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An Analysis of the Online Advertising and SEO Market in Germany

Germany has a deserved reputation as an economic powerhouse. With a population of eighty-two million people Germany is situated at the heart of Europe and has the continent's largest economy. The German economic scene is traditionally a hub of manufacturing industry with a strong emphasis on exports. But how does Germany measure up in this era of rapidly expanding ecommerce?

The Ecommerce Market in Germany

Online sales in Germany are experiencing significant growth with some forty-nine million people expected to be active digital buyers by 2018. This would represent a thirty-four per cent rise on current figures and bring total ecommerce sales up into the region of eighty-three billion dollars, a significant increase on 2015's performance of sixty-two billion dollars.

Online sales in Germany are expected to grow by twelve per cent through 2017, which represents the highest rate of growth in Europe. Reports predict that online sales will account for some fifty-three per cent of German gross domestic product by the end of 2017.

Sales from mobile devices are showing significant growth in Germany. In 2015 some thirty-two per cent of online sales were from consumers using mobile devices, with the market share between phones and tablets being roughly equal. More than sixty per cent of German retailers offer consumers omni-channel shopping options. One feature of German ecommerce that is fairly unique is that shoppers prefer to use direct debit and open invoice payment methods.

As was the case in other economies, German consumer spending peaked in the fourth-quarter holiday period of 2015 reaching some thirteen billion dollars in online sales. This accounted for twenty-seven per cent of total sales for the period and represented a double-digit increase on the same quarter in the previous year.

In terms of cross-border online shopping a significant number of German shoppers use foreign sites, particularly British and US ones. This is to obtain items that are not so easy to source at home. Inbound cross-border shopping is even more significant for Germany, however. In 2015 fifteen per cent of German online sales originated in Sweden, seventeen per cent in Spain and a hefty twenty-three per cent of digital shoppers on German sites were from Italy.

Characteristics of the German Ecommerce Shopper

German online shoppers totalled forty-seven million in 2015. The majority of that number, some sixty per cent, prefer to pay by invoice. Credit card transactions are significant too with around thirty-four per cent of sales accounted for by Visa, American Express or MasterCard. The remaining balance of total transactions is paid for by other methods such as PayPal or its local variants and by cash on delivery.

The products most commonly shopped for online in Germany are fashion items, consumer electronics and the various forms of consumer media, including film, music, games and books. German consumers are enthusiastic online shoppers: according to research by BITKOM sixty-five per cent of Germans shopped online in 2012 compared with fifty-three per cent just four years earlier. This is significantly higher than the European average of forty-five per cent. The potential for market growth is huge in Germany too: eighty-five per cent of the populace have access to the internet.

Companies wishing to expand into the German ecommerce market should be aware that German customers are very discerning and have a culture of returning a large proportion of the goods they buy online. Some studies suggest that returns can be as high as fifty per cent and that customers generally expect these to be made free of charge. German shoppers are also very wary about providing their personal data online. They will often check out an unfamiliar site's security features before making a purchase.

A recent study by Deutsche Card Services has concluded that the disparity between retail sales in western Germany and those in the former communist east of the country no longer exists. Ecommerce sales in the east are just as strong as those in the west.

The biggest players in ecommerce in Germany are Amazon and the German retail giant, Otto. Between them these two account for almost fifty per cent of German online sales. Amazon's online sales in 2015 were €7,790 million while Otto's totalled €2,300. Other significant online retailers in Germany include Apple, Alternate, Conrad, Tchibo, Bonprix, Cyberport, Notebooksbilliger.de and Zalando.

The opportunities for new general retailers to break into this market are very limited, though the prospects for new specialist and artisan retailers are consistently brighter. EBay Germany reports that by 2016 more than one thousand German retailers had achieved online sales in excess of one million Euros per year.

SEO in Germany

Recent research has indicated that there are in excess of four billion internet searches per month in Germany. Of these thirty-seven per cent were one-word searches, thirty-two per cent two words and twenty-five per cent were three or four word searches. As is the case in other countries, search terms are becoming increasingly descriptive and detailed. Long-tail keywords, therefore, are a very effective way to produce SEO results.

Around half of all online searches in Germany concern local information and entertainment options. Not far behind, at forty-five per cent of searches, is a category described as society, computers and electronics. The third most popular search term is travel, which comprises thirty-three per cent of internet searches in Germany.

Not surprisingly Google is Germany's most popular search engine with a ninety per cent market share. The remainder is divided between Yahoo, gmx.de, web.de and tOnline.

The growth of mobile searches in Germany is lagging behind that of US and UK consumers with not much more than five per cent of searches taking place on mobile devices. In terms of social media Facebook is growing fast in Germany, but the student-based network StudiVZ still outperforms it with a forty per cent market share.

German SEO Tactics

Germans favour online content that is very descriptive and prefer it to have a local rather than a global flavour. Indeed, German consumers are very loyal to their own manufacturers and prefer to buy German-made goods. In this regard they are similar to Japanese customers, who also favour indigenous companies.

Recommended SEO tactics in Germany are not that different to those one would use elsewhere. However, it pays dividends to use German hosting and a German ccTLD. Link building in Germany is quite challenging and German webmasters rarely accede to direct requests to exchange links. The best tactic is to build links organically by concentrating on building a site that German users enjoy and will link to by choice. Other approaches include using online PR and investigating relevant German directories.

SEO Costs in Germany

SEO consultancy is a fairly new profession to Germany with most firms having been established for no more than three or four years. A typical client portfolio for a German SEO consultancy comprises twenty-six to fifty small to medium firms. Each consultancy generally has two to five employees.

SEO pricing structures are usually based on either an hourly rate or a project fee. Hourly rates come in at $101 to $150 while a typical project would be charged at $2,501 to $5,000 dollars. Monthly retainer fees are generally in the region of $251 to $500.

German SEO Tactic Trends

The German SEO market is extremely competitive and in many areas has its own unique character. The German language is very precise and expressive so German users respond best to descriptive content and long-tail keyboards as opposed to the clean, ‘less is more' concept that is gaining ground in the English-speaking world. Adapting one's link building in a way that is appropriate to the German market is extremely important.

The SEO market in Germany can be quite ruthless and black hat tactics are still widespread. However, many top SEO specialists insist that a consistent and systematic commitment to more legitimate tactics will produce greater rewards in the long term.

Locally-developed tools such as Sistrix of Bonn, SEOlytics based in Hamburg and Searchmetrics from Berlin are widely used by German SEO specialists. Germans also prefer to use local top-level domains (TLDs) rather than .com site names, though with the exception of the major international brands, such as Facebook.

The State of Content and SEO Marketing in Germany

In the words of Andre Alpar, CEO of Performics and German digital marketing expert, ‘Germans are SEO nerds and nuts'. Like many of his countrymen and women, Alpar uses a variety of SEO tools to ply his trade. These include RatingSpy, SeeRobots, WP youtubeactivator, LinkParser, and WP SEO image renamer. German marketers are particularly enthusiastic about measuring, testing and experimenting and a lot of their evaluations take place in closed circles, such as Skype chats.

Much of Germany's SEO data is now available in that nation's own language and there is little impact from other languages on Germany's search engines results pages (SERPs). German marketing specialists are particular in making active use of Google's Spam Report index. They often use criteria that others ignore such as engaging with crawlers that evaluate the anchor text of all external links. They will also monitor performance after a link is established.

Successful Ecommerce in Germany

If there is one lesson that UK and other foreign marketing specialists need to learn about succeeding in the German ecommerce market it is that they cannot simply replicate the strategies they use at home. The online market in Germany has a very distinct character of its own and quality is always regarded as being more important than price.

Article contributed by Vision64. They are specialists in SEO for Germany and the United Kingdom with offices in the Stuttgart, Germany area.