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Digital Strategy Consulting

Digital Europe
Tracking the growth of online marketing spend
Digital Insight Report
Spring 2006

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Lead analyst for this report is Danny Meadows-Klue.

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European online advertising breaks €4bn
That's our conclusion from talking with trade associations that have been tracking online advertising spend in 14 markets across Europe. By collating evidence from national IABs, it's clear that online is changing the face of marketing across Europe.

Since 2000 the web has become established as a mainstream consumer media channel, and across the continent marketing budgets have now followed audiences. The Digital Europe tracking study provides a snapshot of where the industry is today and directs you to national IABs for more information.

There's a summary of the key findings in this briefing, and a link for you to download the report. If you have questions and would like to join us on an analyst's conference call to discuss the findings, then email me back.

Best regards from all here at Digital,

Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting

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"Strong growth in every European market, but a complex picture of different national experiences"

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Tracking the growth in online advertising

The big switch to bringing online advertising into the mainstream media mix continues across Europe. This new research - which includes collated forecasts from IABs across Europe - reveals European online advertising spend comfortably broke €4bn in 2005 for the first time (a total of €4023m for the markets surveyed).

In some markets more than 5% of the country's spend on advertising already goes into online, and the proportions continue to grow as more and more firms discover the power of web advertising as both a branding and direct marketing medium. With audiences across the continent spending 15% of their 'media time' online, it's no wonder that marketers are turning their attention to the web. But this is about more than having a successful website. Online marketing can support every aspect of a customer's journey - from the early stages of raising awareness of a brand, through the sale itself, and into the after sales service.

Market share
The market share of online vs. other media is the most revealing way of seeing how the use of digital has advanced.

Across Europe share is rising, and the rate varies from just under 1% to 6% in the more mature markets.

Search engine listings have become the new customer acquisition tool, but alongside them dozens of other online advertising formats are also driving the growth. A new generation of web banners are using sophisticated 'behavioural targeting' techniques to learn about the viewer's interest and provide tailored messaging, television-style commercials can now easily be rebroadcast online, the creative power of the 'rich media' formats are taking commercial messages across the whole web page, affiliate marketing is extending the reach of online retailers and giving customers more choice - there are formats and models online that will satisfy any marketing objective.


Strong growth; a patchwork of markets
Europe's markets are all growing rapidly, and are generally following along a similar path in the widespread adoption of interactive advertising by marketers. Each country is at a different stage in that journey. However, each market also has its own unique experience of how online is being incorporated into the media mix, and which client sectors are championing its use.

Online audience
As the price of broadband connections comes down, the proportion of each national population that has online access has risen rapidly, creating a massive shift in media focus and consumer media consumption throughout Europe.

A €4bn market? Probably more
The research collated here suggests Europe's marketers spent around €4bn in online advertising during 2005. It's worth remembering that data were not available for a few countries, and that many of the 2005 predictions are simple cautious doublings of the first half year reported figures. This means Digital Europe should only be used to give a general picture of the landscape. On balance the total market size is likely to be significantly greater than €4bn.

Europe's online advertising pie
By extrapolating the available figures to create a conservative estimate of each market's year spend for 2005, it's clear that the three top tier markets continue to dominate.

The UK remains the largest market, but with the French market data based on ratecard, direct national comparisons are difficult.

About the Digital Insight Report series

In times of huge economic and technical change, knowledge becomes a critical success factor. We created the Digital Insight Reports to bring you insights from a particular part of this fast changing industry.

They are independent perspectives on key issues in doing business or marketing in the digital networked economy, and are published monthly. We also publish similar Digital Thought Leadership interviews and Digital Book Club reviews to share the ideas and thinking of some of the people and companies shaping the digital networked world. These often accompany our own talks and training workshops because knowledge and training can unlock the potential of your team.

Our thanks

Getting clear and accurate data on a young and growing industry is always a challenge. We would like to thank all of the national IABs and partner trade associations that helped by providing data. Although Digital Europe is a clear snapshot of where each market currently is, in the report we draw your attention to the differences in methodology and counting each country uses, which prevents a perfect like-for-like comparison. The next edition of Digital Europe is planned for the Autumn.

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