Spending on online marketing in Europe will double in the next five years, from around ¿7.5 billion in 2006 to more than ¿16 billion in 2012, according to a new report by Forrester Research, Inc. (Nasdaq: FORR). In five years, online marketing ¿ including email, search, and display advertising ¿ will represent 18 per cent of total media budgets. The forecast is based on data from Forrester¿s Consumer Technographics® surveys of more than 25,000 consumers in France, Germany, Italy, the Netherlands, Poland, Spain, Sweden, and the UK and interviews with 24 major European marketers.

The reason for this shift in spending is simple enough: audience and attention are moving online. According to Forrester, 36 per cent of online Europeans say that they watch less TV because they¿re online. And trust in many types of advertising is eroding: 67 per cent of online consumers believe that advertisers don¿t tell the truth in ads. At the same time, online consumers don¿t seem adverse to the kind of targeted advertising that the online channel can deliver: 34 per cent of online consumers say they don¿t mind ads if they relate to their interests; 40 per cent trust price-comparison sites; and 36 per cent trust online product reviews from other users. This opens the doors to new online marketing forms like word of mouth, email campaigns, and blog advertising.

¿An expanding interactive marketing universe doesn¿t just mean more budget,¿ said Forrester Research senior analyst Rebecca Jennings. ¿Over the next few years, the shift of online marketing from experiment to mainstream will force marketing organizations and processes to change. As different types of social media like MySpace and peer reviews strengthen their grip on users, expect marketers to jump on the bandwagon by switching ad spend to social media forms like RSS, blogs, and networks. The recent rash of acquisitions within the online marketing space ¿ such as Microsoft¿s acquisition of aQuantive and Google¿s purchase of DoubleClick ¿ presents marketers with easier routes online through integrated media operations and will drive up spend and innovation.¿

Highlights from the report include:

  • Overall marketing spending is growing again in Europe in 2007 after several slow years. 54 per cent of companies have set their 2007 budgets higher than their actual spend for 2006.
  • Online display advertising remains universally popular, with almost all of the interviewees using banner ads.
  • Most interviewees use paid search, with 17 paying agency fees in the process. This is due to a good return on investment (ROI), a need to follow the general trend, and a desire to do more targeted marketing
  • Spending on display advertising ¿ for example, banners, buttons, and pop-ups ¿ will grow from ¿2.5 billion in 2006 to ¿5.6 billion in 2012. As the number of European consumers with home broadband access rises from 47 million to 83 million over this period, existing Internet advertisers will ramp up their spend, expanding into new formats such as rich media.

The report ¿European Online Marketing Tops ¿16 Billion In 2012¿ is currently available to Forrester RoleView¿ clients and can also be purchased directly at: http://www.forrester.com/Research/Document/0,7211,41451,00.html