Are Ad Spend And Commerce Spend Correlated?

I wrote a post with some numbers on global internet use earlier this week and followed up with a second post the next day. Both posts generated excellent comments and also some good links with additional numbers.

I particularly like this post from the InPage Advertising blog which has some good IAB numbers on Europe. This chart from that post caught my eye.


So the online ad spend in Norway is 130 euros per monthly unique Internet user in Norway. And that number in Italy is 37 euros.

So that go me thinking. Is the online commerce market (on a per user basis) four times larger in Norway than it is in Italy? Is the online commerce market per user in the UK three times larger than France?

I don’t think so, but I don’t have the data to back that up.

If all internet advertising was direct response/CPC/CPA advertising, then I think the correlation would be pretty high between ad spend and commerce spend. But it seems that brand oriented campaigns are more prevalent in some countries like UK and the some of the nordics and less prevalent in markets like France, Austria, and Italy.

I’m not sure why that is. It could be that branding dollars have just not moved online as quickly in some markets as others. This chart from the same post bears that theory out.


But I still wonder if online ad spend will ultimately be correlated with online commerce spend. There are many markets around the world where online commerce is starting to take off but online advertising has not. Are those developing markets big opportunities for online media?

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Comments (Archived):

  1. WayneMulligan

    I wonder if brand ad buys are more prevalent in countries with smaller populations (or where the majority of the population is centered around a specific region). The brands might get more traction doing CPM buys due to offline purchasing activity (versus the CPC/CPA campaigns that are looking for strictly online activity).Thoughts?-Wayne

    1. Stanley

      you need to consider the conversion rate between euros and dollars. if the ratio wasn’t so low in favor of the euro than im sure the U.S. ad dollar spend would be significantly higher (1.56 higher actually, according to google).

    2. fredwilson

      Comscore has done studies that suggest the majority of activity generated by an online ad campaign is transacted offline and never captured in the roi calc

      1. Robert Seidman

        That makes sense to me. It would be interesting to see more granular data and calculate what % of online ad spending is on campaigns where the end transaction is deliberately offline (movies,cars, food) or completely fine with the advertiser if it occurs offline (computers, gadgets, books, DVDs, etc).

        1. WayneMulligan

          Good question. I’d also be interested in the causality. Is it purely cultural, is it based on how quickly (or not) the web is being adopted in certain regions, internet penetration rates, population densities, etc.?

          1. PhilipJames

            Yo Wayne!I think there’s certainly some cultural differences, generally Northern Europe has higher spend while Southern Europe has lower spend. Notice greece and spain (nice weather there) with the lowest, and the nodic countries (long depressing winters) with the highest. While climate may be part of the cause the direct influence is, i think, internet penetration (no data to prove this) and that would explain the second graph, but not the first.I’m stretching things here, but i’d say the first graph can be explained by a herd mentality – you get a country with good internet penetration and high usage and ad dollars move online. Once this happens its easier for more dollars to follow.

          2. David Gillespie

            It’s interesting to see the stats and compare them with what’s happening in Australia where we’re seeing wide-spread Internet adoption despite slow-moving infrastructure to support it. Advertisers are subsequently taking much more of a wait-and-see approach, despite evidence to the contrary in terms of online consumer spend within the country. It’s very much a case of an audience being ready and waiting to consume and business sourcing the nerve to deliver to them.Mind you, our big business isn’t traditionally as adventurous as Europe or North America, which is of course both a boon and a curse.

  2. gregorylent

    a great question which i would imagine guys in the ad business dont want to hear the answer to

  3. Jim in Colorado

    As a U.S. performance based marketing company that has moved most of its business to Europe I can backup with our numbers that the numbers above reflect similar results we see. Traffic in countries at the top of the chart is worth more on a performance basis as well, not just because of an abundance of brand advertisers those users just convert better. Also, worth much more then U.S. traffic for sure.

  4. Taylor Davidson

    Currency fluctuation and conversation rates obscure the differences in purchasing power on the first chart. But the second chart is very relevant.I wonder how much of the difference reflects the split between fixed and mobile internet use, both in terms of consumer usage and advertising?

  5. gian fulgoni

    The relationship between ad dollars and sales can be tenuous — even on the Web! I think there’s a variety of factors beyond ad spend that dictate how big e-commerce is in a particular market. For example, retail store location and mobility (i.e. lack thereof) of the population are also important drivers of e-commerce. Interesting data nonetheless.

  6. LIFTr

    In other words, “Are Ad Spend and Marketing Spend Correlated?” AKA “Does marketing = increased sales? “LIFTr

  7. curiouslypersistent

    Do you know if the ad spend figures only include spend on that country’s domain (,de etc)? If not, it could be that some countries are more likely to spend on international domains…Bur is an interesting question. I think ultimately it will come down to the category of products – a Barnes & Noble online campaign may generate a lot of sales online, but an American Apparel campaign would drive footfall to the stores so people can try the clothes on.Simon

  8. Paul de Beer

    my 2 cents: broadband penetration is much higher in Scandinavia and the low countries, a better ROI can be expexted with rich media campaigns (higher CPA also). Could also toss in new PC-sales figures, for RIA-campaigns use more CPU cycles…

  9. Michael Altendorf

    Hm, I think when you also take the general price level in these countries under consideration the graph makes sense. The countries with a higher spend per user also have bigger earnings per user. e.g. McDonalds also earns more per big mac in norway that in Germany or Italy. But the price level on its own does not explain all but could work as an indicator. Sure, there are differences in these markets

  10. Pawel T

    Due to Eurostat (European Statistical Org) Nordic countries also have large number of companies with high speed Internet access and significant number of people working online at home (it is well known in Europe that Scandinavians have best internet connections:)) but for example British companies got more online inquires than Nordic countries. In Europe it can be quite important to see every country as different. There are countries where people likes buying products online and use it to save time or money and on the other side you have people who don’t like to buy anything online and have to have some kind of important reason to do so ( like nice price difference). Sometimes this can be caused by climate, sometimes by tradition (some nations simply used to go to traditional shops and treat this as a “ritual”).Referring to the question: “if online ad spend will ultimately be correlated with online commerce spend.”Those two don’t have to correlated because online ads can be bought also by traditional business using internet only to show that they exist. For example some companies makes sure that if you will type in google taxi Paris, you will get link to their website – so they advertise online without having much to do with e-commerce. Google as well as more and more popular services locating bars, cinemas or shops on the maps can force traditional business to invest in online ads. If internet will be used more to create portals for local communities those small businesses will see even more reasons to advertise online. Those factors can interfere correlation between online commerce and ads.