UK Online Ad Explosion

There is no British stodginess about online advertising in the UK.

According to data released by the UK Internet Advertising Bureau (IAB), based on a study conducted in partnership with PricewaterhouseCoopers and the World Advertising Research Center, total online advertising expenditure in the UK surpassed all initial expectations in 2005, reaching £1.4 billion ($2.5 billion), a 65.6% increase on 2004. This represents close to 8% of all UK advertising spending in 2005. 

With a 7.8% market share, the Internet is now as much part of the UK advertising mainstream as newspapers," said David Hallerman, Senior Analyst at eMarketer. "Even more ad spending will migrate to the online space in the coming years, which will force other media to better integrate the Internet into their traditional offerings."

In fact, if online advertising in the UK stays on track, the IAB estimates that it will overtake national press advertising by the end of this year.

A recent article in The Times quoted Paul Pilkington, a director at PricewaterhouseCoopers, as saying that, far from slowing down, online advertising is likely to surpass £2 billion ($3.6 billion) in 2006.

Online advertising expenditure in the UK is driving the growth of the entire advertising industry there. Although advertising across all other media fell by close to £200 million ($360 million) in 2005, the dramatic increase in online marketing pushed total advertising spending to a 2.5% increase in 2005.

The news is not all bad for UK newspapers. As Mr. Pilkington told The Times, many advertisers are increasing their spending on newspaper websites. The IAB data showed that spending on online classified advertising increased by 62% from £161.4 million ($290 million) in 2004 to £262.2 million ($472 million) in 2005.

UK advertisers have clearly recognized that online search is effective for both direct response and brand-building initiatives. Spending on search advertising posted the largest increase of all online advertising formats in the UK in 2005, rising by 79%.

Display advertising was also important. Researchers at the IAB theorized that broadband penetration was an important factor in contributing to the online advertising spending jump. With 71% of UK home internet users now on broadband, advertisers are confidently increasing their investment in rich media ads. Spending on online display ads, often referred to as "banners," increased by 44% in 2005 as advertisers took advantage of increased connection speeds to deploy more rich media campaigns.

For more information on this area of the online world, read the eMarketer report, UK Online.

Article from www.eMarketer.com, 3 April 2006