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Online ad spend powers ahead

Online ad spend powers ahead

Traditional media spend was static year on year in the face of online growth, according to new figures from the Internet Advertising Bureau (IAB).

On the face of things, statistics for the advertising industry over all appear positive. Total ad market value of £18.4 billion is up 4.3 per cent on 2006 – a considerable increase on the poor performance of 2006 vs 2005 which saw just a 1.1 per cent rise.

However when one looks at the performance of traditional media compared to digital, a different picture emerges.

Taking digital out of the equation, traditional media revenue is static at 15.6 billion year on year. Direct Mail has suffered worst with a year on year decline of 6.5 per cent, followed by Press Classified (down 3.2 per cent).

It is the staggering performance of internet ad spend that has helped to paint a rosier picture for the total ad market. With its revenue value now standing at £2.8 billion, the platform has seen an increase year on year of 38 per cent.

This places it as the third biggest ad platform in the UK, now holding 15.3 per cent of total advertising market share.

TV remains the leader with 21.8 per cent (worth £3.9 billion) followed by Press Display at 19.9 per cent (valued at £3.6 billion).

But their fortunes are on the wane. TV revenue only grew by 2.3 per cent year on year, while Press Display fell by 0.3 per cent.

The IAB study carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC), predicts that online could be set to overtake TV spending by the end of 2009.

But with the problems facing traditional media as a whole, as highlighted in this report, the outlook does not look good. Prospects look all the more bleak in the face of an advancing recession.

With a shift in the economy and advance of rich media, UTalkMarketing Founder, Niall McKinney, has already predicted online spend will over take TV, not in 2009, but this year.

Keydrivers for growth in the digital economy accordin to the IAB include the growth of the online audience, now standing at 32.5 million people in the UK. Also, broadband usage accounts for 90% of the online population (BMRB Internet Monitor, February 2008).

A fall in the price of laptops means they are no longer seen as a luxury item or business tool. This means more people, more eyeballs, more impressions, and so more advertising.

Also, the launch of services such as BBC iPlayer and Channel 4’s 4oD are breaking the barrier between video entertainment and the internet as a communications or shopping tool. 

Social media continues to have a massive impact on the market, especially as an audience driver. In 2007 ad spend for this area was relatively low and coming off a small base, yet looks set to grow steadily in the coming years.

Chief executive of the IAB, Guy Phillipson, said, “It’s clear marketing directors now recognise the value of online to drive their business, and more and more are using rich media and video to build their brands, just as they do on TV.

“With broadband speeds on the up and consumers spending more time on more sites, the outlook for online advertising is rosy - in fact we expect it to overtake TV in 2009 when it will become the UK’s biggest medium.” 

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