number one

Notably, 92% of AOP board members expect growth in digital advertising spend this quarter (Q3 2013) with 92% selecting 'Advertising revenue growth' as the highest priority for their business over the next 12 months, maintaining the same level of positivity reported in Q2 2012.

Cost reduction was seen as the highest priority for only 33% of publishers surveyed, down from 46% in Q2 2013. Conversely those prioritising the introduction of new products and services to their business grew from 42% in Q2 2013 to 67% in Q3 2013.

Howard Davies, Deloitte media partner, said: "Looking ahead, the vast majority of digital publishers expect to see further advertising revenue increases across sectors over the coming quarter. We believe that this sustained growth reflects the investment made by premium publishers in the quality of their inventory, adoption of new trading approaches, and the continuing appeal of high quality editorial content."

There was a large uplift in expectation of technology advertising spend, potentially driven by competition in the device arena. Of those surveyed, 33% of publishers expected to see a rise in technology advertising spend over the next 12 months, the highest of any sector.

Positive outlook

Confidence among digital publishers remains significantly higher than the average seen throughout wider industry.

The latest Deloitte CFO Survey polled 135 CFOs of major UK companies, across different sectors, to gauge corporate optimism.

Those taking part in the AOP Sentiment Index were found to rank 24% points higher than the cross-industry CFO group when asked if they felt more optimistic about their company's finances now than they did three months ago.

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