Internet advertising expenditure jumped 21% last year to £1.6bn despite tough trading conditions.
The figures have been released by the Internet Advertising Bureau in partnership with Pricewaterhousecoopers and the World Advertising Research Centre.
The study found marketers demonstrated confidence in online advertising at a time when all major advertising mediums – TV, press, outdoor and radio – experienced falls in expenditure.
Online exceeded expectations to increase its market share by four points to 18.7%, only 0.6% behind total press display (19.3%) and 3% behind TV (21.7%).
Total internet display advertising spend rose 16.3% year-on-year to £333.8m. This was boosted by a 36.6% increase in spending on ‘embedded’ formats such as banners, rich media and video.
The growth in spenditure has been put down to the increase in people online in the UK, helped by the availability of cheap laptops, and the fact that 3G wireless ‘dongles’ and mobile phone web-browsing are no-longer considered luxuries.
The total advertising market was £8.9bn, down 0.7% year-on-year, during the period January to June 2008. The advertising market would have experienced a 4.6% decline without the internet’s growth.
Paid-for searches continues to lead the way, growing by 28% year-on-year and was worth £981m in the first half of 2008, with its market share marginally up to 58.3% of total online advertising (57.8% in first half of 2007).
Search has become a staple on the media schedule and is increasingly integrated into traditional and online advertising campaigns.
Internet display ads are still the only major display medium to be growing leading researchers to believe the increase reflects confidence in its ability to engage consumers, build brands and drive sales.
The study found that the majority of online display ad spend is still via major portals and online publishers, but sales networks – representing thousands of smaller sites – have increased their volumes and accounted for 41% of all display expenditure.
Sales houses and networks are growing the ‘long tail’ of internet advertising – smaller and niche websites – and offer advertisers a streamlined ‘quick sell’ for direct response campaigns.
An analysis of display advertising revenues in terms of sector split reveals that technology is the top category with a 17.3% market share, followed by finance at 11.9%, entertainment and media at 10.7% and recruitment at 9.9%.
Classifieds grew by 30.2% year-on-year to £361.6m as recruitment, property, automotive and small ads continued their migration to the internet from print classifieds, which declined 10% year-on-year.
Guy Phillipson, chief executive officer of the IAB UK said, “Online is not immune from the economic downturn, but while other sectors see falls in expenditure the internet is still experiencing an incredible increase and is propping up the entire advertising market.
“The growth in internet advertising spend is beating all expectations as advertisers look to maximise their budgets, and take advantage of new display advertising formats such as video. They are also increasing their investment in paid-for search marketing because it delivers measurable returns on investment.”
Paul Pilkington, director, entertainment and media practice, PricewaterhouseCoopers LLP added, “Overall, we believe online will perform better than other media during the downturn, but expect to see differences in performance across the various online segments."
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