Internet adspend set to outstrip national newspapers

by Jennifer Whitehead, Brand Republic 04-Oct-06, 08:45

LONDON - UK internet advertising spend rose by more than 40% in the first half of the year to £917.2m, and is now just under a percentage point behind national newspapers in terms of share.

According to figures released by the Internet Advertising Bureau in conjunction with PricewaterhouseCoopers, internet adspend now has a market share of 10.5%, compared with 11.4% for national newspapers. The IAB anticipates it will overtake spending on national newspapers before the end of this year.

Guy Phillipson, chief executive of the IAB, said: "The gap between online and newspaper advertising is narrowing fast and if this growth rate continues then we will be a £2bn medium by the New Year."

The breakdown of online adspend is 23.5% across display advertising and 57.9% on paid-for search, a rise of 58% on last year. Classified ads accounted for 17.7% and pop-ups, the only online format to experience a fall, accounted for just 0.7% of all online ad spend.

The figures also show that internet adspend has contributed an additional £284m to total UK advertising revenues during a period where spend on other media has been depressed.

This is attributed in part to the continuing growth of broadband, with 40% of UK now using fast internet connections, as well as an increase in the amount of time spend online -- now at an average of 23 hours a week, according to a poll by YouGov.

The IAB also said that new online ad formats and the popularity of blogs, social networking and user-generated-content sites had also raised the profile of the internet and attracted more advertisers.

Phillipson said: "This has been a very tough market, marked in most media by loss of confidence and declining advertising expenditure. In this environment, it's encouraging to see the internet turning over nearly half-a-billion pounds a quarter -- showing healthy growth from an already high base."

Figures released by ZenithOptimedia earlier this week forecast that UK online adspend would have a 12.9% share of the market by the end of the year. The UK is the first market where internet advertising has moved into double digits.

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