Today, more European consumers are embracing the web to not only search for information, but also to purchase product.

By Nicola Delasalle

European Online Users
Ranking	Country	Internet users	% of Population (penetration)	% of Users in Europe
1	Germany	50,471,212	61.2%	20%
2	United Kingdom	37,600,000	62.3%	14.9%
3	France	30,837,595	50.3%	12.2%
4	Italy	30,763,940	51.7%	12.2%
5	Russia	23,700,000	16.5%	7.5%
6	Spain	19,765,032	43.9%	7.8%
Source: Internet World Stats 2007

Europe now holds a significant portion of the global Internet users and its strong economy and high broadband penetration promise a great sales platform for marketers. However, the concentration of Internet users and in particular broadband adopters seems to be limited to a handful of countries. Understanding the successes and failures of these countries could be key for the further development of the Internet and its sales potential across all European markets.

According to a 2007 report conducted by Nielsen Research, the number of Internet users in Europe totals 314,792,225, which penetrates 38.9 percent of the population and represents 28.3 percent of the world usage. The largest number of Internet users, however, lay in a small number of countries, namely Germany, the United Kingdom, France, Italy, Spain and Russia.

Across the five largest European Union countries--France, Germany, Italy, Spain and the U.K.--eMarketer has estimated that there will be 136.1 million people online this year. The research firm also estimates that advertisers will spend $7.5 billion to reach all Western Europeans, indicating an increase of 25 percent from the $6 billion reported last year. Online sales in Europe are predicted to have reached $97 billion during 2006.

Broadband penetration also has seen an increase with Western Europe leading the world in terms of the percentage of broadband subscribers.

THE U.K. CAPTIVE AUDIENCE - LEADING THE WAY
The U.K. is the largest online advertising market in the world. eMarketer reports that the Internet accounts for as much as 18 percent of all media spending in the region this year. In addition, the Internet Advertising Bureau (IAB) shows that ad spending on the Internet has overtaken radio advertising and is also set to overtake national print.

It is widely observed that Britain has become Europe's leading Internet economy due to strong consumer purchasing and low-cost connectivity, compared to other areas of the world.

Telecommunication companies have lowered their operating costs and this has encouraged an increasing number of British Internet users to upgrade to a broadband Internet connection. Britain now has the fifth largest broadband population in the world, and ranks ahead of Germany and France, according to a March 2007 report by Internettrends.org.

Speedier connectivity means that Brits are spending a greater amount of time online. Internettrends.org reports that approximately 47 percent of U.K. households have a high- speed connection, and it is estimated to reach 77 percent (20 million households) by 2011.

Research also indicates that the British population feels more confident in transacting online, with 32 percent of all consumers having made at least one purchase on the Internet.

The web, according to Topic, a U.K.-based Internet research firm, is being used for a variety of purposes--from purchasing products, conducting business research, making price comparisons, looking up weather, health, financial and legal information, and participating in community sites.

Not only is the web used for a multitude of purposes, it seems to transcend generations with 24 percent of the users over the age of 50. A recent poll even indicated that the Internet is more popular among pensioners than gardening.

EUROPEAN GROWTH
Despite a growth in broadband adoption last year across Europe, the rate of growth was noted to be slower than previous years, as reported by the European Competitive Telecommunications Association.

According to a recent Infoworld article, Denmark, Belgium, France, Spain, Sweden and Austria all experienced slower growth in broadband adoption. In contrast, Germany experienced a surge in broadband penetration.

Venture capitalists are, however, seeing the long-term potential of Internet companies and marketing on the web. In a January 2007 article published in the Financial Times, funding at the early stage of business has increased more than 300 percent from GBP 24 million in 2005 to GBP 79 million in 2006, according to venture capital fundraising company, First Capital.

Although these numbers appear small in comparison to global figures, Ernst & Young estimated investment to be $32 billion in 2006, highlighting a potential for substantial growth in this market. Many of these investors appear to be U.S. venture capital companies.

London is Europe's biggest wireless Internet place. The latest network to be turned on--built by Europe's leading wireless network operator, The Cloud, in conjunction with the city of London--covers the entire core of London, known as the Square Mile.

Compared to its Western European counterparts, France has lagged behind in both computer and Internet adoption. However, due to deregulation, France has become one of the most competitive of the European markets among Internet providers. Three major companies are currently competing to lay fiber-based broadband, according to Jupiter's Ian Fogg. They need to ensure that as many people as possible opt to buy a computer and broadband to ensure cost efficiency.

In the 1990s, Minitel, a French government-sponsored company, produced a mini computer with a limited service offering, slow connection speeds and a black-and-white screen. Since the advent of the Internet, this has become nearly extinct. Recently, however, Neuf Cegetel has developed a computer with the same low-cost approach to encourage those who cannot be persuaded or cannot afford a computer. For as little as ¬ 39.90, customers receive a small white computer roughly the same size as a toaster. For an additional ¬ 29 the consumer can purchase a keyboard, mouse and camera, and for ¬ 99 more they can receive a 14-inch color monitor, according to an April International Herald Tribune article by Thomas Crampton.

Neuf's decision to build a cost-effective computer will help drive efficiencies and cover the cost of laying fiber-based broadband. Neuf, citing consumer problems with Microsoft Windows, has opted to build its own platform to reduce these issues and encourage ownership.

One of the key factors slowing broadband adoption seems to be lack of competition. Paul Meller of IDG News Service, suggests that Europe's position as a world leader in broadband will be hindered if regulators don't open up the market allowing more competition and, according to SPC Network, enabling a further 20 million broadband lines.

TV, INTERNET MERGE
With increased broadband acceptance (especially in Western Europe), more television programming is being shown on the web, blurring the line between offline and online content.

Apple is expected to enter into the European online video market. Competitive companies are watching Apple's every move, knowing the growth potential in this area. The global online video market is expected to grow to an $11 billion per year business by 2011, according to the International Herald Tribune.

Online Spending by Country
Country	Average number of items bought online	Amount spent online
United Kingdom	18	¬ 1201
Denmark	11	¬ 1159
Germany	10	¬ 521
Sweden	9	¬ 1013
France	8	¬ 509
Norway	7	¬ 1406
Netherlands	7	¬ 681
Italy	7	¬ 454
Belgium	6	¬ 790
Spain	5	¬ 452
Source: European Advertising Association. January 2007, in a survey of 7,000 participants.

In the U.K., RTL's Five are charging $40 to download the latest episodes of the American TV show "CSI" from CBS before they appear on British television. France's Canal Plus has started to offer video downloads, which can be saved to disc and has reported sales of greater than 2 million videos since the technology's inception this year. Many other companies such as Strasburg-based Arte also are offering video downloads, while other companies such as the U.K.'s BBC have yet to decide on whether to operate a similar system. They have, however, taken initial steps and their proposal includes an Internet service that enables viewers to download television shows for a week after they air. It also includes the ability to download radio programming and streaming of the BBC channels itself, as reported by the International Herald Tribune.

Broadcasters and Internet video content providers agree that video on demand (VOD) enables them to reach a younger demographic than traditional television. In order to reach the entire audience, programming is being placed on both traditional television and the Internet.

Purchasing TV content on the web has faced some criticism, as many believe that public broadcasters have a duty to provide access to information, and by applying a cost or the need to use a specific application, such as Windows to view, it places a restriction on accessible information.

Arguably for the Internet advertiser, TV content on the web provides a perfect medium to place a banner advertisement since the TV show already has attracted a large and targeted demographic for a fraction of the cost of traditional TV advertising. Many savvy marketers are choosing to take this approach and add their own video content to these advertisements, providing a compelling and immersive brand experience, as well as driving traffic to the site with the chance to convert a sale.

EUROPEAN CONSUMERS ONLINE; CONVERSION RATES UP
It is one thing for consumers to purchase a computer and broadband subscription, but the number of consumers using the computer to purchase indicates an acceptance of the computers in their daily lives.

Recent research by the European Interactive Advertising Association indicates that European consumers no longer use the Internet simply as a research tool, but through the rise in consumer confidence, online purchasing is at an all-time high.

The biggest conversion rates year-on-year were mobile phones (a 23-percent increase), followed by music downloads (a 16-percent increase), car accessories (a 15-percent increase) and home furnishings (a 14-percent increase), compared to 2005 figures.

Certain sites witnessed great success from consumers who purchased a product or service following research on the Internet. The highest conversions of this kind were achieved for the sale of concert tickets (75-percent conversion), travel tickets (72-percent conversion), books (71-percent conversion) and clothes (70-percent conversion).

Not only are consumers making more purchases online, they also are spending significant amounts of money. According to a January 2007 survey conducted by the European Interactive Advertising Association (EIAA), 78 percent of Internet users in Europe shop online and spend an average of ¬ 750, buying 10 items in just six months (see chart below).

EIAA also found that many of these consumers are using price-comparison sites to source the best deal. Leading the way are the Dutch, with 54 percent checking comparative costs online at least once each month. In the U.K., 62 percent of online users visit auction sites once a month, with Germany following at 49 percent.

It would seem that online shoppers spend less time watching television as a result of spending more time viewing a wider range of websites. The most popular sites visited were banking and finance sites, price-comparison sites and auction sites. All of these demonstrate increased consumer confidence in purchasing on the Internet and an increasing competence in website navigation.

Without a doubt, Europe--and in particular, Western Europe--has embraced the Internet and exhibits huge growth potential, a strong economy, high consumer spending and strong investment from venture capitalists. This is an open market for advertisers without the heavy costs associated with television. Furthermore, broadband adoption will continue to grow and, as a result, television advertisers will be able to reach a similar-sized audience to television via the Internet throughout this region.

Nicola Delasalle is an international representative at Livemercial. She can be reached at +1-949-30-9449, or via e-mail at ndelasalle@livemercial.com.