As someone experienced in the digital sector, you're probably not
surprised the latest data revealed another massive leap in the UK
market's growth. It paints a bullish picture of the ceaseless boom in
online advertising, and one that is funding the vast majority of
free-to-air web content. Ever larger campaign budgets are switching
online, search engines have cemented themselves as the new customer
acquisition channel, brand marketers continue to integrate web media
more deeply into their mix, and classified ad volumes continue to flip
over from print. All this before the impact of web TV and mobile
advertising has even started. With the UK acting as an indicator market
for where the rest of Europe heads, the trends are even more
Having tracked the online ad economy since the early nineties, several
people asked me to provide some commentary on how the sector is
evolving, so I thought you might like me to share it with you. As usual
the highlights are in the e-mail and there's a short Digital Insight
Report at the end of the links. Let me know if it's useful, and if you'd
like to talk more about what it means, or if you have a comment to add
for one of our discussions, then just mail me back.
Founder and Chief Executive
Digital Strategy Consulting
Insight Report: UK advertising market commentary
for the news service
Digital advertising: the switch accelerates
Every year we provide our commentary on the growth of the online advertising market in the UK, the related restructuring in the media industry, and the key trends in this segment of the digital networked economy. This Digital Insight Report examines some of the implications for classic media, reaffirms our predictions from a few years ago that online advertising spend will exceed television within three years, and explores the nature of some of these changes as audiences and ad budgets migrate from classic media channels.
With the professionally produced content sector founded on the advertising model, the continued leap in web ad spend has much wider implications for the future growth and diversity in online media and entertainment. Since 2002 the UK has emerged as an indicator market for much of Europe and the US, providing a rare laboratory into the future of media, so many of the trends explored here will be echoed across those markets.
Since 2000, we have been talking about the digital networked society and the implications for firms as their sectors make the transition. Digital Insight Reports explore patterns within these changes and provide some of the navigation to successfully make the
UK online adspend market share is now almost 15% of total adspend
The sector overtook direct mail in early 2007
The first half of the year was £1,334.3 million
The growth rate continues to be above 40%
These are record setting leaps in online advertising growth
Digital Strategy's forecast for the full year remains at £2.95bn
The growth in online is offset by dramatic changes in the market share of other channels as budgets are drained from classic media to fuel digital marketing
Search engine advertising continues to dominate, but all online formats are growing, with new waves of brand advertising entering the industry
Among client sectors, motoring is enjoying noteworthy growth in both classifieds and display, marking a transformation in the role the web plays in the sector
Consistent pattern of growth and substitution
the first web advertising was sold in the UK fourteen years ago, the
sector only became a mainstream advertising channel here in 2002.
The marketing industry continues to be in the midst of a dramatic
cultural and structural shift, and the 2007 data about the growth of
online advertising spend provides a clear snapshot of the winners
and losers. The data in this report is drawn from the recent audits
by PricewaterhouseCoopers, in partnership with the IAB, and our
commentary explains where we believe the sector is heading next.
The online ad industry has already enjoyed astonishing growth, but
this high level of annual expansion will be maintained, as a large
range of both supply side and demand side drivers encourage
continued increases in advertising investment. Media substitution is
an inherent by-product of this as clients reassess the mix of media
they need to deliver campaign objectives, and there continues to be
a wider discovery within agencies of the value the digital media
channels bring to their clients in the digital networked society.
Online advertising growth since the dotcom boom: now nearly
£700m in Q2:
Source: PricewaterhouseCoopers / Internet Advertising Bureau
UK online adspend: biggest leap yet
The latest figures confirm the rapid switch to online marketing is
continuing in spite of the sector's existing size, challenging any
suggestions that the market has matured and is slowing down. In
Europe's lead media market, the internet's share of all advertising
swelled to almost 15% in the first half of 2007, with further
record-setting leaps in real growth. Boosted in particular by
massive increases in the supply of media from social networks, and
the continued switch of acquisition budgets into search engines, the
wider media sector is starting to feel the real impact of the
digital networked economy as the models that underpin many print and
broadcast players get called into question.
As Digital's team had forecast, online ad spend growth held steady
at above 40% year-on-year, giving the largest quarterly rises, and
triggering further concerns across the TV and magazine industries
about the profitability of classic media.
- First half of 2007: £1,334.3 million
- First half of 2006: £917.2 million
- Year on year growth: 41.3%
- Online adspend market share of total UK adspend: 14.7%
Online advertising: at 15% it's the most advanced market share
in the world:
Source: PricewaterhouseCoopers / Internet Advertising Bureau
Scattered postings from one person's journey on the road to the
digital networked society
Newspapers 'alive and well' online?
performances from British and US newspaper groups, but the British
Newspaper Society is championing the number of websites they have.
online newspaper gets newest content format
web's video content tipping point has firmly been crossed.
is a right and not a privilege"
Facebook story just keeps getting better when the TUC table FaceBook
in lunch-breaks as a policy issue.
is September 3rd 2007 a momentous day?
is the day my bank manager was able to send me an e-mail.
media pool resources to deal with the ad squeeze
times in the US media market.
agents: new medium, old tricks
Scraping websites, breaking copyright: they're doing the lot.
"We're still in the early stages of the transition to the digital networked society. The massive growth in online advertising may have fuelled web media, but the same migration of audiences and advertising is now hurting the classic channels deeply. In this decade of incredible social and technological transition, the major changes are yet to come. Firms who plan to survive transition need to become adept at reading the landscape, and adapt quickly based on what they