Internet ad spend to surpass TV by 2009- IAB
- Added:
- Apr 08, 2008
The amount of money spent on Internet ads in the UK will be worth more than that spent on TV by the end of 2009, according to new research.
The new figures, from the Internet Advertising Bureau and PriceWaterhouseCoopers, indicate that the Internet’s share of ad market grew from 11.4% in 2006 to 15.3% last year, making it the largest advertising medium behind TV (21.8%) and display ads in the printed press (19.9%).
According to the IAB, the U.K. is the world’s most developed Internet advertising market, worth $5.6 billion in 2007.
Commenting on the new figures, said Guy Phillipson, chief executive of the IAB(UK), said: "To grow 38% from £2bn ($4bn) to £2.8bn ($5.6bn) is a very powerful performance. It's clear marketing directors now recognize the value of online to drive their business and more and more are using rich media and video to build their brands, just as they do on TV.”
While the big portals and publishers are still generating the bulk of revenues but the IAB said new money is flowing through networks who are brokering ads on the internet's ‘long tail’- the thousands of small and independent websites who get the low value, but increasingly blue chip internet adverts.
Online advertising has grown from being the smallest market sector in 2003 to the third largest in 2007, with a new high of £2,812.6m spent on advertising.
This represents a 38% year-on-year like-for-like increase, taking the medium to a market share of 15.3% (up from 11.4% in 2006).
Internet advertising spend in 2007 exceeded the most generous forecasts and is now larger than press
classifieds and regional newspapers.
In just three years online advertising spend has increased by £2 billion. In a relatively buoyant UK advertising market the internet was the biggest driver of growth – accelerating nine times faster than the entire advertising sector, which experienced 4.3% growth to reach £18.4 billion.
The new findings from the Internet Advertising Bureau (IAB), the UK online advertising trade body, carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC), reveal a continued healthy growth as online looks set to overtake spending on TV by the end of 2009.
Display, search and classifieds all experience impressive growth Total internet display advertising spend saw a 31% year-on-year increase, whilst the core formats – banners, skyscrapers and embedded rich media including
video – grew by 45% to £592 million. Furthermore, spend on embedded formats has doubled during the past two years to account for 79% of total display.
The majority of display spend rests with portals and major online publishers, but an increasing volume is being brought through sales networks. Sales houses and networks are responsible for growing and monetising the long tail of internet sites, accounting for 40% of display advertising in 2007.
Paid-for search marketing is maturing, but not slowing, as marketers become more sophisticated in their use of the medium.
In 2007 search grew by 39%, in line with overall growth, to £1.6 billion (£1.2 billion in 2006), while its market share remained largely the same at 57.6% (57.8% in 2006).
Brands are now using search more intelligently, getting a greater return on investment through ’key phrases’ and more accurate targeting that reflects consumer behaviour.
Classified advertising saw a 54% year-on-year growth and was worth £585.3 million in 2007, as consumers and marketers recognise online’s exceptional reach, flexibility and immediacy.
Recruitment leads as Retail and FMCG hit new highs The breakdown of industry categories revealed that the Recruitment sector continued to lead the market with 25.7% market share, up 0.9 points on the second half of 2006. Second was Automotive with 11.9%, while Technology (10.4%) overtook Finance (10%) for the first time to take third place.
Other areas of growth were Retail which increased by 1.7 points to 5%, as a result of a buoyant ecommerce sector, with Consumer Goods (including FMCG) increasing to 5.3%, while Property climbed the ladder to break into the top
five with a market share of 7.9%.
Nicki Lynas, senior manager, entertainment and media practice, PricewaterhouseCoopers, said: “2007 has been another success story for the internet. The strong growth in adspend reflects what has been an incredible
year for internet advertising in the UK. We’ve seen high profile acquisitions, mergers, a rise in social media and online video, and higher than ever usage of the internet.”
KEY DRIVERS FOR GROWTH
Online audience. There are 32.5 million people now online in the UK, with the average broadband user spending 16 hours per week with the medium.
Across the board, the online population is continuing to reflect the demographic make-up of the UK as a whole, with a 52%/48% male/female split.
In fact, young people are slightly more represented online than the GB population, with 21% of internet users being 25 to 34 years and at the other end of the spectrum, the over 50s now represent 30% of total time spend
online.
Cheap laptops mean more machines in the home. Anecdotally we know that a PC plus two laptops is not uncommon in most British homes. Laptops are no longer a luxury item or business tool, with Dell selling wireless enabled
machines for £199, this means more people, more eyeballs, more impressions, and so more advertising.
Catch up TV. Launch of services such as BBC iPlayer and Channel 4’s 4oD are breaking the barrier between video entertainment and the internet as a communications or shopping tool. More online familiarity means more time
online, again attracting more advertisers.
Broadband. Broadband penetration is 90% of the online population (BMRB Internet Monitor, February 2008), so it’s no longer whether a consumer is on broadband it’s about how fast their connection is.
54% of UK broadband users have more than 2mb speed, nearly double the 28% who had the same speed
in November 2006 (BMRB Internet Monitor, November 2007). The combination of wireless proliferation and rollout of 3g laptop cards sees more people online, anytime.
Social networking websites. Social media continues to have a massive impact on the market, especially as an audience driver. In 2007 adspend for this area was relatively low and coming off a small base, yet looks set to grow
steadily in the coming years. CPM values for user-generated content are lower in this sector and they are generally bought through networks.
However, the premium channels such as MySpace Music and MySpace Film are sold at a higher CPM rate and overall the IAB expects to see a greater contribution to online spend in 2008.