Online Ad Spending
Though the final tally must wait until early next year, eMarketer expects UK online ad spending to show hard-won gains in 2009 and regain momentum in 2010 and beyond.
Throughout Europe, the recession has helped increase the sophistication of Internet marketing. The 2009 Marketers’ Internet Ad Barometer, prepared by the European Interactive Advertising Association (EIAA), found that 84% of respondents in 16 European nations were satisfied with the performance of the Web as an advertising medium. In most countries, digital media budgets will recover modestly in 2010 and allow online marketers to make even better use of their skills. Judging by the declared plans of marketers quizzed by the EIAA, aggregate online ad spending in those countries will rise almost 8% in 2010.
E-Commerce
Europeans are shopping online as never before. Yet the margins of most mainstream online retailers in the region will shrink further in 2010, as shoppers continue to demand value and inefficiencies are punished. In the UK—still struggling to emerge from recession—the e-commerce sector will consolidate in the short term, and the biggest merchants will tend to see the best results.
As economic revival speeds up in France, Germany and most Western European markets, more retailers will venture online for the first time. The number of Internet buyers will rise more slowly. In Eastern Europe, online shopping is less advanced and there is more room for rapid growth in buyer numbers. But most of these nations still face months or years of economic stress, making retailers wary of substantial investment in Internet storefronts.
Mobile: Year 2
2009 was the first genuine year of mobile. As we anticipated, more widespread and sophisticated use of SMS and MMS led to excellent campaign and customer service results for many brands, including Marks & Spencer, First Direct and Visa Europe.
In 2010, the iPhone will continue to revolutionize mobile device use, Web access and mobile marketing in Europe. Many initial deals that licensed iPhone sales to a single operator in individual countries are coming to an end, enabling millions of people to upgrade without switching providers. (According to MarketWatch, Orange sold 30,000 iPhones in the UK on November 10, the first day they were available through this operator.) Competition between operators should mean better prices and contract terms for iPhone owners. Even the retail giant Tesco has announced plans to sell iPhones—a move likely to give the market a major shakeup.
Meanwhile, Nokia, Samsung and other handset makers are playing catch-up. The number of customizable mobile devices that provide convenient, sexy access to multiple functions (including the Web, music, video and social networks) will continue to grow. Advertisers—especially those targeting affluent, younger consumers—can be assured of expanding mobile audiences, and mobile budgets will rise as marketers vie to impress. That said, the world is waiting for mobile campaigns that do more than offer a discount voucher when the phone owner comes within 100 meters of a fast-food outlet. Engagement and retention are key.
For that reason, the explosion of mobile apps will continue. Only genuinely useful apps, such as those tied to local search, will deliver ROI in the long term, however. Hundreds of others will fall by the wayside in the coming year.
Paid Content
Premium content owners throughout Europe will be tempted to follow Rupert Murdoch’s News Corp. and charge (or charge more) for access to their most valuable material. Among those opting to impose fees, subscription-based business models will triumph over micropayments, at least until micropayment mechanisms become as quick, transparent and familiar to consumers as an online subscription purchase.
But many Web users will simply avoid sites that charge, and find content elsewhere. Rivalry between free and restricted sites will intensify, as both look for better ways to monetize their assets. Some industry observers have speculated that paying subscribers may be more valuable to advertisers than non-paying site visitors, and that site owners can raise ad rates accordingly. But this view—familiar from the heyday of print publishing—may not be borne out online.
Major television broadcasters will also have a tough year in 2010. They too are considering charging for prime content distributed on digital channels, such as catch-up viewing of popular shows, as well as other video-on-demand services and access to archive material. Even the BBC, cushioned by the license fee, needs to save money. On November 24, 2009, the BBC Trust revealed that a review of the Corporation’s online portfolio may result in closure of Websites that are not considered “essential to the BBC’s mission.” But on the same day, the BBC announced that it had no plans to charge for news online. In the long term, broadcasters will enjoy better prospects than print content owners, because their material is less easily duplicated and often generates greater loyalty.
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Check out today’s other article, “Integrating E-Mail and Social Media.”
Next week, look out for predictions from eMarketer’s co-founder and CEO, Geoff Ramsey.