Online ad spend up 17 per cent in 2008

Internet advertising continues to buck wider advertising industry trends, with spend rising 17% to £3.3bn in 2008.

Wednesday, 1 April 2009

Figures released today by the IAB show that the internet was the only marketing medium to experience growth in 2008, with online market share rising to 19.2% as advertisers seek greater accountability and return on investment.

The IAB's bi-annual online advertising expenditure study - carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC) - shows that spending online increased by £540 million year-on-year. This was achieved against a challenging backdrop which has seen total UK advertising spend fall by 3.5% in 2008 to £17.5bn.

In the second half of 2008, the internet’s share of all advertising spend actually peaked at 19.8%, overtaking total press display. The UK is now the world’s most advanced market for internet advertising with £1 in every £5 of media budgets spent online.

Online display was the only display medium to grow in 2008, up 7.7% to £637.4m, accounting for 19% of all online advertising expenditure. The core embedded formats attracted an increasing number of advertisers, buoyed by sophisticated and measurable new formats such as TV-style rich media.

The continued growth of rich media embedded formats and video is accelerating the decline of interruptive formats, which only accounted for 0.4% of all online spend in 2008.

Paid-for search continues to lead the way online as marketers look for guaranteed accountability, measurability and fast results. Paid-for search grew by 22.7% to £1.987bn, a 59.3% share of all online advertising.

Classified growth remained healthy, up 22.2% to £715.2 millions, a share of 21.4%. Online classifieds across recruitment, property and automotive increased, as these sectors migrated from print to digital formats.

For the first time in 2008, the study broke out the online display figures by sector. Throughout the year the fastest-growing display sector was entertainment and media. In the first half of 2008 it accounted for 10.7% of all online display advertising, and in the second leapt almost six percentage points to 16.3%. Retail also increased its spend significantly, rising from 6.3% in the first half of 2008 to 9.1% in the second half.

When all formats are combined – search, classifieds and display – recruitment continues as the leading sector, accounting for 23.8% of all online advertising spend, followed by automotive (13.5%), technology (11.2%), property (9.7%) and finance (7.6%).

Guy Phillipson, chief executive of the IAB, says: "These are really tough times and advertising budgets are being slashed. More than ever, marketers have to demonstrate a clear return on their media investment – and accountability is online's trump card. UK advertisers have become digital savvy and they're now using rich media, ad networks and search in intelligent ways to achieve their sales and brand targets. This shift to digital has propelled online to become a 20% medium."

Phil Stokes, UK head of entertainment & media at PricewaterhouseCoopers, adds: “As audiences continue to migrate to an online environment for commerce, information, social interaction and entertainment, advertisers are following in ever greater numbers. The growth in broadband household penetration is allowing a far richer mix of video entertainment and advertising to create a ‘near-TV’ feel for mass audiences online and advertisers can see new and innovative ways to build and sustain brands with targeted advertising.”

For more information click here, or contact:

Amy Kean at IAB UK on 07739 372042 or amy@iabuk.net
Mark Terry-Lush at IAB UK on 07740 432 112 or mark@renegademedia.net
Anna White at PricewaterhouseCoopers LLP on 020 7804 9719 or anna.r.white@uk.pwc.com

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