Online marketing spend set to reach £1bn in 2005

Paid-for search marketing grew by 73 per cent annually in the first half of this year, to hit &£197.3m, according to figures released by the Internet Advertising Bureau and PricewaterhouseCoopers.

The total spent by UK marketers on online advertising rose by 62 per cent, to &£490.8m. The IAB says this means the industry should be worth over &£1bn by the end of 2005. Online’s market share grew to 5.8 per cent, putting it ahead of outdoor’s 5.1 per cent and radio’s 3.6 per cent.

Paid-for search accounted for 40 per cent of total online advertising spend in the first six months of the year. Display advertising revenue increased by 68 per cent annually to &£162.1m and classified revenue by 93 per cent to &£131.4m.

IAB chief executive Guy Phillipson says: “At the end of 2004, the IAB predicted that online would overtake outdoor by mid-2006. We’ve beaten this target. Now the internet looks certain to be a &£1bn medium in 2005.”

Phillipson adds: “Broadband is experiencing record take-up this year, which has fuelled internet consumption and in turn attracted a greater share of ad spend. Marketers are recognising the internet’s full potential and are actively diverting budgets to online advertising.”

Other drivers of online marketing growth include innovation in technology and in online advertising formats, enabling greater creativity and so greater impact; technological developments such as video streaming, personalisation, interactive formats and localised search; and the online retail boom: online retail association IMRG predicts that total online sales will reach &£19.6bn in 2005.

Of the individual business sectors using online advertising, technology experienced the biggest growth: spending was up by 133 per cent, largely driven by the computing sector. Consumer goods marketers spent 36 per cent more, at &£23.6m.

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