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UK internet advertising expenditure grows 4.2% to £3.5 billion in 2009

Internet advertising spend grew 2,200% during the noughties


UK internet advertising expenditure grows 4.2% to £3.5 billion in 2009

Internet advertising spend grew 2,200% during the noughties

The UK internet advertising sector increased revenues by 4.2% to £3.54 billion in 2009, up from £3.35 billion in 2008. Surpassing industry forecasts, online grew last year despite a decline in total UK advertising.

Despite the economic outlook and its devastating effect on the advertising industry, online has weathered the storm. The results of the bi-annual IAB and PricewaterhouseCoopers LLP advertising spend reflect the inexorable move of Britain’s population online as recognised by the Government’s Digital Britain vision.

Records show that, since the dot com crash of 2001, internet advertising expenditure registered growth every year during the noughties. From £153 million in 2000 to £3.5 billion, UK online advertising has shot up by 2,200%.

The study also highlights that the second half of 2009 was healthier than the first, with online advertising spend increasing by £25.6 million to £1.78 billion between July and December. During the first half it accounted for £1.76 billion.
In 2009 Retail and Consumer Goods categories leapt ahead to become two of the biggest spenders in online display, as marketers increased internet advertising budget allocations to capitalise on the medium’s accountability, reach and engagement strengths.
Search, video and affiliate marketing experienced strong growth Across 2009 one of the biggest gains was in paid search, which grew by 9.5% like-for-like to reach £2.15 billion, representing 60.7% of all online ad spend (59.3% in 2008).

While online display saw 4.4% decline between 2008 and 2009 (on a like for like basis), the market picked up as the year wore on. Between January and June 2009, display was worth £334.6 million in real terms, which increased to £374.7 million between July and December, taking total 2009 spend to £709.3 million, or 20% of the online market (19% in 2008).
Within display, online video was the real success story as spend saw a 140% increase year on year, with pre- and post-roll advertising generating £28.3 million.

Affiliate marketing – one of the oldest forms of online advertising where advertisers pay on a ‘cost per acquisition’ basis – also saw healthy growth, rising by 38.2% to £72.6million.
 Economic tension within the housing, automotive and job markets led to a decline in online classified spending, with investment falling 5.3% like-for-like to £677.4 million, down from £715.2 million in 2008.

Classified accounted for 19.1% of all ad online spend in 2009 (21.4% in 2008).
Retail and consumer goods enter top five category spenders for the first time Last year saw a shake-up among the biggest spenders on internet display advertising. While Telecoms and Entertainment & Media accounted for 15.6% and 15.5% of the market respectively in H2 09, Retail jumped into the top three with 11.9% spend in H2. As retail marketers become better acquainted with the online customer journey, more money is being ploughed into online display formats to drive ecommerce sales.

Consumer Goods were the fifth highest spender, accounting for 10.1% of display.  This represents a real attitude shift among FMCG marketers who recognised the internet’s value in reaching audiences and building brands.

Guy Phillipson, chief executive officer of the IAB, said: “In 2009 the advertising industry was hit hard but online has proved itself a winning medium, capturing a greater share of marketing budgets.

“In the past year we’ve seen some real success stories as search passed the £2 billion mark, and online video advertising experienced spectacular growth. And with sectors such as Retail and Consumer Goods increasing their spending on the internet we can look forward to a healthier 2010.”
Eva Berg-Winters, PricewaterhouseCoopers LLP, said: “Ten years ago online was a new medium with high expectations, but backed by little commercial reality. Since then it has matured to become an integral part of our lives, which marketers have learned to trust.”

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