Online Ad Spending Up in UK

Television will remain the preferred method for advertisers to reach consumers in the UK for the foreseeable future, but Internet advertising is making some strides in the UK, according to Fletcher Research.

Spending on online ads in the UK will rise from £50 million in 1999 to £479 million in 2002, Fletcher found. Those marketers that currently use online advertising allocate 7 percent of their budgets to the Internet, and that figure is set to rise to 14 percent in 2002. In addition to television, direct mail, print advertising, and telephone sales are more popular than the Internet.

Just like in the US, many of the biggest Internet companies in the UK have turned to television advertising to reach consumers. Companies such as Freeserve, Amazon, Egg and CurrantBun are using integrated camapigns, and have achieved generally high brand recognition, according to Fletcher.

“The current spate of high-profile TV campaigns by UK Internet companies indicates a ‘gold rush’-like imperative to achieve mass brand consumer awareness among consumers,” said Caroline Sceats, business analyst at Fletcher Research. “It’s clear that those Internet companies which spend heavily on TV advertising quickly achieve far greater brand awareness than those that don’t.”

Most Popular Forms of
Web Advertising in the UK
Form of
Percent of Online
Budget Allocation
Banners 53
Search engine listing 11
Keyword search ads 9
Sponsorships 6
Sales partnerships 6
Exclusive tenancy 5
E-mail 4
Microsites 1
Source: Fletcher Research

When it comes to ads running on the Internet, the biggest share of new advertising still goes to search sites and portals. Of all the breaking campaigns from April to September of 1999, Fletcher found that search and portal sites were the most popular with advertisers: Yahoo ran 103 campaigns, Excite had 88, and UK Plus carried 81 campaigns. Web navigation, news, and reference sites account for almot 50 percent of ad placement between April and September, Fletcher found. Web navigation ran 26 percent of breaking campaigns; 22 percent ran on news and reference sites; 23 percent, 10 percent, and 7 percent were placed on entertainment, financial services, and computing sites.

Banner ads remain the most popular form of Web advertising in the UK, accounting for 53 percent of online budget allocation, according to Fletcher. Other treatments include search engine listing (11 percent); keyword search ads (9 percent); sponsorship (6 percent); sales partnerships (6 percent), exclusive tenancy deals (5 percent), email (4 percent), and microsites (1 percent). Advertisers in the UK are still concerned about the lack of standarized site auditing and accurate user tracking, and consider these problems a barrier to entering the online advertising market. Forty-six percent of advertisers cited the lack of reliable audience data, and 36 percent feel they are unable to accurately measure campaign effectiveness.

More than half (59 percent) of consumers in the UK say they have clicked on a Web ad, but 34 percent are annoyed by banner advertising, and 24 percent consider it a time-wasting diversion. Less than one-quarter (24 percent) find Web ads useful and 20 percent consider them informative. Interest in a particular product or service was by far the leading reason for ckicking on an ad, while interest in the company advertised was the reason for 21 percent of consumers responding, according to Fletcher.

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