Online adspend rises in the UK

06 October 2010

LONDON: Online advertising expenditure continues to rise in the UK, with consumer goods brands and retailers among the key drivers of this trend.

Estimates from industry body the IAB, compiled in partnership with PricewaterhouseCoopers and Warc, show internet ad revenues increased 10%, to £1.97bn ($3.1bn; €2.3bn), during the first half of 2010.

This took the medium to a record 24.3% market share, and also meant the net out-performed the advertising sector as a whole, which registered a 6.3% uptick to £8.1bn.

Paid search maintained a dominant position, receiving 59.9% of web advertising sales, improving 8.9% compared with H1 2009.

Display sales, on £381m, jumped 6.4%, delivering around 19% of online adspend, largely flat year-on-year.

Standard formats such as banners contributed £272m of this figure, up from £238m on an annual basis, and pre- and post-roll video returns also rose 82%, reaching £20.7m.

Meanwhile, social networking platforms like Facebook and MySpace claimed 13% of internet display advertising takings.

"The effectiveness of social and video ads for classic brand building is reflected in these formats enjoying exponential growth," said Guy Phillipson, ceo of the IAB.

"Add to that the clear accountability of performance marketing online, and we have a channel which now commands a quarter of total UK advertising spend."

Strengthening demand among automotive, recruitment and B2B firms helped classifieds expand 11.4% to £379m.

Lead generation, where businesses pay for prospects rather than clickthroughs, drew £21.6m from brand owners.

By category, entertainment and media companies provided 14.4% of display income, a 1.2% improvement year-on-year, while financial services was down 1.6% on 13.3%.

The FMCG segment generated 11.8% of revenues, a 2.2% leap, and retailers' display outlay increased 1.5% to 8.4%.

One major factors fuelling overall growth was the rising internet population, which grew by 3.7m people in the 12 months to April 2010, to 40.5m in all, including an extra 1m users aged 55 years old or more.

The fact 92% of netizens have broadband, and wider uptake of the iPad, smartphones and e-readers like Amazon's Kindle, are also encouraging consumers to access the web.

"As awareness of cheap connectivity increases with the flood of devices onto the market more people are online, for longer," the IAB said.

Social networks account for 23% of all time spent online, offering "immersive" experiences and substantial opportunities for brands to engage customers, the IAB said.

Elsewhere, TV adspend climbed 16% in the first half to a 25.5% share, while press display surged by 17.9% and cinema gained 12%.

"These figures reflect a sense of positivity in the advertising industry," said Anna Bartz, strategy manager at PwC.

Data sourced from IAB; additional content by Warc staff