Digital Landscape Poland 2008: Polish internet market accelerates

This first edition of Digital Landscape: Poland report is the most comprehensive study prepared by a leading online magazine Internet Standard. It gives an overview of the Polish internet industry, showing changes in online population, major market players, their revenues, current and future investment plans, and online adspend forecast. Covering digital advertising, e-commerce as well as ways of starting a business in Poland, this report is an indispensable study for anyone interested in finding out more about investment opportunities in the country. Digital Landscape: Poland also gathers investors and industry leaders' comments on the country's development, giving a fresh view on the latest issues.

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http://files.idg.pl/news/Digital Landscape Poland - January 2008 - Polish internet market accelerates.zip" target="_blank" class="link"> In this brief summary we outline the main findings of the Digital Landscape: Poland report. The full version of the report is available to be downloaded on this website.

Poland, member of NATO (since 1999) and the European Union (since 2004), has a population of about 38 million people. Gross domestic product per capita in the country was estimated to be 16,500 USD in 2007. According to SMG/KRC NetTrack research, internet penetration in Poland was around 42% in Q2 in 2007. That means there were 12.8 million internet users (over 15 years old). Over two thirds of Polish users go online every day or almost every day.

Interactive Advertising Bureau Polska (IAB Polska) estimates that in 2006 internet advertising market was worth 215 million PLN (60 million EUR), excluding search adverstising. Unfortunately Google does not disclose its revenues, which makes the process of estimating the value of the market quite difficult. Nevertheless, IAB Polska prompted that paid search advertising could have been worth 60 million PLN (16.6 million EUR) in 2006. That makes a total market value of 275 million PLN (76 million EUR). It also means that internet advertising has more than 5% of all media adspend in the country.

IAB Polska forecasts that in 2007 internet adspend reached 305 million PLN (84.5 million EUR) and search engine marketing revenues rose up to 110 million PLN (30.5 million EUR). According to these estimations online market was worth 415 million PLN (around 115 million EUR) in 2007.

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There are thousands of internet firms operating in Poland. Google is the most popular website in the country (it is visited by 77% Polish users every month). The second most popular internet destination is Onet.pl, a web portal owned by a large media group ITI. The Digital Landscape: Poland report outlines the main market players (both local and foreign firms operating in the country, grouped into categories: advertising bureaus and networks, interactive agencies, web portals, other services). It also describes companies' ownership structure and business models.

E-commerce

From 2001 to 2006 Polish ecommerce market grew by over 4500%. The highest growth rate was seen in 2000-2004 when Polish online retail trade sales increased by 200% per year. The value of the market in 2006 was estimated to be 5 billion PLN (1.39 billion EUR). Online auction platforms generated 3 billion PLN, online shops had a turnover of 2 billion PLN (500 million EUR). According to the latest estimations published by Rzeczpospolita, Polish online shops and auction platforms generated 8 billion PLN (2.22 billion EUR) in 2007.

Polish e-commerce market is significantly bigger than Irish, Portuguese or Greek.

Since 2005 about 60% of Polish e-commerce sales have been made by transactions performed on auction platforms. The indisputable online auction leader in Poland is Allegro.pl.

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The catalogue run by Sklepy24.pl currently contains information about 3,300 Polish online stores divided into 12 groups. Home & Garden makes the largest category; there are another four significantly big groups: Health & Beauty, Gifts & Flowers, Electronics & Photo and Computers. There are not many Polish shops selling food, only a few from 77 listed in the catalogue offer fresh food (e.g. Frisco.pl).

According to the data published by Eurostat, in 2006 one in eight Poles and one in four Polish internet users did online shopping at least once. This proportion places Poland on 17th position in the European ranking, next to Slovenia, Czech Republic and Slovakia.

Polish e-commerce in brief
From 2001 till 2006 Polish e-commerce market grew by over 4500%

The value of e-commerce is estimated to be 8 billion PLN in 2006 (2.22 billion EUR)

Online auction platforms generated 3 billion PLN in 2006 (830 million EUR)


A surge of new investment

Polish internet market can be considered a mature one with local companies having very strong market positions. Although foreign big players have started their operations in Poland it has proved difficult for them to outplace local firms in a short period of time. A good example is eBay, which entered Polish market in 2005 and is still behind local auction platform - Allegro.pl.

What created a lot of stir on Polish market recently were two announcements: both MySpace and AOL decided to open their offices in Poland. At the moment MySpace is in the process of hiring staff for marketing and content management departments. Interestingly, MySpace is perceived as one of a few international companies which stands real chances of conquering Polish market. Other international social networking players (Hi5 and Bebo) are trying to enter Polish market, but they will have to face very strong competition. There are already local firms: Fotka.pl (with more than 3 million users a month), Moja Generacja (with more than 2 million users a month), Nasza-Klasa.pl (with more than 6 million registered users), Grono.net (with more than 1 million users a month), ePuls.pl (with round 600 thousand users a month), which are doing very well and which may prove very difficult to compete with.

Many Polish firms made public offerings in 2007. There are already a few companies which have been listed on the stock exchange in Warsaw for many years (Interia, Agora). Last couple of years has shown that more and more firms find stock exchange a very tempting way for finding new resources for business development. Hence, Bankier.pl S.A., Gadu-Gadu S.A., Travelplanet S.A. and many more firms went public.

It goes without saying that year 2007 should be called "a year of investments". The amount of venture-capital investments and acquisitions has not been seen on Polish market before. There are many traditional firms buying small and medium size internet companies to gain market advantage or online entrepreneurs widening their portfolios and increasing revenues from the internet.

You will find more details of the development of Polish online market in the full version of the report available http://files.idg.pl/news/Digital Landscape Poland - January 2008 - Polish internet market accelerates.zip" target="_blank" class="link" title="here">here. [Compressed PDF file.]

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If you would like to contribute to the second edition of the Digital Landscape: Poland report, please contact the authors.

If you would like to advertise in the report, please contact Anna Stando on +48 22 321 78 00 (or Anna_Stando AT idg.com.pl).

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