Reading about the online market in Germany, you may feel you have been transported back in time to 1999 – the last time one read so many superlatives about the growth in online sales, online ad spending, and online population in the days of the booming “new economy.”
The German online advertising market reached almost $700 million Euro in 2006 – an impressive 66% growth rate (SevenOne Media). This number does not even take keyword advertising (e.g., Google AdWords) and affiliate marketing into account. With no detailed stats available, analysts can only estimate the numbers involved. Most agree, however, that keyword advertising surpasses classic ads (like banners and popups) by almost 100%, or about $1.2 billion Euro. Affiliate marketing is estimated at somewhere between $100-$200 million Euro and growing quickly.
According to a (N)ONLINER Atlas study, 60% of the German population uses the Internet (more than 39 million Germans above the age of 14). More conservative numbers place Internet users at roughly 32 million (comScore), but even this figure makes Germany the fourth largest Internet nation (surpassing both the UK and South Korea).
However, according to the German Internet Industry association Bitkom, the number of broadband connections lags behind expectations in Germany: 37% in 2006 with a predicted 50% in 2008. Analysts attribute this to the tactics of former state monopoly German Telekom. Broadband use has tripled in the last two years, partly due to antitrust regulations and dropping prices.
The Top Three Search Engines in Germany: Google, Google, and Google
Germans love Google! Or at least they act as if they do. Taking a look at the organic search market, Google (predominantly .de, .com, and image search) alone has almost a 90% market share. If you add in all the other search engines that use Google results, such as AOL, T-Online, and Web.de, the number climbs to almost 95%! Yahoo! (below 3%) and MSN/Windows Live (1.5%) are pretty much negligible, while Ask is barely a blip on the screen (WebHits).
Google has, in effect, a monopoly in Germany. Any website that cannot be found in Google will fail miserably if they wish to earn money on the net in Germany.
SEO in Germany: Hated by Users, Loved by Analysts
The average German netizen frowns upon search engine optimization. The likelihood of the term “SEO” being used as a synonym for “SPAM” is very high. Many experienced and educated online developers do not really understand what SEO is about. Search terms like “meta tag optimization” or “search engine submission” (to 1,000 search engines!) are still used by somewhat questionable companies.
Nevertheless, SEO is one of the fastest-evolving parts of the booming online advertising market. Studies comparing stats and projections for different online marketing techniques such as affiliates, email marketing, or pay per click show that organic search engine optimization is foremost now.
Social Media Still Far Behind
In the US and on the worldwide scale, social media (e.g., Digg, del.icio.us, StumbleUpon) and video platforms (e.g., YouTube and its numerous competitors) are very popular. Local German equivalents face major difficulties.
Almost all global social media properties have at least several local German copycats, but most of these find they cannot compete, even if there is no German version of the global property. Taking del.icio.us as an example, even the most popular German competitor (Mister Wong) cannot erode its German and German-speaking (mostly from Germany, Austria, Switzerland, and Italy) user base. A particular German blog may have 50+ bookmarks on del.icio.us, but barely exists on Mister Wong. Mister Wong, nonetheless, is one of the rising stars of Web 2.0 in Germany.
The situation is somewhat of a paradox. Social news and bookmarking have a very high acceptance factor at older online media properties. Almost all well-established online newspapers (such as Spiegel Online, ZEIT.de, FAZ, or Sueddeutsche) have direct links for saving articles in at least five social media services, the majority of which are German.
On the other hand, the traffic numbers are ridiculously small compared to those of Digg, Reddit, or del.icio.us. While front-page appearances on these will bring you thousands or tens of thousands of visitors in hours, a front-page story on YiGG, Webnews, or Mister Wong might bring you between 30 and 300 unique visitors.
So it is understandable that link-building tactics are more Web 1.0 in Germany than you might be accustomed to in the US. Link baiting exists, but on a very small scale. Even the German blogosphere is comparatively smaller than the French one, for instance. Some SEOs, and also popular publications like Spiegel Online or Heise Telepolis, therefore also publish in English and aim for Digg.
To date, one of the most successful German link baits on Digg was a list of the world’s “funniest toilets” with pictures. Hmmm. If you check Digg for other German sources, you will mainly find the aforementioned Spiegel Online and Heise Telepolis, but also a source you might be familiar with but not suspect as originating in Germany – Smashing Magazine. It publishes in English as well as German and regularly approaches the appeal of Digg and other global social media sites.
Price Comparison: A Crowded Market Means Alternatives for Google Traffic
For every rule there are exceptions. There is lots of price-based competition in the German market, and the competition is fierce. Old media conglomerates like Springer have acquired popular properties such as Idealo. If you search for a particular product on Google.de, you will find several shopping search engines at the head of the SERPs.
If you have an online shop in Germany, you cannot afford to ignore shopping search sites. Submit your product lists to at least a dozen of them. Sites like billiger.de or guenstiger.de (the names mean “cheaper” or “favorable”) advertise on TV. Sites that focus on consumer reviews were built upon user-generated content long before that term was coined. Ciao, Yopi, and Dooyoo have dominated the market for over five years. International competition from Kelkoo, Bizrate, or even Froogle (now Google Product Search) faces very tough competition in Germany.
What’s Different About Germans, Anyway?
Based on these numbers, you might wonder why there are so many unusual aspects to this particular market. Some experts, for example, claim that German netizens (or rather the German general public) tends to be more conservative than Americans. There may be some truth to this (IMHO), but I believe it’s more accurate to speak of a country-specific digital divide. Even with a German-speaking population of almost 100 million, there is only a small, very active, expert class of Internet power users. These people speak English, love Web 2.0, and buy stuff online using the latest browsers.
Numbers from Alexa, however, show that the average German Internet user prefers Google, eBay, YouTube, and Spiegel Online. Among the Top 10 websites in Germany, Wikipedia outperforms the rest, along with United Internet (which owns two of the most popular hosting companies and two of the biggest free email providers - GMX and Web.de), according to comScore and Nielsen NetRatings studies.
So, while you may build non-Google traffic in the US via Digg, the blogosphere, and search engines like Yahoo!, MSN/Windows Live or Ask alone, this will not work in today’s Germany. To succeed online in Germany, you need a combination of a good Google position, “old media” ad campaigns, and Web 1.0 ties with some viral strategies.
Do not underestimate the native German market in the long run, however. A successful start-up called StudiVZ (a local Facebook clone) has over two million users in Germany alone, and in terms of page views is Germany’s biggest site. It has now been acquired by Holtzbrinck, one of the biggest German old media publishing houses.
For now, the more things change, the more they seem to stay the same in Germany. The potential market, however, is huge and it cannot be long before demand forces further adaptation.