UK Online Ad Growth

Internet advertising is expected to grow by 46.4% in 2006, with a 25% increase expected in 2007, according to a new report from Merrill Lynch.

Merrill Lynch puts this down to the increase in broadband penetration; falling traditional media prices accommodating new media; marketing becoming more data driven; and the closing of the mismatch of internet consumption v advertising expenditure.

The financial analyst says that the larger European advertising countries are all expected to post healthy increases in internet advertising growth for 2006-2008. Growth in internet expenditure for most larger advertising countries is now forecast to slow from very strong rates in 2004-2005, although Merrill Lynch says that it suspects these rates are subject to upward revision, as they have been historically.

In addition, broadband penetration in Europe is increasing rapidly. In 2005, penetration reached 35% and is expected to rise to 60% by 2010; this will support increasing internet advertising as a proportion of total ad spend. Sweden, the UK, Denmark and Norway have the highest levels of internet expenditure as a share of total adspend. At 8.6%, 7.5%, 5.4% and 4.7% respectively all of these countries are in the top half of European countries in terms of broadband penetration.

Merrill Lynch www.ml.com