Google's UK Unit Set to Outsell Channel 4

02 November 2006

LONDON: Google will siphon around £900 million ($1,72bn; €1.34bn) from the UK advertising pot in 2006, claims Andy Duncan, ceo of Britain's second largest commercial TV network, the state-owned Channel 4 - whose own ad revenues are expected to reach about £800m.

Likening the Google phenomenon to global warming (an apt metaphor in the eyes of many), Duncan cautioned that UK broadcasters cannot afford to be "in denial" about the "fundamental change" to their industry.

Speaking in Cassandra-like tones to the Financial Times, he warned: "People need to wake up and realise that this is not just a cyclical issue. There is deep structural change taking place. If we want to protect the fantastic legacy of UK broadcasting, we need to wake up to this sooner rather than later."

The UK wing of the Internet Advertising Bureau estimated last month that online marketing grew by 40% to £917m (or 10.5% of the national market) in the first half of the year and is on course to overtake spending on national press advertising by the end of 2006.

Online advertisingis already twice the size of the outdoor and magazine sectors, and three times that of radio. However, although Google's share of this (very) plum pie is significant, exact figures are hard to come by.

Moreover, some observers believe it unrealistic to assume that Google's search ad revenues come entirely at the expense of other media. There appears to be little or no available data as to the number of search ads placed by 'first-time' advertisers or small businesses that would not contemplate mass media such as TV.

Cynics might wonder if Duncan's cries of 'wolf' are triggered less by concerns for the future of TV in toto, and more by his current lobbying for additional government funding.

Data sourced from Financial Times Online; additional content by WARC staff