Free online content 'is worth €100bn'

21 September 2010

BRUSSELS: The total annual value to consumers of free, ad-supported online services will hit €100bn ($130.9bn; £83.4bn) in 2010, according to new research from IAB Europe.

The study, which was conducted on the marketing trade body's behalf by McKinsey and covers Europe and the US, also suggests that this value will grow by an average 13% per year over the next five years.

In comments accompanying the results, IAB Europe praised the ad-funded, free content model as beneficial to both online publishers and online advertisers.

The study is released at a time when alternative  online monetisation models are gaining popularity among publishers.

Several popular websites, including those of many News Corporation newspapers, have gone behind a paywall in recent months.

But the McKinsey data indicate that, for each euro spent on online ads served to free websites, users get three euros worth of services in return.

Alain Heureux, the organisation's president and ceo, said: "Until today, there has been little robust and independent research into the huge value generated by the free, advertising-supported web services that we all use every day.

"McKinsey & Company's research shows that online advertising plays a strong role in enabling new services and content distribution models, as well as its traditional role in supporting the creative industries."

The report found that just one in five web users currently pays for one or more online services, with the remainder consuming free content exclusively.

It also suggested that, should all free services introduce user charges to replace the revenue currently provided by ads, around 40% of users could be so put off by the costs that they would stop going online at all.

The IAB Europe report was unveiled at the European Roundtable on the Benefits of Online Advertising for Consumers, which took place in Brussels.

Data sourced from IAB Europe; additional content by Warc staff