Market Research Shows That FMCG And Entertainment Brands Embrace The Internet

Market research released today from B2B International on behalf of the European Interactive Advertising Association (EIAA) shows that online advertising is increasingly attracting the big spenders. Advertisers forecast that online will represent a growing share of their overall media budgets over the next two years, especially within the FMCG and Entertainment sectors.

The EIAA Marketers Internet Ad Barometer, commissioned by the EIAA to understand the role online advertising plays and attitudes towards the Internet amongst key advertisers across Europe, reveals that 42% of those questioned already spend over 5% of their media budgets online and 74% of all those surveyed regard the internet as a vital component of their advertising strategy. According to 80% of respondents, increasing broadband penetration is making the Internet more attractive as a branding medium and online ad spend is forecast to rise by over 65% by 2008.

The Netherlands, the UK and the pan-European sector steal the lead in terms of predicted spend but advertisers in Spain, Italy, France and Germany are boosting their online budgets to narrow the gap.

FMCG and Entertainment Brands

FMCG brands are demonstrating strong signs that they are embracing online. The EIAA research showed that the percentage of overall media budgets devoted to online are forecast to rise from 5.6% in 2005 to 9.8% in 2008 – a massive 75% growth rate. Internet advertising expenditure will experience a boost by both the higher and lower spenders of the sector over the next two years, with the higher spenders stating that 64% of this extra spend has come from other media budgets and 57% of respondents claiming the spend has been diverted from TV advertising.

Likewise in the Entertainment sector, online ad spend represented 6.5% of overall media budgets in 2005 but is forecast to grow to 11.2% by 2008 with UK, Dutch and pan-European advertisers significantly increasing spend.

Centrally Managed Pan-European Budgets

As a pan-regional and indeed global medium online is particularly well positioned to benefit from centralised marketing strategies where specific pan-European* budgets are held separately from local budgets. The Marketers’ Internet Ad Barometer is the only study which includes a comparison of centrally managed media strategy with local strategies. Marketers managing these central budgets are also planning to spend more online, particularly within the entertainment, FMCG and travel sectors. Respondents see a 92% growth in online ad spend from 2005 to 2008 due to cost-effectiveness, scope and consistency of campaign messages.

Taking Share from Traditional Media

The EIAA research reveals that online is chipping away at the heartlands of the advertising market, especially amongst the higher spenders. FMCG companies are siphoning spend from TV advertising while Entertainment and Consumer Electronics companies are reallocating budget to online primarily from TV and print. Travel is also diverting ad spend from print while Automotive advertisers are taking share from across the media board.

Maturing Attitudes: Higher vs. Lower Spenders

The study highlighted other marked differences between those who already spend significantly online (6+% of media budget) and those who are catching up (1-5%). The lower spenders are driven primarily by increased use of the Internet while the higher spending online advertisers place greater importance on the medium’s reach and share of voice. Higher spenders are also more than twice as likely to view Internet advertising as essential to their overall advertising strategy and see online as having a greater influence on sales, intent to purchase, profitability and market share.

Breaking Down the Barriers

Measurement of the success of online campaigns has traditionally been an issue for advertisers but the study showed that this is now much less of a concern. The language and terminology used in online advertising was no longer considered to be such an issue for 64% of advertisers.

Caroline Slootweg, Director – Digital Marketing & New Media at Unilever, said: It’s important for advertisers to understand what’s happening across the media landscape and within their own sector as they monitor the progressive shift to online. Changing media consumption habits and the growing importance of digital technologies are prompting brands to review their media budgets and allocate an increasing proportion towards developing a consistent and strategic approach to online media.’?

‘This study highlights the headway that online has made in becoming an integral part of the marketing mix’? said Alison Fennah, Executive Director of the EIAA. ‘The higher online ad spenders are settling into an online strategy and steering a path for the lower spenders to follow – and this research highlights how they are catching up quick. Both groups are recognising the benefits of creative and targeted online campaigns and as confidence grows in the technologies and terminologies of the medium, so too does market share.’?

Key Findings
– Online ad spend expected to grow substantially over the next 3 years
– FMCG and Entertainment brands planning significant online spend
– Advertisers diverting spend from TV and print media to online
– Online terminology and campaign measurement no longer perceived as huge barriers

Note on methodology

The survey was conducted by telephone interviews with senior marketing executives with responsibility for advertising budgets and/or strategy within leading FMCG, Entertainment, Travel, Consumer Electronics and Automotive companies across the UK, France, Germany, Spain, Italy, Netherlands and the pan-Euro sector.

About the EIAA

The European Interactive Advertising Association (www.eiaa.net) is a unique pan- European trade organisation for sellers of interactive media. The primary objectives of the EIAA are to champion and to improve the understanding of the value of online advertising as a medium, to grow the European interactive advertising market by proving its effectiveness, thus increasing its share of total advertising investment. Its members are currently AD Europe, AdLINK Internet Media AG, AOL Europe, MSN International, Tiscali, Yahoo! Europe, LYCOS Europe and T-Online International. It is chaired by Michael Kleindl, Managing Partner of Valkiria Network. The EIAA members’ networks account for 79% of the European online audience.

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