British marketers are embracing new techniques for the Internet. For example, Hewlett-Packard used an e-mail campaign in Britain, to try to attract potential customers to a web site promoting its products.
Digital advertising is racing ahead in Britain, growing at a roughly 40 percent annual rate, and is expected to account for as much as 14 percent of overall ad spending this year, according to media buying agencies. That is the highest level in the world, and more than double the percentage in the United States.
There are big differences between the advertising markets in Britain and the Unites States. In Britain, much of the advertising is national, while there are strong local and regional ad markets in America. Still, some believe that digital advertising in Britain provides somewhat of a roadmap for where digital ads in the United States and elsewhere may be heading. “The U.S. is so behind,” said Terry S. Semel, the chief executive of Yahoo, in a recent speech in London. “It’s certainly lagging the U.K. by at least a year or two.”
More than their American counterparts, British marketers seem to have bought into the oft-touted benefits of Internet advertising: that it is easy to track, enormously effective and a relative bargain. In Britain, as Internet ad spending surges, the overall advertising pie is not growing much at all, and traditional media are the ones losing out.
However, British media are nearly all aimed nationwide in contrast to the United States newspaper and television markets, where local and regional markets are big players. These local markets in the United States have, so far, been slow to move ad money digitally.
As recently as 2002, many British advertisers were reluctant to go digital too. That year, British advertising was 1.4 percent compared with 2.5 percent in the United States, according to the Internet Advertising Bureau in Britain and the Interactive Advertising Bureau in the United States. Each bureau tracks digital ad spending in their respective countries.
In the following year, Britain overtook the United States, and it has not looked back. In 2005, nearly 8 percent of British ad dollars went digital, compared with 4.6 percent in the United States. And in 2008, the two bureaus say, the Internet will account for 10.5 percent of British ad spending compared with 5.6 percent in the United States.
Media buying agencies like Group M, the media-buying division of WPP Group, estimate that digital ad spending in Britain will be even higher — close to 14 percent of the total this year.
Similarly, broadband access in Britain at first lagged access in the United States, but has since surged. In 2002, 15.7 percent of American households had broadband compared with only 5.1 percent of British homes, according to eMarketer. This year, Britain is ahead, with 47.4 percent of homes having broadband, which is more than the 43.9 percent in the United States.
Some analysts say British advertisers may simply be quicker to embrace new marketing ideas than American companies. “I’d like to think there’s a cultural factor in the U.K., where we’ve been a bit more experimental on some of these things,” said Rob Noss, European chief executive of MindShare Interaction, a new media division of Group M’s MindShare unit.
In the United States, major advertisers are more dependent on traditional media, particularly television. The top 50 advertisers in the United States spent just 3.8 percent of their budgets in the first half of this year on digital ads, excluding search-related advertising like that sold by Google, according to data from TNS Media Intelligence.
“Partly driven by scale but also by legacy, there are a lot of traditional budgets that are already laid down,” said Antony M. Young, president of the American division of Optimedia, a media-buying unit of Publicis Groupe.
Ad buyers at the major American brand companies may be reluctant to commit larger sums to the Internet because they believe they do not have control over where their ads appear, analysts say. Many Internet advertisements in the United States are still sold through networks that place ads on member sites. In Britain, more advertisers work directly with Web publishers, giving them greater say in where and when ads appear.
In contrast, large advertisers in Britain appear to be leading the push onto the Internet. British financial-services companies have been particularly aggressive digital spenders, in some cases allocating 30 percent or 40 percent of their advertising budgets to the Internet, Mr. Noss said.
Big British advertisers have also been quick to jump at the opportunities provided by paid search advertising, like that sold by Google and other search engines. Search accounts for 56 percent of Internet ad spending in Britain, compared with 42.5 percent in the United States, according to the Internet Advertising Bureau. “We’re all searchaholics,” said Guy Phillipson, chief executive of the bureau’s branch in Britain.