European advertisers will use multichannel campaign feedback to set digital advertising budgets — and drive the online ad market to €6.4 billion in 2007, according to a new report by Forrester Research B.V. (Nasdaq: FORR). While Web marketing matures, mobile and iDTV will surface as ad platforms.
“To determine how marketers’ changed budgeting will affect European online ad spending, Forrester forecast Web, iDTV, and mobile advertising in 17 European countries,” said Forrester Analyst Diana Janssen. “This forecast shows that Web advertising picks up again in 2003, while advertising on mobile phones and iDTV start quietly. The UK and Germany will account for almost 50 percent of total Web advertising spend in Europe; Sweden and Norway outpace all other countries in relative terms, devoting roughly 10 percent of ad budgets to the Web in 2007. By then, Norwegian marketers will spend €36 per capita on Web ads, compared with €9 today.”
With 8.5 billion SMS messages sent in Europe every month and EMS and MMS on the way, advertisers are warming up to address consumers via mobile phones. The mobile Internet via GPRS and UMTS will boost permission-based dialogues and sponsored content. To avoid violating the phone’s personal nature, marketers will limit advertising to €633 million in 2007, 10 percent of total online ad budgets. And iDTV’s 46 percent penetration in Europe tempers total ad spend to €767 million in 2007. The UK — with more than 10 million subscribers today and counting — is Europe’s lone ranger, accounting for almost 40 percent of Europe’s iDTV ad spend.
When Forrester talked with advertisers in 2001, they were bullish about rising online budgets, yet frustrated by a lack of adequate metrics for Web marketing. Advertising heavily with banner ads, they anticipated shifting over the next three years to more varied ad formats like sponsorship, as well as to better-integrated campaigns across multiple devices. The interviewees kept their word: 30 percent will not increase the proportion of spend on banner ads. Instead, 33 percent plan to boost email marketing initiatives. The majority of marketers now feel comfortable with results-based metrics like lift in sales; only 17 percent said they would try additional metrics in the future. Today, most online ad budgets go straight to PC-based campaigns; only 22 percent of our respondents advertise via mobile or iDTV. But by 2005, interviewees plan to spend an average of 15 percent of their digital marketing budget on new devices.
“Innovative advertisers will step up a learning curve to improve the impact of online budgets by setting measurable campaign goals, testing and refining to improve ad effectiveness, and turning results into ad budgets,” Janssen added. “To get away from the ad hoc inclusion of Web advertising, marketers will first define campaign success; to create relationships with consumers, firms need insights into their wants and their needs. Based on the analysis of test results with tools like SAS, marketers will reshuffle their ad budgets to move toward a test-and-refine stage. Just a few firms will have the guts to rigorously reshape ad budgets to reflect campaign results. Such pioneers, however, will have an enormous impact over time — gaining a competitive advantage that will force traditionalist firms to follow suit. And companies that decide to wait and see will learn from pioneers’ expensive mistakes but will lose market share and waste untargeted ad euros in the process.”
For the report “Online Advertising Picks Up Again,” Forrester interviewed 30 marketers across Europe, whose overall marketing budgets average €32 million per year.