UK Online Adspend To Pass £1 Billion

Internet advertising expenditure in the UK reached £490.8 million in the first half of 2005 and is predicted to exceed the £1 billion mark by the end of this year, according to new figures from the UK Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

According to the study, online revenues increased by 62.3% for the first six months of 2005, compared to the same period last year, rocketing past the 3% growth in overall UK adspend.

Despite online’s strong performance, television remains the largest single advertising medium with expenditures of £4.7 billion last year.

Online advertising in the UK is shown to have overtaken the market share of the outdoor advertising sector, with online representing a 5.8% share of the market compared to outdoor’s 5.1% in the first half of 2005.

Commenting on the figures, Guy Phillipson, chief executive of the IAB said: “These results have surpassed our expectations. At the end of 2004 the IAB predicted online would overtake outdoor by mid 2006 and we’ve beaten this target. Now the internet looks certain to be a £1 billion medium in 2005.”

Phillipson attributed online’s strong growth to broadband adoption and the resulting increased connection speeds, saying: “Broadband is experiencing record take up this year, which has fuelled internet consumption and in turn attracted a greater share of advertisers’ spend.”

Continental Research’s Internet Report Autumn 2005 report shows that the number of homes with internet access has risen by 6% in the last year, with 1.5 million new homes coming online, taking the total of users in the UK to 14 million, or 56% of the population.

Broadband adoption in the UK has more than doubled in the past twelve months, pushing it ahead of the US in terms of percentage of households with broadband.

The overall online retail boom has also aided broadband penetration, with marketers investing more and more online.

Phillipson added: “Marketers are recognising the internet’s full potential and are actively diverting budgets into online advertising.”

This opinion is confirmed by recent research published by online magazine, Direct, which revealed that increasing awareness in online advertising has resulted in marketers shifting their adspend onto online, with 60% planning to raise their online advertising expenditure in 2006.

According to Direct, marketers are allotting 41% of marketing budgets to online channels this year, taking money away from traditional direct marketing channels. The survey found that marketers allocated 75% for traditional media channels last year, compared to just 59% this year.

IAB: 020 8683 955 www.iabuk.net