The digital marketing market - Italy

1.2 A fast-growing global market

In ****, the digital advertising and marketing market was estimated at $*** billion and is expected to reach $*.* trillion in ****. The compound annual CAGR for the forecast period ****-**** is **.*%. In addition, future growth of the digital marketing market is expected to be significant due to the growing population of people consuming and creating content through digital channels and the Internet.

Size of the global digital advertising and marketing market World, ****-****, in billions of dollars Source: ****

Geographic analysis

According to Research and Markets' analysis, the United States is the largest market in terms of digital marketing revenue, at $***.* billion, in ****. The second largest market is China with a CAGR of **.* percent over the ****-**** forecast period. Japan and Canada, on the other hand, have lower projected growth with a CAGR of *.* percent and *.* percent.

As an example, in the United States, companies mainly invest **.* percent of their digital marketing investments to optimize their websites. These days it is increasingly important to create content on one's web page that adds real value to business activities and can attract as many potential customers as possible. Data analysis and secondarily the activity that attracts the most investment flows for **.* percent of CMO respondents. The following ...

1.3 The Italian market

The digital marketing industry is driven by the online advertising segment, which is growing. The market is also expected to grow thanks to the development of online shopping, which will bring more opportunities for advertisers to promote products, content, and services online.

In ****, total revenues from online advertising in the Italian territory amounted to just over * billion euros, far below Germany, the top European country in terms of revenues at **.* billion euros in ****. From the chart below, the growth trend affects both modes of online advertising delivery.

Advertising revenues by delivery mode Italy, ****-****, in billion euros Source: ****

In the online advertising market, the sector with the highest revenues is advertising in the form of videos, immediately followed by advertising delivered by banners. In fact, in ****, revenues from video grew *** percent compared to ****, from *** million euros to just over * billion euros. On the other hand, banner-driven revenues grew by ** percent compared to ****. The following chart provides more details.

Online advertising revenues by format Italy, ****-****, in millions of euros Source: ****

Competitor analysis

In Italy, the main players in the market are Amazon, Google, Meta Platforms (***) of the total percentage of sales of products and services in the market attributed to brands. ...

1.4 The consequences of the COVID-19 pandemic

Even before the outbreak of the pandemic, the digital marketing market was showing signs of a solid growth rate. Then, with the pandemic, there was a further boost as it accelerated the adoption of digital devices, which will lead to more robust growth of the digital advertising market for mobile devices in the following years.

The graph below shows the number of people using smartphones. Italians are increasingly addicted to smartphones, and the number of users is expected to grow in the coming years, reaching nearly ** million in ****. In particular, the COVID-** pandemic has changed people's behaviors, increasing the demand for digital devices for mainly business and entertainment reasons. In ****, the number of users increased by **% from the previous year. In ****, the growth from the previous year was smaller, or **%.

Number of people using smartphones Italy, ****-****, in millions Source: ****

1.5 The obstacles to the development of digital marketing

A survey was conducted in Italy that indicated the main obstacles to the development of digital marketing. In ****, ** percent of respondents working in the digital sector said that company management lacked web culture and knowledge, up from **** when the percentage was ** percent. Forty-five percent of them, on the other hand, pointed to the great confusion in marketing metrics and measures. In addition, based on respondents' statements, large companies incur higher costs related to campaign effectiveness than small and medium-sized companies.

The other market barriers, published by Engage, are shown in the chart below. In ****, a new problem for marketers has arisen, which has to do with the difficulty of adapting strategies to the mobile Internet, which is increasingly popular among consumers. Other obstacles include the reduction of investments due to the pandemic of COVID-**, for which, however, in **** the percentage was reduced compared to the previous year. However, one should also mention the effects of the war conflict between Russia and Ukraine. Indeed, rising inflation will have an impact on consumer confidence and spending. Companies may slow down investment, held back by fears about inflation and weaker demand.

Obstacles to the development of digital marketing in Italy Italy, ****, in percent Source: ...

2.1 Demand characteristics

Age, gender, income, geographic location, occupation, education, and ethnicity. This information can help marketers create a more targeted and personalized marketing campaign for the target audience. In addition, using demographic data can help marketers segment audiences and create segment-specific advertising messages. The analysis of demographic data can also help marketers identify specific consumer trends and behaviors, providing useful information for creating more effective marketing strategies.

Age and gender

Teens and young adults constitute the part of the population who make the most use of smartphones for social media and other means of communication, as well as for e-commerce. From the graph below, it can be seen that in general, the younger age group (***) than the remaining population, innermost circle. Facebook is the second most used communication tool with **.* percent use among the youngest. Finally, smartphone users in Italy in **** were both genders, as male users accounted for **.*% of the total population surveyed, while the remaining **.*% were female users.

Comparison of the total and young population of social media, mobile apps, and online platforms Italy, ****, in percent Source: ****

2.2 Determinants of demand

The growth of the Internet

The digital marketing market is growing because people's behavior has shifted from the offline world to the online world. In ** years, the number of Internet users has grown to double in size, from **.* million in **** to **.* million in **** in Italy. Users are growing strongly according to the forecasts shown in the chart below.

Internet users in Italy Italy, ****-****, in millions Source: ****

The Internet penetration index since **** has grown steadily until ****, with a more widespread presence among the male population (***).

Internet penetration index by gender Italy, ****-****, (***) Istat

Increase in social media and online shopping

Growth in the video, banner, social media, and search-associated advertising markets is relatively higher than in the ad market due to the rapid increase in social media consumption and online shopping. The number of Italians active on social media has risen from **.* million in **** to ** million in ****, DigitalReport analysis shows.

Online shopping covers **.* percent of the total value, as shown on the graph. Specifically, according to data from Osservatori.net, in **** the share of e-commerce in total Retail (***) remains stable in products, at ** percent, while it increases in services, from ** percent in **** to ** percent in **** [***].

Share of online shopping in the ...

3.1 Online advertising

The Internet is how advertising reaches Internet users through various formats, which include: search engine advertising, banner advertising, video advertising, and classified ads. Another distinction should be made depending on the mode of delivery, namely that between desktop (***) advertising.

Digital advertising also covers that on social media such as Facebook, Twitter, and LinkedIn. Ads on social networks can appear as sponsored posts or next to the newsfeed.

In Italy, the segment which gathers both the most investments and the best growth expectations is advertising in search engines such as Google Chrome. In ****, investment is expected to reach **.* percent of total digital advertising investment. On the other hand, the least investment-targeted segment is audio advertising, which would account for *.** percent of total investments in ****. The graph below shows a general growth trend, i.e., affecting all segments, also fueled by the increasing use of mobile devices and the Internet in these devices.

Advertising spending by segment Italy, ****-****, in billions of euros Source: ****

The chart below shows that in Italy, the percentage of investment in mobile advertising (***) in ****. From this year on, desktop advertising has had a decrease in investment, which is expected to reach **.*% of total investment in ****.

Advertising spending by ...

3.2 The sectors that are most invested in

In ****, it was found that the industry that spends the most resources on online digital advertising is the consumer goods industry. The share of advertising spending in this industry remained more or less constant compared to ****, or **%. The automotive industry is the second largest in terms of ad spending at **.* percent of total ad spending in Italy. Notably, it is the industry with the highest increase in advertising spending, as, in ****, the share was ** percent.

Shares of advertising spending by industry Italy, ****, in percent Source: ****

3.3 Distribution channels

Services as well as any digital marketing products are sold to customers through two main modes: B*B and B*C.

B*B "business-to-business" and social media

This refers to companies that sell their products or services to other companies. In this type of transaction, the main goal is to create long-term relationships between the companies involved and purchasing decisions are often based on the quality of the products and services, as well as the reputation of the selling company. B*B digital marketing focuses on creating useful content for companies, generating qualified leads, and using marketing tools such as email marketing, search engine marketing, and social media marketing to reach target audiences.

In this regard, Tommaso Magistrali, country manager Italy of TIMOCOM, said that even in B*B to make decisions, emotions are used, to be interpreted through Aristotelian rhetoric (***), in addition to reason alone. Social media, for example, is also a great solution in the B*B market, as with minimal investment, says Tommaso Magistrali, one can reach a more loyal audience and easily distribute original content with the "right tone of voice." TIMICOM is a company that offers the world of transportation and logistics a large digital marketplace ...

4.1 Supply analysis

As of March ****, the number of new display campaigns was *,***, or +*.**% compared to the number of campaigns in March ****. New campaigns are defined as those communication activities that are published after ** days of silence. In contrast, the total number of active campaigns amounted to *,***. The number of active advertisers who have at least one active campaign during the analysis period is *,***, up from March **** when there were *,*** instead.

Digital campaign scenario Italy, March ****, in absolute value Source: ****

Moreover, based on the number of posts analyzed on social media, images are more used by advertisers than videos (***).

According to the IAB report, the most used display format of advertisements is ***x***, with a total of almost *,*** ad campaigns analyzed in Italy. The other formats, ***x**, ***x***, and ***x*** are employed between *,*** and *,*** times for advertisements. Shown below are the most popular advertising creations as of March **** by chosen format.

Source: ****

4.2 advertising spending

The three segments for which online advertising costs the most on average are app advertising, social media advertising, and search engine advertising. Probably because of the characteristics of each sector. In-app and social media advertising is likely to be demanded by market leaders who have higher prices, for example, such as Amazon, Facebook, Instagram, and others. Video advertising and ads are in the middle range between more or less ** euros and ** euros for the entire period shown in the graph.

Instead, among the most cost-effective ads for companies are those created by influencers, which are on the rise throughout the period until ****, when spending is around **€ per ad. Then there are the ads that have a short duration and finally, the absolute cheapest ones represented by audio ads, as they do not include the visual component of advertisements and are less effective.

Average advertising expenditure per internet user by segment Italy, ****-****, in € Source: ****

4.3 Artificial intelligence and privacy

Artificial intelligence is proving to be one of the key technologies to stand out in the market and more and more digital marketing professionals are investing in its adoption.

According to a survey published by Marketing Charts, globally the top reason marketers use or plan to use artificial intelligence is to predict future behavior and customer needs (***). On the other hand, for ** percent of the *,*** marketing professionals surveyed, the reason is AI's ability to discover frequent customer journeys. The chart below shows the other solutions for which artificial intelligence is most relied upon in digital marketing.

Top reasons for using artificial intelligence to improve the consumer experience Italy, ****, in percent Source: ****

Customer privacy is an increasingly pressing issue for those working especially in digital marketing where personalization and privacy are diverging.

It wasn't long ago - in **** actually - that Google announced the removal of third-party cookies from its Chrome browser to protect its consumers. Cookies for more than two decades have been used by marketers to serve the right ads to the right audience at the right time [***].

5.1 Regulations

In Italy, digital marketing is regulated by several regulations that require marketers to comply with certain obligations and restrictions. Some of the most important regulations are:

The Consumer Code

Enacted by Legislative Decree No. *** of September *, ****, establishes the rules that must be complied with for consumer protection, including those concerning online marketing and sales activities. In particular, the Consumer Code prohibits unfair and deceptive business practices, such as misleading or aggressive advertising, and guarantees consumers the right to withdraw from a distance or off-premises contract within ** days of delivery of the product.

The Data Protection Regulation (***)

This European Regulation ****/***, published on May *, ****, in the Official Journal of the Union, establishes rules for the collection, processing, and storage of consumers' personal data. The GDPR requires data controllers to obtain users' explicit consent for the processing of their personal data and guarantees them the right to access, rectify, and delete data.

The ePrivacy Directive on Cookies

The European legislation to ensure data privacy in the European Union, enacted in ****, relates to the processing of personal data and the protection of privacy in the electronic communications sector. However, because it is a directive and not a law, it has had different legal implementations at ...

6.1 Segmentation

Source: ****

• Google ads
• Meta
• PMX - Publicis media exchange
• FGMC
• Facile.it