Spending on internet advertising topped £1.75 billion in the first half of 2009, a rise of just 4.6 per cent compared to the same period last year. But the increase was enough for online advertising to pass declining TV spend, which sits at £1.64bn, for the first time in a major market.
The figures from PricewaterhouseCoopers and the IAB tell a success story for the online industry, which has toppled TV's 50 year reign as the UK's leading medium. Online advertising now accounts for 23.5 per cent of all ad spend compare to TV's 21.9 per cent.
It's not all been rosy, however, as online publishers have been devastated by falling display prices. Display advertising only makes up 18 per cent of online advertising, totalling a paltry £317m, compared to the £1.05bn and 60 per cent share taken up by search marketing.
Another warning to the industry is that, while Q1 2009 saw £920m spent on online advertising, Q2 saw just £832m.
But the figures tell the story of immense growth in a little over a decade, since online advertising started appealing to brands looking to sell goods online.
TV stoics have already criticised the figures, saying they are meaningless in a converging world, but they show that a new generation is growing up with the internet and brands have finally realised that's where they need to be.
Comments
This is an interesting fact, but I think the recession has had a huge impact on these results and in a buoyant market this may not be the case where online overtakes TV. It would be interesting to see what the results are at the end of 2010, when I think the economy and confidence in ad spend may be back.
Writing as Thinkbox, we'd like to add a bit of context to the IAB's story. We are not questioning the IAB's own figures or the impressive growth of online, just the validity of its comparisons. There are three points we'd like people to consider.
Firstly, the IAB has used only TV spot advertising revenue for comparison when they themselves have aggregated all forms of online marketing into one big number for themselves but not applied the same methodology to other media. I can't give you the equivalent number for the first half of 2009 but the Ofcom figure for total broadcast TV commercial revenue in 2008 was £3.74bn net. Online TV revenue is in addition to that.
Secondly, online's growth is not at the expense of TV advertising as the story might imply; broadcast TV in fact is also increasing its share of total advertising and - by an even bigger rate - its share of display. Both TV and online are increasing their share at the expense of print and DM.
Last \(horrible) year, TV advertising declined by 2.9% according to Ofcom, against a total advertising decline of 4.2% and a display decline of 5% \(according to WARC). Even in its own press release, the IAB has said that TV spot advertising declined by 16.1% in the first half of 2009 against a total decline of 16.6%, so again modest share growth and that's before we look at the other commercial revenues for TV \(like sponsorship, interactive etc.).
Finally, TV has never been the biggest advertising medium anyway; print remains the leader, hence the IAB is incorrect to say it is now the biggest medium. However, TV is the biggest display advertising medium having overtaken print display a few years ago. We didn't make a fuss about it at the time. Given that online TV advertising is the fastest growing part of online display – again according to the IAB – we expect that position to be maintained.
We in TV are happy to see online advertising grow because TV companies have major online interests. In fact we are a significant part of the online world. and it's about time we stopped talking about the internet as a rival medium to anything. It's a transforming technology that we can all benefit from, and not just in marketing.
Tess, its only natural to defend your industry, however I think the key point to take from all this is that as hard times hit, brands are looking for more specific, targeted and relevant advertising, to ensure they reach their true consumer base, and on a budget. Online can provide this, and marketers recognise the various channels under the online banner that they can exploit. The recession may not be the best time to do these figures, but it certainly proves which is the most powerful medium. The visual real estate provided by TV advertising is far more prominent in comparison to online channels, but when marketers use online, they more often than not employ a variety of different online channels \(search, email, display etc) to have the same impact and reach as a 15 second TV spot. You say "it's about time we stopped talking about the internet as a rival medium to anything", however I believe as an industry, you have recognised that these facts and figures are going to have a dramatic impact upon the clients you work with, and are scrapping to ensure online, as your 'rival', doesn't claw away at your budgets. You guys in TV will be hurting today, there is no doubt about that, and you will have to accept that times are a changing. But rather than try and pick apart the stats, how about you start asking yourself "How are we going to get back to number one"? And until IAB turn around and say "Sorry, the stats are wrong, TV is still top", you have to accept that online is now top of every brands wish list. But hell, what do I know, I'm in mobile. Give it ten years and we will be bigger than Online and TV put together anyway.
Carl, the only people the IAB needs to apologise to are the print industry which remains the biggest single advertising sector. As I explain above, TV has never been the biggest medium so we are managing to live with our pain, thanks, whilst also taking some small comfort from the fact that broadcast TV has also increased its share of advertising, even in a recession.
Our frustration with the IAB's approach is simply that the internet - and mobile - are technologies that all media can use, and TV is doing so very successfully. Maybe your prediction will come true and mobile will be the biggest advertising sector in 10 years' time but I'll bet you 100 quid that TV will be the content most consumed on it.
Great news, but it doesn't come as a great surprise. It simply shows that the Internet is now the defacto method of advertising - reasons being its cost effective, carried out in real time and transparent and accountable through metrics.
I expect this trend towards online advertising to continue as the traditional brands are now begining to understand its worth.
Ken Parnham, UK & Ireland Country Manager, ADTECH
IanC - 05/10/2009
Ken, I'd like to pick you up on a couple of points.
1. Online is cost effective? Sometimes it is, sometimes it isn't, same as the other media channels.
2. Carried out in real time? Ok I can see the odd advantage but for many campaigns once the budget is committed it's commited.
3. Transparent and accountable through metrics? This is my favourite because I think one of biggest disservices the online community have made to 'online' advertising is to continually imply it is relatively better than other channels because it is 'accountable'.
Yes, we can count and collect metrics, but this means online provides data that is 'countable' \(and of course the metrics and actual numbers you end up counting will vary massively depending on the cookie window etc).
I've coined a nice little phrase - "it might be countable but it doesn't make it accountable". So where is the disservice? I've lost count of the number of times that clients talk about taking money out of online display because they are quesitoning it's accountability because what they are counting does not show a positive short term ROI. The online industry is accidently brainwashing the advertiser community into thinking that online has to see a 'click ROI'.
Furthermore, no online channel influences consumers in total isolation from other consumer touchpoints. Even if what you are counting shows a positive ROI this can be misleading \(unless you are a single channel search advertiser parhaps) because everything you count through one channel will be partly influenced by loads of other touchpoints. If you spend another £2m on TV you can bet your life your paid search campaign will suddenly become more 'accountable'.
Measurablity is a great asset of the online channels but we need to stop continually repeating that it's accountable and implying that other channels are not.
All media are more or less equally accountable if you know how to measure and model their effects. Simply counting click-throughs and sales via a channel does not tell the whole story.
It's only my opinion though..
Interesting to see online advertising outweigh TV in UK... and Ian, I do think digital spend can be very cost-effective... but still think people are falling back into spending their online budgets in the 'traditional' ways far, far too often. Display and banner ads are still eating a lot of budget, despite many studies showing their decreasing effectiveness.
And where's the Social Media spend online? It still has to beg for scraps from the budgets of more established, traditional online spends like SEO and Banner Ads.
Finding and engaging people where they are already having conversations online is vital for developing brand/product advocates - but all too often digital spend goes on advertising - banner and display ads - not on community engagement.
I think this is because people think social media outreach is fluffy... but there are stats to prove otherwise. We ran a benchmarking study with Social Media against banner advertising... and Social Media was hands down winner for both engagement and awareness - and was 23 times more cost-effective.
You can see the report for free here if you're interested:
http://www.qubemedia.net/banner-ads-social-media.php
Comments
Zoe Sands - 30/09/2009
This is an interesting fact, but I think the recession has had a huge impact on these results and in a buoyant market this may not be the case where online overtakes TV. It would be interesting to see what the results are at the end of 2010, when I think the economy and confidence in ad spend may be back.
TESS ALPS - 30/09/2009
Writing as Thinkbox, we'd like to add a bit of context to the IAB's story. We are not questioning the IAB's own figures or the impressive growth of online, just the validity of its comparisons. There are three points we'd like people to consider. Firstly, the IAB has used only TV spot advertising revenue for comparison when they themselves have aggregated all forms of online marketing into one big number for themselves but not applied the same methodology to other media. I can't give you the equivalent number for the first half of 2009 but the Ofcom figure for total broadcast TV commercial revenue in 2008 was £3.74bn net. Online TV revenue is in addition to that. Secondly, online's growth is not at the expense of TV advertising as the story might imply; broadcast TV in fact is also increasing its share of total advertising and - by an even bigger rate - its share of display. Both TV and online are increasing their share at the expense of print and DM. Last \(horrible) year, TV advertising declined by 2.9% according to Ofcom, against a total advertising decline of 4.2% and a display decline of 5% \(according to WARC). Even in its own press release, the IAB has said that TV spot advertising declined by 16.1% in the first half of 2009 against a total decline of 16.6%, so again modest share growth and that's before we look at the other commercial revenues for TV \(like sponsorship, interactive etc.). Finally, TV has never been the biggest advertising medium anyway; print remains the leader, hence the IAB is incorrect to say it is now the biggest medium. However, TV is the biggest display advertising medium having overtaken print display a few years ago. We didn't make a fuss about it at the time. Given that online TV advertising is the fastest growing part of online display – again according to the IAB – we expect that position to be maintained. We in TV are happy to see online advertising grow because TV companies have major online interests. In fact we are a significant part of the online world. and it's about time we stopped talking about the internet as a rival medium to anything. It's a transforming technology that we can all benefit from, and not just in marketing.
Carl Martin - 01/10/2009
Tess, its only natural to defend your industry, however I think the key point to take from all this is that as hard times hit, brands are looking for more specific, targeted and relevant advertising, to ensure they reach their true consumer base, and on a budget. Online can provide this, and marketers recognise the various channels under the online banner that they can exploit. The recession may not be the best time to do these figures, but it certainly proves which is the most powerful medium. The visual real estate provided by TV advertising is far more prominent in comparison to online channels, but when marketers use online, they more often than not employ a variety of different online channels \(search, email, display etc) to have the same impact and reach as a 15 second TV spot. You say "it's about time we stopped talking about the internet as a rival medium to anything", however I believe as an industry, you have recognised that these facts and figures are going to have a dramatic impact upon the clients you work with, and are scrapping to ensure online, as your 'rival', doesn't claw away at your budgets. You guys in TV will be hurting today, there is no doubt about that, and you will have to accept that times are a changing. But rather than try and pick apart the stats, how about you start asking yourself "How are we going to get back to number one"? And until IAB turn around and say "Sorry, the stats are wrong, TV is still top", you have to accept that online is now top of every brands wish list. But hell, what do I know, I'm in mobile. Give it ten years and we will be bigger than Online and TV put together anyway.
TESS ALPS - 01/10/2009
Carl, the only people the IAB needs to apologise to are the print industry which remains the biggest single advertising sector. As I explain above, TV has never been the biggest medium so we are managing to live with our pain, thanks, whilst also taking some small comfort from the fact that broadcast TV has also increased its share of advertising, even in a recession. Our frustration with the IAB's approach is simply that the internet - and mobile - are technologies that all media can use, and TV is doing so very successfully. Maybe your prediction will come true and mobile will be the biggest advertising sector in 10 years' time but I'll bet you 100 quid that TV will be the content most consumed on it.
Ken Parnham - 02/10/2009
Great news, but it doesn't come as a great surprise. It simply shows that the Internet is now the defacto method of advertising - reasons being its cost effective, carried out in real time and transparent and accountable through metrics. I expect this trend towards online advertising to continue as the traditional brands are now begining to understand its worth. Ken Parnham, UK & Ireland Country Manager, ADTECH
IanC - 05/10/2009
Ken, I'd like to pick you up on a couple of points. 1. Online is cost effective? Sometimes it is, sometimes it isn't, same as the other media channels. 2. Carried out in real time? Ok I can see the odd advantage but for many campaigns once the budget is committed it's commited. 3. Transparent and accountable through metrics? This is my favourite because I think one of biggest disservices the online community have made to 'online' advertising is to continually imply it is relatively better than other channels because it is 'accountable'. Yes, we can count and collect metrics, but this means online provides data that is 'countable' \(and of course the metrics and actual numbers you end up counting will vary massively depending on the cookie window etc). I've coined a nice little phrase - "it might be countable but it doesn't make it accountable". So where is the disservice? I've lost count of the number of times that clients talk about taking money out of online display because they are quesitoning it's accountability because what they are counting does not show a positive short term ROI. The online industry is accidently brainwashing the advertiser community into thinking that online has to see a 'click ROI'. Furthermore, no online channel influences consumers in total isolation from other consumer touchpoints. Even if what you are counting shows a positive ROI this can be misleading \(unless you are a single channel search advertiser parhaps) because everything you count through one channel will be partly influenced by loads of other touchpoints. If you spend another £2m on TV you can bet your life your paid search campaign will suddenly become more 'accountable'. Measurablity is a great asset of the online channels but we need to stop continually repeating that it's accountable and implying that other channels are not. All media are more or less equally accountable if you know how to measure and model their effects. Simply counting click-throughs and sales via a channel does not tell the whole story. It's only my opinion though..
Nigel Cooper - 07/10/2009
Interesting to see online advertising outweigh TV in UK... and Ian, I do think digital spend can be very cost-effective... but still think people are falling back into spending their online budgets in the 'traditional' ways far, far too often. Display and banner ads are still eating a lot of budget, despite many studies showing their decreasing effectiveness. And where's the Social Media spend online? It still has to beg for scraps from the budgets of more established, traditional online spends like SEO and Banner Ads. Finding and engaging people where they are already having conversations online is vital for developing brand/product advocates - but all too often digital spend goes on advertising - banner and display ads - not on community engagement. I think this is because people think social media outreach is fluffy... but there are stats to prove otherwise. We ran a benchmarking study with Social Media against banner advertising... and Social Media was hands down winner for both engagement and awareness - and was 23 times more cost-effective. You can see the report for free here if you're interested: http://www.qubemedia.net/banner-ads-social-media.php