UK online ad spend up 10%: Video and social media lead way for growth


The money spent on internet ads in the UK increased 10% in the first half of this year, with advertisers spending a total of nearly £2bn on the medium, according to new data. The study, from the IAB and Price Waterhouse Coopers , found that video and social advertising fuelled online display’s return to growth, while the FMCG and Entertainment sectors ramped up investment to become two of the biggest spenders in the sector.

The boom in online video, social and ‘performance’ marketing contributed to the 10% increase in online advertising spend during the first half of 2010 (compared with the same period of time in 2009), which saw UK marketers invest £1,968.6 million, lifting the medium to a record market share of 24.3%. The return to double-digit growth for the internet mirrors the general recovery of the entire advertising industry, with total UK expenditure increasing 6.3% to £8.1 billion between January and June 2010.



According to the bi-annual online advertising expenditure study from the Internet Advertising Bureau (IAB), the trade body for digital marketing, collated in partnership with PwC and WARC, search, online display and classified advertising all saw significant increases in the first half of 2010.

Display and classifieds return to growth as search continues to climb

Following a small decline last year, online display bounced back with an above-forecast increase of 6.4%* to £381 million and a 19.3% share of the medium in H1 2010 (£334.6 million and 19% share in H1 2009). Standard ‘embedded’ formats such as banners still drive the bulk of display ad spend with £272 million, a 72% share (up from £238 million).

Boosting the growth was pre- and post-roll video advertising, which increased by 82% to £20.7 million – a five-fold growth in two years (£11.4 million in H1 2009 and £3.9 million in H1 2008 when records for this began). Advertising on social media sites also made a significant contribution to display’s growth, accounting for an estimated 13% of all online display advertising.

Recession-friendly paid-search marketing continued to be a critical mainstay of advertisers’ schedules with an increase of 8.9%* to £1,180.1 million, a share of 59.9% (up from £1,085.4 and a share of 61.7% in H1 2009).

Despite the recession, classified advertising showed a strong performance increasing 11.4%* to £379 million (up from £335.8 million in H1 2009). Housing, automotive, recruitment and B2B defied the economic downturn to retain classifieds’ share of 19.2% of advertising spend year on year.

Lead generation – a form of performance-based marketing where advertisers pay per lead rather than click through – was measured separately for the first time, and accounted for £21.6 million, or 1% share of all online advertising during H1 2010.

Entertainment, Finance and FMCG categories lead

The study also breaks down the online display market by industry category, to identify who the top spenders are and how investment is spread across sectors.

Entertainment & Media was the top category spender, accounting for 14.4% (up from 13.2% in H1 2009) and second was Finance at 13.3% (down from 14.9%). Once an insignificant spender online, the FMCG sector is now the third biggest spender, at 11.8% (up from 9.4%), having taken a while to be convinced of online’s brand-building capabilities. Retail was another star performer in online, accounting for 8.4% of all display spend (up from 7.1% in H1 2009).

Guy Phillipson, chief executive of the Internet Advertising Bureau, said: “The return to double digit growth in UK online advertising is characterised by increased investment by major brands – particularly in FMCG and Entertainment. The effectiveness of social and video ads for classic brand building is reflected in these formats enjoying exponential growth. Add to that the clear accountability of performance marketing online, and we have a channel which now commands a quarter of total UK advertising spend.”

Anna Bartz, Strategy Manager, PwC, said: “These figures reflect a sense of positivity in the advertising industry - at a time when many other media in the UK have also showed signs of a healthy recovery. As online advertising spend approaches the £2 billion mark - within just 6 months - confidence is returning with search, display and classified advertising all seeing an increase in the first half of 2010.”

Key drivers for growth

More people online. According to data from the UK Online Measurement Company (UKOM) and Nielsen, the UK’s active online user base had grown from 36.8 million in April 2009 to 40.5 million in April 2010 (representing an increase of 3.7 million active internet users in just 12 months.)

Older, maturing audience. An additional one million people aged 55+ are now online in the UK compared to 2009. Source: UKOM, April 2010.

Ubiquitous broadband. 92% of the UK online population now has broadband with 69% enjoying speeds of over 2MB.

Social media fever. Social networks/blogs now account for around 23% of all time spent online in the UK, making online sessions more immersive, whilst offering huge opportunities for brands to exploit the social nature of the web. Social media has injected even more life into online usage making it the perfect environment for entertaining and engaging ads.

Devices and connectivity. 3G dongles, smartphones, iPads, netbooks and eReaders are driving always-on connectivity. As awareness of cheap connectivity increases with the flood of devices onto the market more people are online, for longer

Summary of ad spend for January to June 2009

In the first half of 2009 internet advertising grew by 4.6% to £1,752.1 million, accounting for 23.1% of all UK spend. This is despite the entire advertising sector contracting by 16.6% during the same period to an industry total of £7,614.4 million.

Summary of ad spend for January to December 2009

For the full year 2009, the UK internet advertising sector increased revenues by 4.2% to £3.54 billion, up from £3.35 billion in 2008 – share was 22.9% for all 2009.

*All figures are like for like comparison with H1 2009.


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