Online adspend set to overtake TV in 2009

by Darren Davidson, Brand Republic 08-Apr-08, 09:10

LONDON - Online advertising revenues will overtake traditional television ad revenues by 2009, as internet adspend jumped 38% last year, according to a report by the Internet Advertising Bureau.

The IAB said that faster broadband speeds and greater ownership of laptops propelled internet advertising spending by 38% on a like-for-like basis last year to £2.8bn, taking its market share to 15.3%, up from 11.4% in 2006.

That represented a slowdown from 41% growth in 2006 and 66% in 2005, but it beat the IAB's forecasts of 35%.

The internet, which is now the biggest medium behind TV and press display advertising, is expected to sidestep the downturn in other media to overtake TV advertising revenues next year, the report said. The TV market is currently worth £3.4bn in terms of advertising revenues.

Guy Phillipson, chief executive of the IAB, said: "To grow 38% from £2bn to £2.8bn is a very powerful performance.

"It's clear marketing directors now recognise the value of online to drive their business and more and more are using rich media and video to build their brands, just as they do on TV."

The increasing popularity of social networking websites, the availability of cheap laptops, wireless connectivity and TV on demand, such as Channel 4's 4oD, were also cited as key drivers behind growth last year.

The report, which was compiled in partnership with accountancy firm PricewaterhouseCoopers and the World Advertising Research Centre, showed the internet was the biggest driving force behind overall advertising growth in 2007.

Online formats such as display ads, banners and video, all grew 31% last year, while embedded formats now make up almost 80% of total display advertising, after growth in the sector doubled within two years.

Elsewhere, the market for paid-for search ads is "not slowing but maturing" as advertisers use the medium "more intelligently".

The report said: "Brands are now... getting a greater return on investment through 'key phrases' and more accurate targeting that reflects consumer behaviour."

Classified advertising online also experienced substantial growth, up 54% last year to £585.3m. Recruitment companies remained the heaviest spending advertiser in this sector, with a 25.7% market share.

The automotive sector was the next biggest user of classified advertising with 11.9%, while technology leapfrogged finance for the first time to take third place.

Comments

Colin Donald - 08/04/2008

How long until a major UK advertiser swings a large proportion of its spend from TV to online, as with GM shifting $1.5bn in the US market? And following the lead of Unilever and Mindshare to back a slate of online TV shows? http://tinyurl.com/6qm9fz

Guy Stephens - 08/04/2008

this sounds like a bit of "fuzzy" math for the sake of hype. IAB predicts the end of TV :) Is this in Uganda?

Mark Smith - 08/04/2008

the tv market is valued at 3.4bn. if the internet is now worth £2.8bn and is growing massively every year, while tv is in decline, it seems pretty straight math to me that the internet is going to overtake tv soon

Duncan Pike - 09/04/2008

Interesting experiment over her in Oz - with one major home loan provider putting its entire budget into on-line advertising. They were keen to test what the upper limit would be and what the results would be with mass saturation. They have since returned from 100% to 40% of budget into on-line whilst they explore the results. On a side note the owner of the company currently front a campaign promoting the importance of TV in building brands.

Debbie Bremner - 09/04/2008

In light of the continued growth of the Internet as a medium. The medium needs to become much more transparent, if necessary creating a JIC, to compete head on in the UK market with TV, Press, and Direct Mail. There are still huge amounts of advertising budgets not being committed to the Internet for this very reason. Internet industry become more transparent.