Internet advertising nears £1 billion for the first six months of 2006

In a depressed UK advertising market, internet marketing continues to grow with 40.3% like-for-like annual growth for the first half of 2006. This takes the medium to a half year high of £917.2 million - compared to £630.5 million a year ago - and a market share of 10.5%.

The new findings from the Internet Advertising Bureau (IAB), carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC), reveal that in just six months online advertising expenditure has reached nearly £1 billion and looks set to overtake spending on national press advertising before the end of 2006.

Whilst TV, press, radio, and direct mail have all experienced declining revenues in the past six months, online has buoyed the advertising market by contributing an additional £284 million to total UK advertising revenues.

This has been a very tough market, marked in most media by loss of confidence and declining advertising expenditure. In this environment, it’s encouraging to see the internet turning over nearly half a billion pounds a quarter – showing healthy growth from an already high base. The gap between online and newspaper advertising is narrowing fast and if this growth rate continues then we will be a £2 billion medium by the New Year. - Guy Phillipson, IAB CEO

Once again the internet is the fastest-growing advertising medium in the UK, commanding a market share of 10.5% for January to June 2006, up from 7.3% for the same period in 2005. This takes online advertising to within one percentage point of national press, which recorded an 11.4% share for the first half of 2006.

By comparison the internet is now:

• Double the size of outdoor (5.1%)
• Double the size of consumer magazines (4.6%)
• Three times the size of radio advertising (3.4%)
• Half the size of the TV advertising market, which recorded a 22.7% market share following a decline of 1.3%

Internet advertising can deliver well understood and segmented audiences, highly relevant context, measurable results, and a good return on investment. From this perspective, it is hardly surprising that internet advertising revenues have continued to grow, and that the medium is fast becoming part of the mainstream advertising mix. - Paul Pilkington, Director, Entertainment and Media practice, PricewaterhouseCoopers LLP

Paid-for search (sponsored listings that advertisers pay for when a consumer clicks through to their site) was 57.7% up year-on-year to £531.3 million - a share of 57.9% of the online total. Figures that clearly show that advertisers have adopted the format not only as a direct response tool but to help build their brands and secure an online presence.

Online display advertising (including banners, skyscrapers and other embedded formats) climbed 33.2% to £215.9 million and a 23.5% share of all online adspend, making it by far the fastest-growing display medium.

While traditional press advertising expenditure fell year-on-year, online classified advertising grew 23.4% to £162.2 million, a share of 17.7% for the first half of 2006. Interruptive formats, including 'pop ups', declined by 9% to £6.8 million - the format is now worth just 0.7% of all online advertising expenditure.

Recruitment and finance remain the highest-spending industry categories, but other sectors are increasing their online advertising spend. The Automotive and Entertainment and Media sectors represented 13.8% and 8.9% of the market respectively for the first half of 2006. Consumer Goods, which includes FMCG, rose to 4.6%, up from 3.6% in the same period of 2005. Retail saw its share increase to 3%, compared with 2.8% for the first half of 2005

• IAB members can now download the full figures from the Knowledge Bank of this site