European Online Display Market To Double By 2008

Forrester defines online display advertising as banner ads, sponsorships, slotting fees, interstitials and rich media. The combined revenue from these formats is expected to grow at a 12% compound annual growth rate (CAGR) for the next five years. Key drivers of this growth are increase broadband penetration, further internet ‘education’ and simpler advertising and audience metrics.

By 2008, online display is expected to contribute 1.5% of all advertising spend across Europe. The three largest markets will remain the UK, Germany and France, with a combined spend of â‚Ź900 million, or 2% of all advertising in those regions.

Forrester forecasts that the fourth and fifth largest online ad markets will account for almost â‚Ź200 million in 2008. Italy will experience a particularly high CAGR of 12.7%, driven by high broadband growth; Sweden’s relatively high overall ad market growth and optimistic economic outlook will drive online display ads to nearly â‚Ź75 million by this time.

The remaining 12 European countries in the report will contribute 15% of the European online display ad market in 2008. Some countries, such as Greece and Ireland, have yet to experience the headlong rush online that the more mature markets experienced in 1999 and 2000. These laggards exhibit the high CAGR typical of new and emerging markets.

Other countries, like Finland, will experience continued significant growth but, due to the overall size of their economies, remain below â‚Ź20 million markets.

European Online Display Advertising Forecasts (â‚Źm)
	2002	2003	2004	2005	2006	2007	2008	2003-2008 Growth (%)
Austria	7	8	9	10	11	12	13	62.5
Belgium	7	8	9	10	10	11	12	50.0
Denmark	13	15	17	18	20	22	24	60.0
Finland	8	9	10	11	13	15	17	88.9
France	150	169	191	208	229	248	273	61.5
Germany	154	173	199	222	247	270	297	71.7
Greece	1	1	1	4	10	15	25	2400.0
Ireland	2	2	3	5	6	8	10	400.0
Italy	60	67	75	84	94	107	122	82.1
Luxembourg	1	1	1	2	2	2	3	200.0
Netherlands	23	26	29	30	34	37	40	53.8
Norway	17	19	22	25	28	31	35	84.2
Portugal	6	6	7	8	8	10	11	83.3
Spain	24	27	30	33	37	41	48	77.8
Sweden	40	45	52	57	62	68	74	64.4
Switzerland	20	22	25	27	29	32	35	59.1
United Kingdom	174	196	227	253	281	306	336	71.4
Total	705	793	907	1,005	1,122	1,233	1,375	73.4
Source: Forrester Research, November 2003

European Online Display Advertising Percentage Growth Forecasts
	2003	2004	2005	2006	2007	2008
Austria	14.3	12.5	11.1	10.0	9.1	8.3
Belgium	14.3	12.5	11.1	0.0	10.0	9.1
Denmark	15.4	13.3	5.9	11.1	10.0	9.1
Finland	12.5	11.1	10.0	18.2	15.4	13.3
France	12.7	13.0	8.9	10.1	8.3	10.1
Germany	12.3	15.0	11.6	11.3	9.3	10.0
Greece	0.0	0.0	300.0	150.0	50.0	66.7
Ireland	0.0	50.0	66.7	20.0	33.3	25.0
Italy	11.7	11.9	12.0	11.9	13.8	14.0
Luxembourg	0.0	0.0	100.0	0.0	0.0	50.0
Netherlands	13.0	11.5	3.4	13.3	8.8	8.1
Norway	11.8	15.8	13.6	12.0	10.7	12.9
Portugal	0.0	16.7	14.3	0.0	25.0	10.0
Spain	12.5	11.1	10.0	12.1	10.8	17.1
Sweden	12.5	15.6	9.6	8.8	9.7	8.8
Switzerland	10.0	13.6	8.0	7.4	10.3	9.4
United Kingdom	12.6	15.8	11.5	11.1	8.9	9.8
Total	12.5	14.4	10.8	11.6	9.9	11.5
Source: Forrester Research, November 2003

The UK’s online display revenue is expected to rise from â‚Ź196 million in 2003 to â‚Ź336 million by 2008, an increase of 71.4% over the period.

“Crucially, other marketing tools like search, email and classified ads also drive the growth of digital marketing. These elements are likely to grow as fast as, if not faster than, online display ads,” says senior analyst Rebecca Jennings.

Search marketing will account for 27% of digital marketing spend in 2003 in the US. “Search marketing, which advertisers can trial for around â‚Ź100, provides a safe test bed for novice online advertisers; many of them will then gradually parlay these positive experiences into spend on display ads,” says Jennings.

Education and standardisation Forrester says that efforts on the part of publishers, portals and industry representatives – like the Internet Advertising Bureau – that teach advertisers and media buyers about the advantages of online ads are beginning to pay off. These efforts are expected lure both small and large advertisers online over the next few years.

Alongside this education there have been ongoing efforts to simplify advertising formats and metrics. Standard formats will make cross-country and multi-site campaigns easier, which should also entice new advertisers online.

“Finally, online ads will look more feasible as advertisers begin to understand what the relevant metrics for them are and that they don’t need to track everything simply because they can. Small-scale trials with simple metrics like email addresses gathered and the inclusion of the online element into existing brand-tracking studies will persuade advertisers that online can have a measurable impact on their business,” says Jennings.