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Europe Paves the Way for Global Web Ad Spending Growth

  |  December 5, 2007   |  Comments

Online ad spending growth in Western Europe is poised to be far more accelerated than in the U.S., and substantial growth also is expected in Russia.

Forecasts released by ZenithOptimedia earlier this week suggest Internet ad spend growth over the next three years will be spearheaded by European activity.

The report predicts by 2010, Internet ad spending in North America will have reached a figure in excess of $24 billion. That represents an increase of more than 40 percent from 2007's $17 billion spend.

In Western Europe however, the Web ad growth is poised to be far more accelerated. Spending is forecast to increase by around 95 percent, leaping from just under $10 billion in 2007 to almost $20 billion by 2010. This European growth will be driven largely by the U.K. market, which will account for $8 billion of the region's expected $19.5 billion spend.

Anne Austin, Senior Publications Executive at ZenithOptimedia cited Internet penetration as a possible reason for this rapid growth. "There is more scope for increasing penetration in Europe than in America over the next few years," stated Austin. "This will attract more advertising as the potential audience grows."

According to internetworldstats.com, at of the end of September 2007, EU countries had a total Internet penetration of around 54 percent, compared with about 70 percent in North America.

The regions with by far the largest expected online advertising revenue growth as the decade comes to a close are Central and Eastern Europe. Although relatively modest in dollar terms, Zenith predicts spending will exceed $1.5 billion by 2010, representing an increase of more than 170 percent over 2007's $573 million.

This substantial growth is expected to be driven largely by a booming Russian market. Russia alone is expected to see around $728 million spent on online advertising in 2010, accounting for almost half of the projected Web ad revenues for the region.

"The explosion in Internet ad spend in Central and Eastern Europe is reflective of especially rapid growth in the wider advertising markets there," said Austin. "What we are seeing is a large number of relatively young markets booming off a comparatively low base."

Alex Marks, head of U.K. marketing for Microsoft Digital Advertising Solutions supported this view, noting, the figures "basically reflect the maturity of the online ad market in these regions." He added, "The base figure from which the growth is predicted is of course highly relevant. One hundred seventy-three percent growth of a small amount is not as significant an indicator of health as 43 percent or 95 percent growth in established markets."

Still, Western European ad spending is set to account for a greater share of overall spending than in the U.S. According to the ZenithOptimedia numbers, in 2007 online represented 9.3 percent of the total Western European spend, and 9.1 percent of the North American spend. By 2010, the company predicts online will command a greater portion of advertising budgets in Western Europe than it does North America, accounting for 15.7 percent compared to 11.8 percent of total media ad spend, respectively.

Austin suggested the boom in online advertising in Western Europe could potentially be explained by regulation, or rather a lack of it.

"Advertisers in Western Europe really do seem to have taken to online advertising in a big way, and it may be that it is not yet as heavily regulated in other media." She continued, "For example, there was some evidence that a considerable proportion of 'junk food' ad budgets switched from TV to online in the U.K. when the government introduced its ban on TV advertising of 'junk food' to under-16s."

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ABOUT THE AUTHOR

Jack Marshall

Jack Marshall was a staff writer and stats editor for ClickZ News from 2007 until August 2011. 

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