Europe Started Slower Than The US In Embracing Internet Advertising Opportunities, But It Has Caught Up Real Fast -- In Percentage Terms Its 2007 Web Advertising Spend Is Forecast To Just Exceed The US And Gain Even More In The Years To Come

European online advertising is forecast to grow some 25% this year whereas in the US online growth rates are projected at 19%, but while the Internet’s percentage of the total advertising spend is pretty much the same for both (7.2 – 7.3%) Europe is expecting to hit around 9.4% in 2010 compared to 8.9% in the US.

Those numbers from various eMarketer and Jupiter Research reports indicate that the Internet spend rate in the US will slow appreciably this year from its usual 30%+ range, but in Europe it is still full steam ahead! In dollar terms, the US, of course, still wins hands down with around $16 billion spent last year on Internet advertising whereas for Europe it was just $6 billion.

But European advertisers are beginning to substantially increase their Internet spends, some countries more than others. In The UK, for instance, the spend proportion this year is forecast to hit near 18% according to GroupM, a media buying agency. Financial services spurred a robust 2006 UK Internet spend with the numbers up some 40%. The UK accounts for around half of Europe’s Internet spends.

But as in the US, the Internet’s advertising growth in Europe comes at the expense of traditional media. eMarketer says that Europe’s 7.3% Internet total spend this year already puts it ahead of radio. It is shooting towards 9.4% of the total spend in 2010 and that is really going to affect newspapers that will see their market share drop to 28.1% from last year’s 31.1%. Magazines will drop from 16.9% to 15.8%, but television will see a slight increase in the proportion, from 33.4% to 34.4%.

“More than half (51%) of the growth in online ad spending in Europe has come at the expense of other media, according to the Marketer’s Internet Ad Barometer report, published by the European Interactive Advertising Association.

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eMarketer forecast recently that the US 2007 total media ad spend is expected to increase by just 1.4% but the reason it is that “high” is because of Internet growth. Take the 19% Internet increase Internet out of the equation and the ad spend grows by less than 1%.

Back in Europe, not only does the UK have the largest Internet spend, but it is also the most expensive in the world. In 2006 UK advertisers spent the equivalent of $122 per UK Internet user compared to the $86 US advertisers spent per American user. eMarketer projects that by 2010 the spend per UK user will be $217 compared to $136 in France, $130 in the US and just $10 in Italy.

And don’t forget about Central and Eastern Europe, the fastest growing advertising region in Europe. According to PricewaterhouseCoopers/Wilkofsky Gruen Associates data, Internet advertising there will increase 28.6% this year and grow another 65% by 2010.

The big player will be Poland with a 44.8% share of the market followed by Russia with 32.4%.

“By 2009 Online Shopping is Estimated to Account for 8% of the Total Retail Sales in Europe” screams a headline on a new market analysis by Research and Markets. The important word there is “estimated” because the big problem in Europe today is that with so many countries and different reporting structures no one really knows how much online retail sales is really worth. The latest statistics that came out three months ago from the EC said that online sales grew 45% in 2005 from 2004! In the US we know the 2006 online retail sales figures was around $100 billion.

Be that as it may, the European Interactive Advertising Association (EIAA) says that 78% of European Internet users shop online, spending an average €750 ($975) and bought10 items in the past six months – an 11%gain.

The UK and the Nordic countries spend and buy the most goods online. The Dutch are the continent’s bargain hunters, with 54% checking comparable costs online at least once a month.

In the US, Jupiter Research says retail sales may be reaching a plateau and that the bulk of future sales growth will come from those who are already buying online. “US online retail sales will plateau at 10% to 15% of total US retail sales, barring a dramatic change in the online shopping experience that promotes an inordinate a spending shift among buyers,” according to Patti Freeman Evans, the lead author of Jupiter’s report, US Online Retail Forecast, 2006 – 2011.

Over the past three years US online retail sales grew about 25% annually, but the forecast for this year is 16%. But at the same time Jupiter’s report says that offline sales will continue to benefit appreciably from online browsing and research.

Although so much is made about Europe being one entity, it seems its online buyers still keep very much to their own country and to their own language. When they start to compare prices across borders, and make their purchases accordingly, then online shopping in Europe will have reached a true milestone.