UK’s Internet advertising market worth over £4bn

The Internet Advertising Bureau (IAB) in the UK publishes annual figures on Internet advertising spend and trends in the online market. Gone are the days when these summaries were published quarterly, due to cutbacks, but the annual figures continue to provide an insight into how this sector continues to grow whereas most other forms of marketing spend decline or stagnate. The last figures, for 2010, show that UK online advertising spent just over £4bn in the year, which was also an impressive 12.8% growth on a like-for-like basis.

The IAB compiles these figures with PricewaterhouseCoopers (PwC) and values the total UK advertising spend in 2010 at £16.6 billion, which shows that the Internet’s market share has reached a record high of 25% (up from 23% in 2009). This also means that £1 in every £4 invested by advertisers is now spent online.

The IAB says that these findings demonstrate that, despite the recession, online advertising continues to perform well and shows healthy growth. Marketers are increasingly using online channels to drive their brand building campaigns, with consumer goods and retail advertisers increasing their investment in online to become two of the top four big spenders in display advertising. This is to capitalise on the medium’s core strengths of reach and engagement as well as accountability.

In 2010 the biggest gain in spend came from display advertising, thanks to a nearly 200% surge in display advertising in a social media environment (on a like-for-like basis) and 91% year-on-year (absolute growth) in video formats. Overall display grew by more than a quarter (27.5%) on a like-for-like basis to a new high of £945.1 million, representing 23% of total online spend (up from 20% in 2009).

Paid-search continues to perform strongly with growth of 8% year-on-year on a like-for-like basis to £2,346 million, representing 57% of total online spend (61% in 2009).

Despite pressure on the housing, recruitment and automotive markets, online classified advertising bounced back in 2010 recording 9.7% growth on a like-for-like basis to £751 million – a share of 18% (19% in 2009).

Mobile advertising has experienced a staggering 116% year on year growth (on a like for like basis), up from 32% in 2009. Advertisers spent £83 million on mobile advertising in 2010, led by the entertainment and media sector, but with encouraging growth from finance, telecoms and consumer goods advertising.

The IAB tracks many drivers of market growth, such as more people being online – according to data from the UK Online Measurement Company (UKOM) and Nielsen, by December 2010 the UK’s active online user base had grown to 40.3 million. Also the penetration of broadband access in internet homes is now 98% (source: Kantar Media’s Internet Monitor, December 2010) and 47% of at home UK internet users access the internet with a connection speed of between 2Mb and 8Mb, with 14% accessing online with a connection speed of over 8Mb. (source: UKOM APS/Netview December 2010). In addition to this, social networks now account for 25% of the time spent online in the UK, which is reflected in the growth of display advertising spend as brands are able to tap into the social nature of the web.

If you’d like more information about these figures and the implications for your online advertising plans, please contact us for details.

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