Multichannel Online-Ad Growth Predicted for Europe

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Online advertising in Europe will skyrocket over the next five years from $1.5 billion to $4.2 billion, according to a report by global research firm Yankee Group, Boston.

But the report urged advertisers, creative agencies and content developers to shift their focus from banners toward the "multichannel interactive market." Banners are projected to decline from 53 percent of ad spending in 2001 to 40 percent in 2006.

The report said the growth of e-mail marketing would account for much of the move away from banner ads but warned that e-mail was a transitory form that would encounter consumer resistance as "annoying and intrusive."

European markets show "a relatively balanced emergence of fast-growing, different platforms," said Scott Smith, Yankee Group's London-based director of Internet strategies, Europe. "Digital TV is becoming big in the UK. The mobile Internet is growing faster than in the U.S."

Advertisers should "look to tie the different platforms together rather than focusing on only one medium," he said.

"Europe is already in the early stages of penetration on non-PC platforms such as mobiles and interactive TV," he said, "so the ground is staked out and advertisers can strike up an early relationship with operators providing different platforms."

The user base for this technology is growing more rapidly in Europe than it is in the United States, in part, Smith said, because European markets haven't reached the saturation found in the United States.

"There's still a tremendous slack in getting users online, with dropping access prices an underlying driver that will have a snowball effect in growing audiences," he said.

Consolidation of portals is another such driver that may be bad for niche sites but "good for the medium overall because it concentrates users in certain areas and provides stability," Smith said. "Europeans like the recognizable and the safe. Generally speaking, they are not as risk-happy as we are."

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