U.K. Online Ad Spend Grew 4.2 Percent in '09, Says IAB

Despite adverse economic conditions, spending on online advertising in the U.K. grew 4.2 percent year-over-year during 2009, according to the IAB U.K.’s biannual advertising expenditure report. The research – conducted on the IAB’s behalf by PricewaterhouseCoopers – estimates that total spend reached £3.5 billion ($5.2 billion) in 2009, up from £3.5 billion ($5.1 billion) in 2008.

Unsurprisingly, paid search was one of the biggest growth drivers, as marketers concentrated on highly measurable channels throughout the year. Overall, the IAB estimates paid search grew 9.5 percent year-over-year, accounting for over 60 percent of all online ad spend.

By contrast, overall display ad spend dipped 4.4 percent during the course of the year, representing around 20 percent of the overall market. Within that category, however, video witnessed striking growth, with advertisers spending 140 percent more on the channel in 2009 than they did in 2008. That suggests spending on more traditional display ad formats, such as banners and buttons, actually dipped by far more than 4.4 percent. The IAB also saw substantial strength in the affiliate marketing space, which rose by 38.2 percent, year-over-year, to reach £72.6 million ($110 million.)

In terms of advertisers, those in the retail and consumer packaged goods categories were attributed with helping drive growth, shifting spend from traditional channels. The report estimates consumer goods advertisers accounted for 10.1 percent of display ad spending in 2009, with retail accounting for 11.9 percent of total spend during the second half of the year. Telecommunications and the entertainment and media sectors accounted for 15.6 percent and 15.5 percent, respectively, for the year. However, cuts in spending among advertisers in the recession-ravaged housing, automotive and employment categories were blamed for a 5.3 percent in dip in spending in classified ads during the same period.

Guy Phillipson, CEO of the IAB U.K., said the growth in online spend despite the economic environment showed it was continuing to capture budget from other channels. With the growth of formats such as video, and increasing investment from consumer goods brands, Phillipson predicted a “a healthier 2010.”

In terms of growth drivers, the report also cited an increased U.K. user base, which grew 4.4 percent in the twelve months ending February 2010, the continued increase of broadband connection availability, and the explosion in social media activity.