Data & Intelligence | by Danny Meadows-Klue
In 2004 online ad spend enjoyed 60% year-on-year growth and the market closed at £653.3m. Market share peaks at 4.3% in second half of the year and online overtook radio ad spend. It will surpass outdoor and transport in 2006 and may leap further if search engine advertising is fully disclosed. Online advertising’s transformation into a mainstream media channel was confirmed this month as new figures showed its growth had overtaken radio to be hot on the heals of the outdoor industry. “Online has come of age”, explains Richard Eyre, Chairman of the UK’s IAB. ”It is a maturing mainstream medium and consumer confidence in the web is at an all-time high”. Eyre is clear that the growth is driven by clients looking to support all parts of the marketing process.
The financial audit by PricewaterhouseCoopers also underscores the importance of all the advertising formats in driving the growth. Display formats (banners, sponsorships, interruptive formats) are neck and neck with search in spend, and like classified formats everything is rising at a dramatic rate. Search has exploded because of an increase in consumer confidence and a willingness by new advertisers to test online’s benefits as a direct response medium. This is proving to be a powerful gateway into search.
Meanwhile audiences continue to rise, both in terms of the total number of people connected and the amount of time they spend. Half the UK’s 29m users are enjoying high speed broadband access which itself fuels confidence by providing a better customer experience.
People are turning to the web as a key element in the research of any major purchase decision. “You can look at the car industry to see the pace of change”, explains Guy Phillipson, the new chief executive at the helm of the UK IAB. “A few years ago you’d expect someone to make seven or eight visits to a dealership before buying a car. Today they make just one or two because they’ve already done their research online”.
Display advertising grew 40.6% year-on-year to £232.9 million as a result of search’s ‘gateway effect’ and the new ‘Universal Advertising Package’ introduced by the IAB last year, which enables advertisers to trade easily based on a consistent display model, using ‘known’ formats. Sponsorship also experienced yearly growth, up 95.6%, being increasingly recognized as providing highly relevant environments as advertisers capitalize on third party endorsement from media owners.
Paid-for search grew 87.4% year-on-year to a 2004 total of £257.7 million, particularly as a result of media owners creating their own search tools and new advertisers testing online to experience the cost effective and measurable results that search lends itself to.
Online has surpassed radio’s market share (4.3% in the second half of 2004 vs radio’s 3.8%), which reflects an understanding by a new generation of advertisers that the internet is a versatile brand-building and direct response medium with vast audiences.
Most sectors experienced growth in real terms although the top five accounted for the majority of growth. In the second half of 2004 automotive grew to £41 million with an 11% market share as car advertisers recognised that an increased percentage of car buyers use the internet to research a new purchase, compare prices and book test drives. This figure is also a reflection of the growth in automotive classifieds online.
Sector market shares are: finance (25.1%), recruitment (18.0%), travel and transport (11.8%), automotive (11.0%), technology (9.7%), consumer goods (7.6%), entertainment (6.5%), business and industrial (4.3%), retail (3.7%), government (0.8%), and leisure (0.5%).
