U.K. Online Ad Spending Up 40%; Set to Overtake National Press This Year

In a depressed UK advertising market, internet marketing continues to grow with 40.3% annual growth for the first half of 2006. This takes the medium to a half year high of £917.2 million ($1.72 billion)- compared to £630.5 million a year ago - and a market share of 10.5%, up from 7.3% for the same period in 2005, according to IAB/PwC.

Paid-for search was 57.7% up year-on-year to £531.3 million - a share of 57.9% of the online total. Online display advertising climbed 33.2% to £215.9 million and a 23.5% share of all online ad spend, making it by far the fastest-growing display medium.

The new findings from the Internet Advertising Bureau (IAB), carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC), reveal that in just six months online advertising expenditure has reached nearly £1 billion and looks set to overtake spending on national press advertising before the end of 2006.

By comparison the U.K. internet ad market at 10.5% share is now:
  • Double the size of outdoor (5.1%)
  • Double the size of consumer magazines (4.6%)
  • Three times the size of radio advertising (3.4%)
  • Half the size of the TV advertising market, which recorded a 22.7% market share following a decline of 1.3%
  • Within one percentage point of national press, which recorded an 11.4% share for the first half of 2006.

While traditional press advertising expenditure fell year-on-year, online classified advertising grew 23.4% to £162.2 million, a share of 17.7% for the first half of 2006. Interruptive formats, including 'pop ups', declined by 9% to £6.8 million - the format is now worth just 0.7% of all online advertising expenditure.

Recruitment and finance remain the highest-spending industry categories, but other sectors are increasing their online advertising spend. 

  • Automotive and Entertainment represented 13.8% of the market
  • Media represented 13.8% and 8.9% of the market 
  • Consumer Goods, which includes FMCG, rose to 4.6%, up from 3.6% 
  • Retail saw its share increase to 3%, compared with 2.8% for the first half of 2005.

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