SCANDINAVIA: ONLINE ON THE MOVE - Technology-loving Scandinavians have embraced the internet wholeheartedly. Advertisers need to keep up to reap the benefit or risk falling behind, Rachel Miller says

When it comes to surfing and shopping on the internet, Scandinavian consumers lead the way in Europe. In Sweden, the most technologically developed of the Scandinavian countries, more than 18 per cent of the population do their banking online.

By next year, it is estimated that Sweden, Norway and Denmark will have internet penetration levels of more than 50 per cent. Internet penetration levels have hit around 90 per cent among Swedish 16- to 19-year-olds.

Because the Scandinavian online market has matured so rapidly, Jupiter Research refers to it as 'the most developed and sophisticated online shopping market in Europe', much closer to the US model than the rest of Western Europe.

So why have Scandinavians embraced the internet so readily? 'It has taken off because of the Northern European engineering tradition - Swedes like technology,' Christian Dahlborg, the media director at Zenith Media in Stockholm, says. 'They like things that are complicated - the PC business grew very quickly because people wanted to upgrade their computers themselves.'

As with any maturing market, however, there are challenges ahead.

Online ventures are under pressure, both to expand and to show a return on their investments. And, while they may have the consumers and the technology at their disposal, Scandinavian dotcoms are finding it as hard as any other to stand out from the crowd.

'Scandinavia is amazingly wired,' says Tim Hunt, the account director at St Luke's, which is opening an office in Stockholm. 'It is absolutely at the centre of mobile and internet technology. They have audiences with a great appetite for the internet as well as huge technological resources - particularly with Ericsson and Nokia in the mobile phone market.'

Despite this, the advertising industry in Scandinavia has found it difficult to reap the potential benefits of the region's enthusiasm for the internet.

According to Jupiter Research, the Scandinavian markets, with the possible exception of Sweden, have not yet reaped the additional online ad revenues from their high online penetration rates.

There are a number of factors contributing to this slow development - the lack of consistent and reliable audience data, for example, and the lack of standards for online advertising deals. But Jupiter believes this is temporary.

The turning point will come as surfers are converted into consumers.

Jupiter predicts that the number of online shoppers in Scandinavia will rise from two million in 1999 to eight million by 2005 and with that, online ad revenues will go up from E98 million in 1999 to E653 million in 2005. As the Scandinavians spend more time and money online, the advertising industry will have a large number of very attractive prospects to target.

'The problem today is still the slow reach,' Dahlborg says. 'A daily trade paper could have a readership of 300,000 and its website might attract the same number of visitors in a month. To advertise on the website, you would have to buy space on every impression in a month to reach the same audience as the newspaper on one day.'

Even on the most popular sites, such as, and, it can be hard to stand out, he says. 'There is so much clutter on the home pages and the experience for surfers is that there are more and more banner ads. Often between the banner ads and the sponsors, there are seven or eight different messages on a page. We have no idea whether people mentally register that they have seen a banner ad.'

Measurement of advertising effectiveness on the internet is still rudimentary, he adds. 'If you have very straight objectives, to sell a particular product, then you can measure the results of a campaign. But it is harder to measure the effect of brand-building exercises.'

So what's the answer? Dahlborg says: 'Advertisers must use innovative marketing. This entails exploring targeting beyond content, ad models beyond banners and performance beyond click-through measurements.'

Michael Raffnsoe, the chief executive officer of Saatchi & Saatchi Denmark, agrees. 'As an advertising agency, it is about how we use our creativity. You have to exchange content and make alliances with value-added companies. You have to think hard about how to make banner advertising work. These ads have to provide more value, through promotions and offers.'

Norbanken, Scandinavia's biggest brand, ran a banner ad with a difference on its website, It featured a scratchcard mechanic, where consumers had to scratch off a grey panel with the mouse to reveal the message.

At 43 per cent, Denmark's internet penetration lags slightly behind Sweden and its consumers are slightly more cautious. 'The Danes are very sceptical people and they are worried about trading online,' Raffnsoe says. 'We are waiting for the online signature that the government is working on to provide security. But at the moment, many e-commerce sites are using offline payment methods or payment on delivery.'

The aversion to credit cards extends across the whole of Scandinavia.

'The Swedes are far behind America when it comes to using them,' Dahlborg says. 'As a result, many companies are paid on delivery here, although that will change within the next generation or two.'

Scandinavian companies are already having to adapt to the consumption habits outside their home markets. This is necessary because the Scandinavian market remains relatively small compared with other parts of Europe.

'Only eight million people live in Sweden, so companies have to export,' says Colm Barry, the managing director of Planit Media, a pan-European online media guide that is run from Sweden. There are many examples of Scandinavian websites that have expanded across Europe - (in 16 countries), Toycity (in 15 countries) and Dressmart (in eight countries).

Meanwhile, as these successful dotcom brands mature, they face new challenges.

This involves a shift in focus from customer acquisition to customer retention. Jupiter Research cautions that Scandinavian online players will have to find other ways to boost revenue - expanding internationally, integrating offline and online operations and trying to increase the wallet share of their existing customers.

The general consensus is that the days of big dotcom adspend are over and that more targeted efforts aimed at retaining customers are coming to the fore. Jupiter Research says: 'Players should invest in cross-selling systems that are customer-centric rather than product-centric, and that offer loyalty schemes to reward repeat purchases. Businesses must differentiate their brands, not through more TV ads, but by providing great customer service and an enjoyable and productive overall website experience.'

Scandinavian dotcoms are investing in new platforms - such as wireless application protocol, digital television and broadband - so that they can offer customers a choice of channels and the ability to access the internet while they are out and about.

Scandinavia's foothold in mobile telephony, coupled with its high internet penetration, should ease the path to widespread use of WAP technology.

However, even with the Scandinavian love of technology, it seems that WAP has still not yet really taken off. Some industry observers seem set to wait until uptake levels rise substantially. 'WAP technology is way too complex and there is not enough content. Mobile internet definitely has a role to play but on what platform?' Raffnsoe says.

The big telecoms companies clearly have faith in their own platforms and are investing in platform dependent mobile internet services.

However, the future may include a number of platform-independent and device-independent services, such as mobile internet services that you can access from any phone, personal digital assistant or laptop.

One such company is Speedy Tomato, a mobile internet portal that has been set up by the telecoms provider Telia. 'Speedy Tomato is a mobile internet service that allows you to customise your mobile and select all the information you want on a regular basis,' Hunt says.

The portal will target a mass-market audience described as 'love-lifers'.

It includes communication tools such as e-mail and a diary, a search engine and independently provided content such as news, weather and stock movements.

'Our main competition doesn't yet exist,' Anne Liliaholm from Speedy Tomato, explains. 'Within a year we expect to see a number of alliances between companies to develop other such services. There is going to be a huge change.'

Whatever the channel, it is clear that Scandinavian consumers need no convincing when it comes to the benefits of the internet and shopping online. In the next few years, there should be a dramatic increase in levels of e-commerce. Jupiter predicts that online revenue is set to increase by 40 per cent between 2000 and 2005, with 7.7 million Scandinavians spending E6.5billion online in 2005.

And, with the rest of Western Europe playing catch-up, it seems that the European internet market is starting to fulfill its promise.


Sweden retains some stringent legislation when it comes to targeting young consumers - advertising to under-12s is not allowed. It was never banned, but it has not been permitted since commercial television launched in Sweden in 1992.

While this has so far created a barrier for European market directors targeting Sweden's young consumers, advertisers can now target them on the internet.

'Children may not even be missing commercials on television,' Christian Dahlborg, the media director at Zenith Media in Stockholm, says.

'The internet brings an opportunity to reach children more efficiently and to bring them messages that excite their imagination.'

Colm Barry, the managing director of Planit Media, says: 'Traffic online from youth is very big. In Sweden, there are after-school clubs called Free Kids where every child has access to a computer. There is a very high standard of education and everyone is computer literate.'

Peter Bergstrom, the chief executive officer of CIA Interactive Sweden, agrees. 'Young people are a big target audience,' he says. 'There is a huge reach and many opportunities to communicate with them.'

Sites that are popular with children and teenagers include Hotmail and Darling, an internet entertainment magazine site. Chat rooms and online communities are also widely used and are a good way for advertisers to reach their young audiences.

Youngsters like to use the internet to buy games, CDs and books.

'It makes a big difference because television is very regulated and there are more possibilities for advertising on the internet,' Bergstrom says.

He also believes that research is vital to ensure that advertisers understand their young target audiences better. 'With young people, the interesting thing is to study the media they use and how they communicate.

'What it is important to realise is that these young people are the early adopters. Companies should observe them to help them with their own development. And young people are willing to share information and give their opinions on products and services.

How they respond is going to be critical to the long-term success of any business. They are the new consumers.'


1999            E98 million

2000            E170 million

2001            E254 million

2002            E340 million

2003            E433 million

2004            E535 million

2005            E653 million

Source: Jupiter Research 2000.


Denmark         2,565,348

Finland         1,628,348

Norway          2,218,351

Sweden          4,729,940

Source: ACNielsen


                2000        2005

Denmark         12%         31%

Finland         8%          26%

Norway          12%         32%

Sweden          16%         35%

Source: Jupiter Research 2000.

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