IAB: Online Propping up Struggling U.K. Ad Market

Online is propping up the U.K. advertising market, with spend on the medium growing by 21 percent year-on-year during the first half of 2008, according to figures from the IAB U.K. and PricewaterhouseCoopers.

According to the numbers, released today, total U.K. internet spend reached almost £1.7 billion ($3 billion) in H1, representing a 19 percent overall market share. Without this growth in online, the total U.K. advertising market would have fallen by 4.6 percent, the report says. As it stands, it fell by 0.7 percent when compared to H1 2007.

Guy Phillipson, CEO of the IAB U.K. said, “Online is not immune from the economic downturn, but while other sectors see falls in expenditure the Internet is still experiencing an incredible increase and is propping up the entire advertising market.”

Unsurprisingly, search continues to pave the way, growing 28 percent year-on-year, and accounting for 58.3 percent of total online spend. Display rose 16.3 percent, driven by a 36 percent increase in spending on “embedded” formats, which includes banners, rich media and video. Online classifieds also experienced a substantial 30.2 percent increase, as the medium continues to benefit from the decline of its print relative.

Display ad revenues were dominated by spending from the technology sector, which accounted for 17.3 percent of spend, followed by finance with 11.9 percent, and entertainment/media and recruitment at 10.7 percent and 9.9 percent respectively.

Despite encouraging growth however, Paul Pilkington, director, entertainment and media practice, PwC warned that online was by no means immune to the torrid financial climate we find ourselves in. Although he expects online to perform better than other media during the downturn, he predicts “differences in performance” in the coming months.

The report cited key drivers of growth as the rise of ad networks, the commoditisation of broadband access, and the increasing popularity of online TV and social networking sites.