Inside this Insight Report | UK digital advertising market | Digital advertising: the switch accelerates | Speed read
In this report  | Online adspend snapshots
The world's leading digital ad economy
Market evaluation for UK online advertising

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When the new data came out about online advertising spend in the UK getting set to overtake television next year, a few people asked me to write up some perspectives on the growth, the drivers, and the nature of change in media. You're probably not surprised by another massive leap in what has become the world's leading online advertising economy, but the trends in search, classified, video and industry sectors are fascinating. Ever larger campaign budgets are switching to the web, and there is an accelerating understanding of the models to apply to web media to get consistently high returns.

Having tracked the online ad economy since the early nineties, I'm confident that whatever happens to the wider marketing sector over the next three years, there will be no dramatic slowdown in online. The highlights are for you here, and there's a short Digital Insight Report at the end of the links. Let me know if it's useful, and if you have a comment you'd like published, then just mail me back.

Danny Meadows-Klue
Danny Meadows-Klue
Founder and Chief Executive
Digital Strategy Consulting

Profiling the world's leading digital ad economy
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Digital advertising: the switch accelerates

Every year we provide a commentary on the growth of the online advertising sector in our home market, the UK. We explore the related restructuring in the wider 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 that online advertising spend will exceed television, 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 advertising spend has much wider implications for the future growth and diversity in online media and entertainment. Since 2002, the UK has emerged as a trend-setting market for much of Europe and the US, providing a rare laboratory into the future of media; many of the trends explored here will be echoed across those markets over the next three years.

Speed read

  • The UK online advertising market is the largest in Europe
  • The sector is now larger than all press classifieds and growing around 40% year-on-year
  • The share of advertising going into online is almost 16% and probably the largest anywhere in the world
  • The full year total for 2007 was £2.813bn - an increase of £797m year-on-year
  • Online spend broke £750m in a single quarter
  • 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 growth
  • Search engine advertising continues to dominate, but all online formats are growing, with new waves of brand advertising entering the industry
  • There is a three to five year timelag between where audiences place their attention and where advertisers place their budget
  • Regardless of the macro-economic conditions, the outlook for the online advertising sector over the next three years remains consistently strong

In this report
The switch to online advertising has not slowed down in Europe's largest digital media market. Online ad budgets continued to grow around 40% year-on-year, with the internet overtaking press classifieds for the first time and on course to overtake television in 2009. The sector now accounts for almost 16% of advertising spend and has risen by £2bn in three years. Half of this spend still goes into search engine advertising, but the breadth of brand building formats has broadened, and the arrival of video is triggering a new wave of growth. This Digital Insight Report draws upon data from the census of media owners managed by PricewaterhouseCoopers for the IAB, and provides our commentary on the market, both today and over the next three years.

Sections in this report include:

  • Insight and analysis: UK online adspend: set to overtake TV next year
    • Massive leap in real terms
    • Market share still rising at record levels
    • Sluggish wider advertising market
    • Minor seasonal trends
    • International
    • Why the data can be trusted
    • Topline growth hides turmoil
    • Direct mail: losing to search and email
  • The digital media mix: The balance of advertising formats
    • Balance between the ad formats remains steady
    • Search still takes the lion's share
    • Display shows strong performance by dynamics change
    • Classified growth masks turmoil offline
  • Industry structural change: Growing roles for networks
  • Advertiser sectors: Rapid growth as new sectors emerge
    • Job hunting shifts channels
    • Key industry categories: motoring and property
    • Retail accelerates
    • Finance sector matures
    • Consumer goods: still missing a trick
    • Limited data
  • Sector outlook: Strong growth continues: web set to top TV
    • Audience growth swells the potential market
    • Stronger strategies from media groups
    • Where next?
    • Recession or not, online emerges on top
    • Television advertising set to flood onto the web
    • Overall growth: topping TV within 18 months
  • Actions: Key takeouts; navigating change
  • Appendix: Online adspend research methodology

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With a market share of 15.3% online overtook press classifieds

Five steps: To get up and running

Source: PricewaterhouseCoopers / Internet Advertising Bureau / WARC


 Online adspend: more snapshots from around the world

US boom just keeps on coming
Preview ReportRead more »

UK H1 2007: spend shows the transition between media
Preview ReportRead more »

Mexico starts late but accelerates fast
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Switzerland lags behind where it could be
Preview ReportRead more »

Central & Eastern Europe rising quickly
Preview ReportRead more »

Spanish internet use and spend starts to accelerate
Preview ReportRead more »

Denmark: always out in front
Preview ReportRead more »

The first attempt to track European online adspend for 2005
Preview ReportRead more »

Danny Meadows-Klue
"With web advertising set to overtake TV next year, the scale of shift has triggered a massive restructure in the media industry."
Danny Meadows-Klue
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Previous publications
Preview Report US: Digital advertising market commentary - Market growth and evolution
Preview Report Digital Europe: Tracking the growth of online marketing spend
Preview Report Central and Eastern Europe
Preview Report UK digital advertising market - October 2007

Digital Insight Reports are research briefings developed and published by Digital Strategy Consulting Ltd. in association with our strategic partners. Every month there's a new edition and you can also read many of them online.

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