Online adspend continues to rise in UK

01 April 2010

LONDON: The internet posted an increase in advertising expenditure in the UK last year, at a time when many forms of traditional media saw revenue levels fall.

New figures from the IAB, the industry body, and PricewaterhouseCoopers, the business services group, revealed online adspend climbed by 4.2% last year to £3.54 billion ($5.4bn; €4.0bn).

The IAB/PwC study argued this result came in spite of the downturn and an overall decline in media budgets in the country, and reflected the "inexorable move of Britain's population online".

More specifically, the second half of last year delivered slightly more than half of the annual total, on £1.78bn, as trading conditions improved across the market as a whole.

Paid search enjoyed an expansion of 9.5% to £2.15bn year-on-year, giving this channel a 60.7% share of resources directed to the web, up from 59.3% in 2008.

Display, by contrast, shrank by 4.4% to £709 million, meaning this medium took 20% of the funds invested by brands online.

Within this, web video experienced growth of 140%, with pre-roll and post-roll formats registering a combined £28.3m in returns in the last 12 months.

The telecoms industry boasted the highest outlay on display advertising in the second half of last year, on 15.6%, with entertainment on 15.5%, retail on 11.9% and consumer goods on 10.1%.

"With sectors such as retail and consumer goods increasing their spending on the internet we can look forward to a healthier 2010," Guy Phillipson, chief executive officer of the IAB, said.

Less positively, classifieds contracted by 5.3% to £677m, a 19.1% share, largely as a consequence of the impact of the recession on the housing, automotive and real estate sectors.

Elsewhere, affiliate marketing generated an uptick of 38.2%, although revenues in this area still stood at a modest £72.6m.

Estimates from the UK Online Measurement Company and Nielsen showed the web's active user base in the UK reached 39.7 million people in February, compared with 35.5 million a year earlier.

Some 92% of the internet population now have access to broadband, with 63% using services that offer speeds of two megabytes or more, providing faster streaming of video and other similar content.

Platforms like Facebook are also reshaping the environment, the IAB said, with this one site alone now being responsible for around 20% of all time spent on the net in the UK.

Alongside making "online sessions more immersive", social media has "injected even more life into online usage making it the perfect environment for entertaining and engaging ads," the IAB added.

These trends, and results from the latest IPA/BDO Bellwether Report, which indicated advertising expenditure levels will rise this year, all contributed to the trade body's optimistic outlook for 2010.

Data sourced from IAB; additional content by Warc staff