Wednesday - August 16, 2000

German Online Ad Market Trails UK

Contrary to popular belief, the UK's online advertising market is Europe's largest online advertising market according to Forrester Research B.V.. This finding directly challenges the widely held belief that Germany has long been Europe's most lucrative online advertising market.

In June, all online advertising in Germany totalled DM16,230,000, and Bertelsmann was far and away the country's leading advertiser spending DM1,244,000 -- 8% of the total market. The second highest German online advertiser was Primus, spending DM473,000 Bertelsmann was also the UK's biggest online ad spender at DM565,000 in June, but its percentage of the market was far lower at 2.3%.

"The German online ad market is significantly smaller than we thought," commented William Reeve, group director of European Data Products. "German media companies and advertising agencies have greatly exaggerated the size of the market estimating that firms would spend upwards of DM500 million on online advertising this year -- but that figure will be much nearer DM300 million. In the UK, by contrast, Forrester expects online advertising spend to be nearer DM400 million."

One reason for an exaggerated sense of the German market's size lies in the assumptions that companies would launch pan-European online ad campaigns -- which have so far not materialised. Also, financial-services advertising in Germany has not been as robust as it has in the UK, where there has been fierce competition between traditional banks and online entrants to the market. While Germany has some of the same competition, its state-run banks do far less advertising than incumbents in the UK.

"Advertising is still relatively local, even on the Internet," Reeve adds. The same sort of logistical problems that stymie cross-border offline campaigns also apply to the online world. Also, the media market in Germany is small enough that estimates of the market's size came from the biggest online publishers getting together and comparing the kind of money they were spending on online ads. Their estimates were more about what everyone wanted the market to be, rather than what it really is."

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