HIGH COST, LIMITED REACH HOBBLE EUROPE'S ONLINE AD BUSINESS Study Finds Advertisers Doubtful and Wary June 18, 2001 By Laurel Wentz CANNES (AdAge.com) -- As rates for online advertising continue to plunge in Europe, advertisers complain that online ads don't reach enough people and are too expensive, according to a new Jupiter MMXI study presented today as the International Advertising Festival here opened with a two-day Global Online Advertising Forum. Two-day Global Online Advertising Forum got under way today at the Hotel Martinez. "Clearly, online advertising has been severely affected by the dot-com crash, but our research shows that this is not the only reason for the downturn in advertising on the Web," said Steffan Engdegard, Jupiter's online advertising analyst for Europe. "There is a lot of work to be done by media sellers to prove the value of advertising on the Internet." Unclear value? Of the 65 top European advertisers surveyed by phone and e-mail on the effectiveness of Internet advertising, 55% said it had insufficient reach, 42% said the branding value wasn't clear and 35% found it too expensive. And the European advertisers surveyed by Jupiter MMXI found the Internet industry's efficiency and servicing of online buys to be inferior in almost every way to that of traditional media, he said. For example, 74% of respondents said traditional media sellers give better service than those online, and 69% think they know more about the advertiser's industry. Regarding international campaign management, 52% of those surveyed gave high marks to traditional media and just 37% to online media. Most of the advertisers agreed that online media is more work; 65% said traditional media offers less labor-intensive planning and buying, while just 29% said the same about online media. Online ad spend to grow 12% Worldwide, Jupiter is forecasting growth of just 12% in online ad spending this year to about $9 billion, down from a 69% surge in 2000, as dot-com advertisers drop out of the market. In Europe, the average net price of online advertising has dropped by about 30% over the last year to a cost per thousand of $18 -- and is still falling -- and just 40% of inventory is being sold, according to Jupiter. Prices vary enormously by market, with U.K. publishers holding out for a CPM of over $35 for premium buys while German rates are about 40% lower. Related Story: HUMBLE PIE & HAIRSHIRTS ONLINE Cannes' Interactive Advertising Forum a Year Later "There are different challenges," said Mr. Engdegard, "The trends are the same-prices are down -- but the prices are different. And the platforms advertisers are interested in are different." In Scandinavia, for example, wireless advertising is the most advanced, although Mr. Engdegard said most wireless advertising in Europe is still in the form of e-mail-like SMS, or short message services, rather than using cell phones to surf Web sites. One conference panelist, Mans Ulvestam, CEO of Stockholm-based interactive marketing company Abel & Baker, described his company's Scandinavian wireless initiatives with Nokia and MTV Networks Europe in an interview with AdAge.com following the Forum held at the Martinez Hotel, a luxury hotel along the oceanfront Croisette whose all-night bar makes it a conference venue by day and the serious partygoers' choice at night. Call phone karaoke MTV is about to launch cell phone karaoke in Europe, then worldwide. Internet users will watch an animated video of a karaoke performance on www.MTVe.com. They participate by dialing a number, entering a pin code, and using their cell phone to perform their own karaoke songs, which can be downloaded in MP3 format and sent to friends, Mr. Ulvestam said. Nokia is using SMS to let job applicants know when an appropriate position opens up, he said. If SMS continues to grow, some form of regulation will probably be close behind. One Swedish company promoted the launch of computer horror game It's Alive by allowing people to sign up friends online to get frightening phone calls. "A poltergeist calls you in the middle of the night and says scary things," Mr. Ulvestam said. Mike Windsor, president of OgilvyInteractive Worldwide, told a room of about 100 attendees, a number of them from struggling dot-coms, that wireless advertising has potential but doesn't yet merit much investment. "We're not going to lose money on wireless," Mr. Windsor said, "If we can't show clients how it's going to make money, it's a difficult sale. Do we want to get there? Yes. Are we going to help you? No." Laurel Wentz is international editor of Advertising Age. © 2001, Crain Communications Inc. Editor@AdAge.com ..