Europe’s Traditional Advertisers Still Wary of Web

Traditional advertisers in Europe are still reluctant to spend money online, even though European audiences are increasing the amount of time they spend on the Web, according to a study from Jupiter MMXI.

According to the study, which surveyed 113 European advertisers in July 2001, 40 percent of the companies polled said they do not plan to spend money online during 2001. Of the remainder, 42 percent said they are planning to spend 1 to 5 percent of their budgets online. The findings come in sharp contrast to earlier Jupiter research that showed U.K. Internet users’ online time grew 20 percent during the past 12 months to 7 hours, and that 81 percent of Fortune 100 companies are now marketing online — up 21 percent from last year.

But as a result of the new research, Jupiter MMXI analysts said that European consumer brands are largely missing the potential of the Web — since they still view the Internet as an also-ran mass-market medium, paling in comparison to the reach of television.

Similarly, traditional firms risk “undervaluing the opportunities the Internet presents … if they use traditional media selection and performance criteria to evaluate the success of their campaigns,” said analyst Staffan Engdegard. Brands should apply a targeted-marketing model better suited to the dynamics of the Internet than the mass-marketing model most are used to.”

Engdegard added that a better use of Internet buys would be to purchase inventory more on the basis of how consumers use each outlet, rather than on related content — and highlighted Nestle’s recent campaign on MSN Messenger for KitKat (“Have a break, have a KitKat”) which appeals to the young, obsessive IM user. In a related way, L’Oreal tapped into Web users’ frequent searching for health and beauty information as a way to push its products to European audiences. As a result, the company rolled out sites mixing product placement with information sites.

“Brands need to develop online marketing and advertising as a distinct practice to optimize the potential of the Internet,” Engdegard said. “Whether it be through adding value, education, identifying new target groups, or even experimenting with new ideas and products, consumer brands cannot ignore the Internet. Brand owners cannot ignore online advertising if they want to sustain or increase the overall time consumers are spending with their brands.”

A report by Allegra Strategies on the new media advertising market in Britain found that increasing Internet penetration and the unique attributes of online, email and wireless formats will push new media advertising from £159 million in 2000 to £1.3 billion by 2005. Also in 2005, Allegra expects new media advertising to account for 6.7 percent of total U.K. ad revenues.

The Allegra report, which is based on 170 interviews with industry players and more than 1,500 consumer interviews, agreed with Jupiter MMXI when it said the key to the growth of new media advertising is gaining the confidence of mainstream advertisers. But Allegra predicts that mainstream advertisers will substantially increase their new media spending as they gain further evidence of tangible results and increase their knowledge and experience with new media.

Allegra found that online ad budgets can best be described as “experimental” at this point, averaging 1 to 2 percent of total ad budgets. The technology and finance sectors tend to allocate a higher percentage of ad spending to the online medium, up to 30 percent of total advertising budgets.

Nearly two-thirds (66.1 percent) of the advertisers surveyed by Allegra Strategies expect to increase their online ad spending in the next two to three years.

internet.com’s Internet Advertising Report contributed to this report.

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