UK Online Ad Market

11/04/2006

UK online ad market nears ?2 billion PWC research reveals record breaking results for 2005 UK’s Online advertising nearly £1.4 billion in 2005 The latest results of the Online Advertising Spend survey have shown that spend on online advertising has increased by 65.6% year on year, to £1.37 billion, giving online a 7.8% share of the total advertising market. The bi-annual survey is carried out by IAB UK in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC). The growth was so dramatic that it fuelled the 2.5% increase shown by the advertising market as a whole from 2004 to 2005. Phenomenal growth across all formats This terrific performance by internet marketing was driven by substantial increases in all formats. Display increased by 44.2% year on year to £334.9 million in 2005, encouraged by the increased opportunities for rich media campaigns. Online classifieds increased 62.4% to £262.2 million, primarily driven by the recruitment and automotive sectors. Search recorded the largest increase of 78.8% year on year to £768.4 million, as advertisers recognized its contribution in both direct response and brand-building initiatives. Entertainment sector harnesses online advertising The recruitment sector remained the highest spending industry category, accounting for 22.1% of all online advertising spend. In second place was finance with 17.4% and in third was automotive with 12.4%. Entertainment and media saw the most significant growth and was worth 10.2% of spend in the second half of 2005 compared to 6.2% for the same period in 2004. The entertainment industry has capitalized on the ability of broadband to engage consumers through video-streaming and sophisticated rich media adverts. Classifieds impact press Online classifieds saw a 62.4% increase year on year – up from £161.4m in 2004 to £262.2m in 2005 – primarily driven by the automotive and recruitment sectors. The growth of online classifieds is making a significant dent in traditional press classified expenditure where revenues fell by 5.1% year on year. The shift is a recognition that online is more immediate and convenient for buyers and sellers. Industry comments on the new figures Guy Phillipson, Chief Executive of the IAB UK, said: “These figures surpassed all our initial expectations. To see such a massive increase yet again is testimony to online’s strengths as a medium to reach mainstream audiences. Our next milestone is £2 billion – a real possibility within the next 12 months, which would make online bigger than national press.” Layla Pavone – President of IAB Europe said ” The UK figures give to all the European countries the concrete idea of how will be the future of the interactive advertising everywhere. Italy is also reaching that the tipping point it’s very close to us. For the second month of 2006 the italian online adspendig is growing more 50% on the year before. I think that we are facing the results of a decade where all the online advertising industry has demonstrated the power of interactivity and the added values of Internet compared to the others media “. Danny Meadows-Klue, Chief Executive of IAB Europe said ‘Because the use of online marketing is more advanced in the UK than most countries, these figures offer a model of what is likely to happen as other European countries cross their tipping point. With Search accounting for more than half of online advertising it is clear that direct marketers have realized the power of the web, and with online accounting for around 8% of total advertising spend the wider media mix is changing’

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