UK Internet Advertising Spend Grows 41%

New figures from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) reveal that UK internet advertising expenditure grew 41% in 2006, breaking the £2 billion barrier as marketers moved their budgets online.

The IAB figures show that £2 billion was spent online by advertisers targeting the 31 million (source: GfK NOP) people connected to the internet.

This growth increased the internet’s share of all advertising revenues to 11.4%, up from 7.8% in 2005.

In 2006, online expenditure overtook national newspaper advertising which grew 0.2% to £1.9 billion with a market share of 10.9%.

The results show that across traditional media combined, advertising fell by £466.1 million year on year, a decline of 2.9%.

However, the IAB says that with the increase in online advertising spend, the entire market grew by 1.1%.

Online enjoyed record spend in 2006, experiencing its highest market share ever reported with expenditure at £1 billion, a 12.4% share of total UK advertising.

Last year, online display advertising (which includes banners, skyscrapers and online sponsorships) grew 35% year on year to reach £453.7 million.

Paid-for search saw its growth sustained in 2006, increasing by 52% to £1.2 billion of total online ad spend, or a 57.8% share.

Meanwhile, online classified advertising also showed an increase, up 45% to £379 million, a share of 18.8%.

Key drivers of the growth experienced in 2006 are identified by the IAB as broadband, advertisers seizing the power of online video, and the rise of user generated content (UGC) and social networking.

At yesterday’s MediaTel Group future of digital seminar, one of the subjects under discussion was social networking and its importance for advertisers (see Seminar Examines Social Networking Phenomenon).

The general concensus reached by the panelists was that social networking should be seen in the wider context of web 2.0.

IAB: 020 8683 955 www.iabuk.net PricewaterhouseCoopers: www.pwc.com