Oct. 10, 2007

According to an IAB (Internet Advertising Bureau) commissioned study by PricewaterhouseCoopers and the World Advertising Research Centre, overall Internet advertising spending in Britain was pegged at £1.33 billion ($2.66 billion) in the first half of this year.

The numbers are up from £917.2 million ($1.83 billion) in the first half of last year.

The IAB expects online ad spending to reach £2.75 billion ($5.5 billion) by the end of the year.

Karin von Abrams, eMarketer senior analyst says "what these numbers demonstrate is that Internet marketing, like the Web audience, have truly come of age in Britain. With average daily Internet usage up 158 percent since 2003, and online campaign measurement growing in sophistication, Internet advertisers have little hesitation about spending major amounts of money online.

Abrams added "overall, the UK economy was generally strong in the first half of this year. Even then, it's remarkable to realize that online advertising is growing so strongly on the back of robust gains in 2006. If the holiday shopping season does push total online expenditure to £2.75 billion by the end of 2007, we could also be looking at another strong growth period next year."

The U.K. advertising market grew by 3.1 percent in the first half of this year, to £9.1 billion ($18.2 billion). Without online ads, spending would have dropped by about 1.9 percent (£147 million or $294 million).

According to the IAB's U.K. office, on average, Internet advertising accounts for about 14.7 percent of all U.K. advertising spending.

Guy Phillipson, CEO of IAB-UK said "today, nearly 90 percent of all U.K. Internet users are on high-speed 'Net access, and about 40 percent are using wireless. We’re also seeing women and the over-50s spending far more time online, which makes the Web a very attractive medium to a much broader set of advertisers."

For its part, online classified ad spending is increasing by about 72 percent annually, and accounts for approximately 20.7 percent of all Internet advertising spending.

Internet display advertising grew by about 32.9 percent to £287 million ($574 million), with a combined market share of slightly under 21.6 percent so far in 2007.

On average, paid search grew by about 44 percent, to £762.3 million ($1.52 billion), and represented more than half of all Internet ad spending in Britain, with a tad over 57 percent of the total.

The IAB said that at least 50 percent of all e-commerce transactions started with search, driving the ad category's growth.

The IAB's U.K. office didn't detail what comprised the remaining 0.6 percent of online ad spending, which likely included eMail advertising in the mix.

eMarketer's own prediction for Britain's Internet ad market is generally in line with the IAB numbers, at £2.64 billion ($5.28 billion) for this year.

That prediction will be slightly lower should the IAB's 2007 projection of £2.75 billion ($5.5 billion) come to pass.

Source: eMarketer