UK online adspend grew 17.1% in 2008

Online adspend grew 17.1% in 2008, to £3.4 billion, according to the latest bi-annual study from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers.

The figures show that spending online increased by £540 million year on year.

Total UK advertising spend fell by 3.5% in 2008 to £17.5 billion. However, the research reveals that the internet grew its share to 19.2% of total UK advertising expenditure – up 3.7 percentage points on 2007 (15.5%).

In the second half of 2008, the internet’s share of all advertising spend peaked at 19.8%, overtaking total press display (all UK newspaper and magazine advertising combined). The UK is now the world’s most advanced market for internet advertising, said the IAB, 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 £637.4 million, accounting for 19% of all online advertising expenditure.

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

Paid-for search grew by 22.7% to £2 billion, a 59.3% share of all online advertising. In the second half of 2008 search broke through the billion pound barrier and accounted for £1 billion of online ad expenditure.

Classified ads were up 22.2% to £715.2 million, 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 the 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 – a leap from eighth to fifth place.

Guy Phillipson, chief executive of the IAB, said: “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.”