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
Founder and Chief Executive
Digital Strategy Consulting
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Profiling the
world's leading digital ad economy
www.DigitalStrategyConsulting.com/insight |
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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
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The UK online advertising market is the largest in Europe
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The sector is now larger than all press classifieds and growing
around 40% year-on-year
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The share of advertising going into online is almost 16% and
probably the largest anywhere in the world
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The full year total for 2007 was £2.813bn - an increase of £797m
year-on-year
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Online spend broke £750m in a single quarter
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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
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Search engine advertising continues to dominate, but all online
formats are growing, with new waves of brand advertising entering
the industry
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There is a three to five year timelag between where audiences place
their attention and where advertisers place their budget
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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:
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Insight and analysis: UK online adspend: set to overtake TV next year
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Massive leap in real terms
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Market share still rising at record levels
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Sluggish wider advertising market
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Minor seasonal trends
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International
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Why the data can be trusted
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Topline growth hides turmoil
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Direct mail: losing to search and email
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The digital media mix: The balance of advertising formats
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Balance between the ad formats remains steady
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Search still takes the lion's share
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Display shows strong performance by dynamics change
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Classified growth masks turmoil offline
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Industry structural change: Growing roles for networks
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Advertiser sectors: Rapid growth as new sectors emerge
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Job hunting shifts channels
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Key industry categories: motoring and property
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Retail accelerates
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Finance sector matures
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Consumer goods: still missing a trick
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Limited data
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Sector outlook: Strong growth continues: web set to top TV
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Audience growth swells the potential market
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Stronger strategies from media groups
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Where next?
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Recession or not, online emerges on top
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Television advertising set to flood onto the web
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Overall growth: topping TV within 18 months
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Actions: Key takeouts; navigating change
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Appendix: Online adspend research methodology
 Download
your copy of the Digital Insight Report »
With a market share of 15.3% online overtook press classifieds
Source: PricewaterhouseCoopers / Internet Advertising Bureau
/ WARC
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"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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