Online ads to thrive in Europe

The European online display advertising market will grow at a 12 per cent compound annual growth rate during the next five years, kicking off with 12.5 per cent growth to around €793m in 2003.

Research from analyst Forrester forecasts that the European display ad market - defined as banner ads, sponsorships, slotting fees, interstitials and rich media - will nearly double to almost €1.4bn in 2005.

A number of factors will drive this growth, including increased broadband penetration, education efforts and simpler metrics, according to Forrester.

"Across Europe, online display advertising will make up one and a half per cent of all advertising by 2008," said Forrester senior analyst Rebecca Jennings.

"A few large territories still dominate the market, although all countries will enjoy compound annual growth rates in excess of nine per cent.

"Continued steady increases in broadband penetration, and positive overall advertising market growth, will combine to push online advertising to an average two per cent of all advertising in these markets."

Jennings added that other marketing tools like search, email, and classified ads will also drive the growth of digital marketing.

"These elements are likely to grow as fast as, if not faster than, online display ads," she said.

Forrester predicted that ease-of-use advances, like standard ad formats, are likely to make multi-site or cross-country campaigns simpler and entice novice advertisers online.

It also expects online ads to look more feasible as advertisers begin to understand their relevant metrics, and that they don't need to track everything simply because they can.

"Small-scale trials with simple metrics, like email addresses gathered and the inclusion of the online element into existing brand-tracking studies, will persuade advertisers that online can have a measurable impact on their business," said Jennings.