UK online adspend surges

30 March 2011

LONDON: Internet adspend surpassed £4bn ($6.4bn; €4.5bn) for the first time in the UK last year, with social media, mobile and video driving the sector's growth.

Trade body the IAB and PricewaterhouseCoopers, the business services firm, stated that web expenditure rose by 12.8% in 2010, hitting £4.1bn.

As a result, this medium claimed 25% of total advertising budgets, an improvement of two percentage points measured against 2009.

Display enjoyed a 27.5% leap, generating £945m, and enhanced its proportion of online ad sales from 20% in 2009 to 23% in 2010.

Within this, the revenues secured by pre-roll, mid-roll and post-roll video advertising increased from £28m to £54m during the period under assessment.

Contributors supporting these trends included a 200% like-for-like jump in display exposures via social media sites such as Facebook, and 91% absolute growth yielded by video.

By category, financial brands delivered 15.2% of display returns, overtaking entertainment and media on 14%, while consumer goods posted neared 13% for the 12 months as a whole.

Guy Phillipson, the IAB's chief executive officer, said: "The power of online to build brands is clearly reflected in the spectacular growth of display, thanks to the popularity of social media and video formats."

Paid search logged an 8% expansion, reaching £2.3bn, although the amount of internet spending allocated to this channel slipped from 61% to 57% year on year.

Classifieds also registered a 9.7% uptick, attracting £751m, despite continued pressures on the housing, recruitment and automotive industries.

Elsewhere, mobile experienced a 116% surge on a like-for-like basis, easily beating the 32% lift observed in 2009, as figures came in at £83m for the entire year.

"With mobile advertising finally coming of age, marketers are enjoying an incredible array of digital opportunities," said Phillipson.

Alongside hardening sentiment among companies, rising broadband penetration, and social media's growing popularity - now taking 25% of time spent using the web in the UK - all played a positive role.

Looking ahead, Ian Maude, an analyst at research firm Enders Analysis, predicted Facebook, which boasts 30m UK users, would further enhance its position going forward.

"Facebook has gone from nothing a couple of years ago to 10% of display spend," he said.

"Usage is beginning to translate into ad revenue. Facebook will be number one for online display in 2011."

"Facebook is becoming for display what Google is for search - it's increasingly becoming a one-stop shop for certain audiences."

Data sourced from IAB/Financial Times; additional content by Warc staff