Internet Marketing In Germany For Canadian and American Internet Marketing Companies

Kristoffer Koonar

Sep 10 2006
Word Count: 1015

This Article MAY NOT be used without proper referencing to the Author.

Table of Contents

Table of Contents 2
Introduction 3
Germany’s Internet Industry 3
Why Do Business in Germany 4
Recommendations 6
Conclusion 6
References 7

Introduction

While there are many similarities and differences between the business sectors in Canada and Germany, this paper will focus on and highlight the major differences between them in the Internet industry. Next, this paper will provide an Industry Report for Canadian Internet Marketing firms to provide them with how and why to do business in Germany. Finally, this paper will end with some recommendations for Canadian Internet Marketing Firms that want work with German organizations.

Canadian Internet Marketing firms may be able to do business with German organizations if they target the right business sectors and the proper protocol is used. Internet Marketing is a relatively new business sector born from the rapid increase in e-commerce. According to Jupiter Research, in 2005 Internet Marketing hit $9 billion in advertising. By 2007, this number is expected to skyrocket to $14 billion. It is not just small organizations that are learning the value of acquiring customers through the Internet; large companies, world-wide, are also taking part in this. For example in 2006, Daimler Chrysler is expected to spend an estimated $400 Million online advertising.

Germany’s Internet Industry

The Internet was introduced to mainstream Canada around 1995. It was not until 1997 that the Internet made its way into Germany. To this day, Germany is still trying to make up the two year lag time as two years is considered a long time in the Internet world.

When the Internet first became main-stream in Germany, it largely consisted of copycat models from American business such as:

USA Company
German Equivalent

Ebay Alan Ricardo
Epionions Dooyoo, Ciao

Amazon Beucher.de

Hotmail web.de

However, today German companies are not just copycats but are rather becoming more innovative and experimenting with new e-commerce models. Germany is expected to have spent 2.5% of GNP in 2005 in comparison to Canada which spent 2.00% in 2005.

While it may be argued that Canadian Internet Marketing firms may have an advantage because of the two year difference of Internet introduction, it would be wrong for any Canadian Firm to think that Germany is disadvantaged in Internet Marketing technologies or that Germany is just waiting for foreigners to sell them Internet services. As discussed with Thomas Bittner, from ABB Group, Germany is investing aggressively in its Internet Marketing across industry sectors. As such, Internet Marketing is becoming an integral part of corporate strategy.

Why Do Business in Germany?

Even though Germany is becoming more and more innovative in Internet Marketing, some German companies may still choose to work with foreign Internet Marketing firms because that is where their products and services are exported. Canadian Internet Marketing firms looking for new markets to expand should consider expanding to Germany.

In August 2006, Professor Khare discussed Germany’s economic makeup. Germany has a large population of 82.5 million people that cover 357, 027k2 of land. As of March 2006 Germany has an estimated 50 million internet users. Additionally, Germany has the largest economy in the EU. Additionally, according to Dresdner Bank, tourism spending in 2006 is expected to reach 25 billion Euros or approximately 35 billion CND.

Germany exports a large amount of products to Canada and United States. Canadian imports from Germany rose from $3.83 billion in 1990 to $10.26 billion in 2005. However, Canadian Internet Marketing firms should not just concentrate on large companies. Many large German companies that export to Canada already have their own Canadian in-house Internet Marketing team. This is a direct result of multinational corporations choosing to hire advertising firms in the country they are selling in.

Germans have always been entrepreneurial which is evident in large corporations that were formed during”Gründerjahre” (founding years) such as Mercedes and Siemens. Many entrepreneurial activities today focus around the “Mittelstand”. Many of these Mittelstand might be interested in marketing their products and services through the Internet. As such, if the firm exports to Canada, then it may also choose to utilize a Canadian Internet Marketing firm.

Additionally, more small business entrepreneurial activity is taking place in Germany today which is likely due to the Internet. This is evidenced by the rise in venture capital firms that often finance small business. The low barriers to entry, including low cost for starting Internet services (such as Internet Marketing and Website Design), would make Internet based businesses attractive to local Germans. This then suggests that there are plenty of German based Internet Marketing firms to cater to local German businesses.

Therefore, Canadian Internet Marketing Firms should focus on working with German companies that either export to Canada or are some type of tourism based businesses. Germany’s tourism sites that are catered to Canadians visiting Germany would benefit from having a Canadian Internet Marketing company design and implement the campaigns. In this case, a Canadian firm would have a better understanding of local buying behaviors. As such, Canadian Internet Marketing firms looking to expand in Germany should focus on this aspect.

Recommendations

Canadian Internet Marketing Firms wanting to expand and do business in Germany will have to ensure that they are following local protocol and focus on a niche market. The following are a few suggestions:

• Be Formal. This is evidenced by the fact that at all business meetings a jacket and tie are worn (or business suit for women).

• Focus on the Mittelstand or medium sized business. Larger companies might have their own in house North American marketing experts.

• Trades shows are an excellent way to showcase new services. More than 90% of new products and technologies are introduced during trade fairs.

• Presentations need to be detailed.

• Offer something of value that cannot be easily acquired in Germany.

Conclusion

Germany has a thriving Internet business sector of their own so Canadian Internet Marketing firms should concentrate on Mittlestand businesses that export to Canada or tourism based businesses. This makes it feasible for a Canadian firm to pitch to new businesses. The best way to introduce a new product or service is through a relevant trade fair. Finally, Canadian Internet Marketing businesses should be mindful of the cultural differences and should follow standard etiquette.

References

Bellmann, K. (2006). “Research and Innovation,” RDGB-654, Day 4 Slides

“Canada and Germany.” Government of Canada. Fetched September 1 2006:
http://www.dfait-maeci.gc.ca/canada-europa/germany/can_ber-en.asp.

“Germany Internet Usages and State” Fetched September 1 2006: http://www.internetworldstats.com/eu/de.htm

Khare, A. (2006). “Deutschland,” RDGB-654, Day 0 Introduction, Page 5

Marc-Oliver Fielder, Thomas Hellman (May 2001). “Against All Odds: The Late But Rapid Development Of The Germany Venture Capital Industry. Fetched September 1 2006: http://scholar.google.com/scholar?hl=en&lr=&q=cache:D_1uSrfrhL0J:strategy.sauder.ubc.ca/hellmann/pdfs/against_all_odds_02.pdf+german+internet+industry

“Travel Report 2006: Moderate growth in German travel spending”: Fetched September 1 2006: http://www.allianz.com/azcom/dp/cda/0,,1065513-44,00.html

Vogelstein, F (2005, Aug 12). Yahoo’s Brilliant Solution. Fortune, 42-55

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