U.K. Online Ad Spend Skyrockets

Online ad spending in the U.K. leapt 66 percent to £1.4 billion (about $2.4 billion) in 2005, according to new figures from the Interactive Advertising Bureau UK (IAB UK).

The numbers, based on a biannual survey of 78 companies performed in conjunction with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre, show big growth in all areas of interactive advertising. Search led the pack with 79 percent growth to £768 million ($1.3 billion) during the year, display advertising grew 44 percent to £335 million ($584 million), and classifieds exhibited 62 percent growth to £262 million ($457 million).

The vertical array of spending hasn’t changed a great deal. The recruiting and finance sectors were out in front for the second year running, with 22 and 17 percent of the market respectively during the second half of the year. Two big movers were the automotive and entertainment/media verticals, each of which grew its share of the total pie to about 10 percent.

One difference between the U.K. and U.S. markets appears to be a greater willingness by major brand advertisers here in the States to migrate offline budgets to the Web, driving display advertising to greater prominence and forcing search to cede some share. Paul Freeman-Sanderson, senior planning executive with the IAB UK, said the slower transfer of branding dollars in the U.K. may be due to a lack of cross-media studies the likes of which have proliferated in the U.S. As a result, he said, search and other forms of direct marketing will continue to dominate.

“The gap in spend between search and display is great and we don’t anticipate this closing significantly in the coming year,” he told ClickZ News. “However, as brand advertisers become more confident in using online, I’m sure we will see the gap decrease. It’s going to take some time though.”

The IAB noted that the new figures place the Web on equal footing with several other channels. Online expenditures were approximately three-quarters the size of estimated numbers for the newspaper market and twice that of radio. They beat magazines and outdoor ads by a good margin as well.

It’s worth noting that the survey includes actual results from Google’s U.K. operation for the first time in two years. PwC and the IAB had previously estimated the company’s revenue in the region by extrapolating figures it had from 2002, and turned out to have low-balled its estimates. Their official statements of the size of the market in previous years have now been upwardly revised, for instance from £653 million ($1.1 billion) to £825 million ($1.4 billion) for 2004.