How does the European market differ from the U.S. when it comes to providing and using digital marketing services?
We asked Joe Schultz, MatchCraft’s Vice President EMEA, to share his thoughts on the current state of digital marketing across the pond.
MatchCraft: How does the digital marketing landscape differ in Europe from the U.S.?
Joe Schultz: It’s hard to talk about one unified “European market” – things differ greatly country to country. In the U.K., for example, the digital advertising market is relatively large and mature, but that’s certainly not true everywhere. Some countries have dozens or hundreds of providers competing for SMBs’ marketing budgets, others far fewer. Very few European digital marketing service providers sell across international borders – they tend to focus heavily on their home markets, mostly due to language and cultural differences.
However, there’s one common factor in all European countries: Google dominates search. In some Western European markets, Google has more than 95% market share. Bing is working hard on increasing its market share, but with mixed results. Even in the U.K., which is Bing’s strongest market, Bing only has about 10% of the market. The story is slightly different in Eastern Europe, with the Russian search engine Yandex and the Czech search engine Seznam both owning a large part of their home markets (in Yandex’s case, neighboring markets too). But Google is coming on strong and gaining market share at the expense of both Yandex and Seznam.
The social media landscape looks similar. Facebook, Twitter, LinkedIn and other American platforms claim large market shares across the board. LinkedIn faces some European competition, mainly from Xing in the German-speaking part of Europe and Viadeo in France. My feeling, though, is that LinkedIn is gaining at the expense of Viadeo and Xing.
MC: What trends are you seeing among the media companies and publishers MatchCraft works with?
JS: I think we are seeing three main trends in the way our European partners are changing their products and businesses:
- Fewer campaigns, but larger media budgets. Many of our European partners are seeing declining numbers of advertisers, but they’re moving their advertisers upstream to more sophisticated products, larger media budgets and agency-like campaign management. I believe increased competition from a larger number of resellers of digital advertising solutions has made this change necessary.
- Measuring value, not clicks. Advertisers want their campaigns to generate real value and are demanding the ability to track qualified leads (calls generated, completed contact forms, etc.). Clicks and low CPCs aren’t cutting it anymore.
- Multiple traffic sources. A few years ago, our partners included search engine advertising (SEA) in bundles with products like directory listings. Today they’re combining SEA with display and social media advertising. They’re still offering one invoice, one campaign, and one performance report, but they’re maximizing ROI across a number of different inventory sources.
MC: How educated are local merchants in Europe about digital marketing and search advertising?
JS: Just as in the US, it varies significantly. The gap is widening between the small business owners who are interested in, knowledgeable about, and embracing digital advertising solutions, and those business owners that are overwhelmed with these new online marketing opportunities. This gap is a real challenge for many resellers: Their sales forces need to be able to adapt their communication quickly based on the knowledge level of each individual advertiser, and this requires a lot of training.
MC: What are the biggest challenges for European companies selling digital marketing to local merchants? What are the biggest opportunities?
JS: I think the biggest challenge to resellers of digital advertising solutions is the fast pace of development in the digital landscape. Resellers who want to keep their market share need to ensure that both their products and their sales teams keep up with the industry’s changes. Most importantly, they need to improve their ability to generate value for and prove that value to their advertisers. If they don’t, they’ll soon see their advertisers spend their budgets elsewhere.
I also think companies that sell digital advertising are likely to see increased competition from newcomers, even companies from other industries currently unrelated to online marketing. That means industry knowledge and good customer relationships will matter even more in the future. If you deliver the booking and payment system to a dentist and have a good relationship with her, you probably also have a good chance to capture her digital advertising budget.
MC: What do you think are the digital marketing solutions of the future in the European market?
JS: SMBs are interested in leads and new clients. The digital marketing solution of the future is whatever generates the most qualified leads for the budget. I think future products will continue to use even more inventory sources than they do today. I also think we’ll see more product segmentation based on verticals. A marketing mix that is designed to maximize the ROI for a dentist looks different from the ideal marketing mix for a restaurant, even if both organizations are of the same size with similar marketing budgets.