E-advertising in Europe to boom

03-10-2005

by Deirdre McArdle

Online advertising revenue in Europe is set to hit EUR6.5 billion by 2010 with paid search advertising dominating the market.

That's according to a report from JupiterResearch called "European Online Advertising Forecasts, 2005 to 2010," which says that in the next five years online advertising revenues will treble from EUR2.3 billion in 2005 to EUR6.5 billion in 2010.

"As European consumers across the demographic spectrum spend ever greater amounts of time on the internet, advertising investment in online media will continue to grow and the digital channel will become increasingly integrated into marketer's customer acquisition strategies," said JupiterResearch analyst Julian Smith.

By 2008, paid for performance search will lead the sector, thanks to its non-interruptive, low-risk format, according to the report. In 2004 paid search revenues totalled EUR0.6 billion compared to EUR1.1 billion for display advertising. By 2010 JupiterResearch believes that paid search will generate EUR2.9 billion accounting for 44 percent of total online advertising revenues, compared to EUR2.7 billion for display ads.

JupiterResearch also expects paid search to drive incremental growth in total advertising spend as greater numbers of small and medium size enterprises (SMEs), which are traditionally low spend advertisers, adopt paid search advertising.

Looking at the various markets in Europe, the UK is identified as the largest online advertising market, accounting for 39 percent of total revenues in 2004 with EUR0.9 billion.

Meanwhile, the report expects the football 2006 World Cup to have a positive effect on online advertising in Germany; the market is predicted to grow at a compound annual growth rate of 22 percent to 2010 spurred by massive investment in 2006.

In the US too online advertising is booming. A report at the end of September by the Interactive Advertising Bureau revealed that online advertising revenue for the first six months of 2005 reached USD5.8 billion, setting a record and resulting in a 26 percent jump over the same period in 2004.