UK Online Ad Sector Posts 28% Growth

20 March 2002

Britain’s online ad sector bucked the 3.4% decline in the nation’s overall advertising market to post 28% growth last year, according to Forrester Research.

Benefiting from a 52% surge in the first half of the year before the market cooled, online ad revenues in 2001 totalled £122 million (€197m; $173m), around 4% of total advertising spend. Nevertheless, the sector’s expansion last year represents a slowdown from the 134% growth in 2000.

Internet advertising was boosted by a 59% jump in spend by the financial services industry, which accounted for 25% of online ad revenues in 2001. There were also rises in the consumer goods (+11%) and media/entertainment (+17%) categories.

Also driving the leap in internet spend was an increase in the number of first-time web advertisers. However, average expenditure per online campaign fell, as prices tumbled amid the dotcom downturn and concerns over the effectiveness of banner ads.

Forrester analyst Rebecca Ulph branded the online sector “the one bright spark in a dull marketing economy,” forecasting steady growth this year. However, she warned that prices would stay low, putting pressure on ad-dependent websites. “There is encouraging growth in online advertising,” she continued, “but in many cases the revenue is not going to be enough to sustain content-based sites.”

Data sourced from: BBC Online Business News (UK); BrandRepublic (UK); additional content by WARC staff