U.K.'s Online Ad Spend Continues Steady Climb

  |  April 9, 2008   |  Comments

In two years, rich media and imbedded format display ads have doubled in spend, driving growth in the U.K. market.

The Internet ad spend in the U.K. continues to grow at a strong pace, recording a 39 percent increase for 2007 compared to 41.2 percent in 2006. That's according to a report released Tuesday by the Interactive Advertising Bureau (IAB), PricewaterhouseCoopers, and the World Advertising Research Centre.

Ad spending reached $5.5 billion (£2.8 billion) for the 2007 calendar year. Reporting for the first six months of the year calculated $2.7 billion in online spending for the U.K.

In contrast,online ad spending in the United States totaled an estimated $21.1 billion, an increase of 25 percent over the prior year, according to a separate report released two months ago by the IAB and PwC.

In the U.K., display advertising experienced a year-over-year growth increase of 31 percent. Banners, skyscrapers, and embedded rich media including video grew by 45 percent in the past year, equating to $1.2 billion (£592 million). Money spent on embedded formats has doubled over the past two years, accounting for 79 percent of total display advertising.

Portals and major online publishers represent the majority of display inventory, though ad networks account for an increasing volume of sales. Ad networks represented 40 percent of display advertising in the U.K. in 2007, and aided in monetizing the long tail of Internet sites. The IAB attributes growth in display and rich media to a rise in ad networks, which offer higher CPM rates, said Guy Phillipson, CEO of the IAB.

Paid search, which saw as much as 79 percent growth in 2005, settled to rates more in line with other categories. Search grew by 39 percent in 2007, to $3.1 billion (£1.6 billion).

Phillipson said dollars are moving to the Internet directly from other channels. "Advertisers in the U.K. absolutely recognize the power of online. Investing more, switching some of their budgets from traditional media. The lion's share of growth can be attributed to Internet advertising," he said.

The IAB U.K. expects to see ad spending to continue in video and direct response.

"We think the drivers for 2008 will continue to be the power of direct response and the value of networks, combined with the brand efficacy of video online, which is growing all the time," said Phillipson. "Advertisers who are used to making TV ads...are recognizing the broadband Internet as a medium that will fit their style of messaging, particularly for package goods."

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