UK internet sector breaks £2bn ad revenue barrier

And mobile phone giant Orange has conducted research showing that more than 50% of respondents would be happy to see more advertising on their mobiles, compared to one in 10 for advertising on TV.

Furthermore, 23% said they had purchased or were more likely to purchase the product advertised.

Of those saying that they saw the ads, more than half recalled the brands unprompted.

Less than 6% said that they disliked advertising on mobile phones and 75% said they would stop browsing a mobile internet site to view an ad if it were relevant to them.

The IAB, run by chief executive Guy Phillipson, refused to comment on the revenue figures ahead of the release of its annual adspend report, but industry sources said revenues would exceed £2bn on the back of growth from both search and display formats.

Alex Marks, head of marketing for Microsoft Digital Advertising Solutions in the UK, said he expected revenues to reach £2bn.

"I would be surprised if it was anywhere wide of the mark," Marks said.

He added that online display advertising was growing well, but  said that search continued to be the biggest driver of growth because of the low barrier to entry for first-time advertisers.

Marks said 2006 was the year that social networking took off and this was an important source of growth for the industry.

Social networking earns revenues from many formats, but one of the most significant is contextual text advertising - where ads appear according to keywords in the text - which the IAB has classed under search.