U.K. Online Ad Spend Up, Sector Otherwise Dour

In an otherwise sluggish year for the U.K. ad sector, online advertising is enjoying record levels of spending, according to a survey conducted by PricewaterhouseCoopers and the Interactive Advertising Bureau UK.

The second quarter of 2003 was the single biggest on record in the U.K., with total spending coming in at $142.4 million (£81.3 million). That’s up 15.6 percent over the previous quarter’s $123.1 million (£70.3 million), and up 79.9 percent over the same period a year ago, when online garnered $79.1 million (£45.2 million).

The IAB/PWC audit, which the companies have conducted since 1997, measures recorded revenues reported by the finance departments of online media owners, excluding production costs.

The IAB expects total spending for 2003 to set records as well. For the first half of the year, Internet advertising boasted a 2 percent share of the total ad market in Britain, at $264.5 million (#151 million). For all of 2003, the IAB expects the online spend to exceed $525 million for the first time.

Such an outcome would mean Britain’s online marketing spend rose more than a third over 2002’s numbers, while the total U.K. ad market has retracted. The Advertising Association, a federation of British ad trade groups, found total U.K. ad expenditure fell by 1.5 percent for Q1 2003 and by 1.8 percent for Q2 2003, compared to the same period a year earlier.

“Despite the fact that the rest of the U.K. ad economy is very sluggish, interactive is doing extremely well,” said IAB Chief Executive Danny Meadows-Klue. “The tide has turned, fueled by rapid product innovation and unstoppable audience growth.”

The U.K. online ad sector has shown signs of health since Q2 2002, when it increased significantly for the first time since Q4 2000. Since then, it has climbed steadily, increasing by $9 to $18 million (£5 to £10 million) each quarter.

While pointing to the unexpectedly rapid growth of Internet audiences as the key driver of the lately stellar numbers, the trade group also credits its own industry acceleration program and interactive ad campaign.