Online ad spend to exceed 2bn as figures jump 40%

Online advertising should break the 2bn barrier in 2006, according to Guy Phillipson, chief executive of the Internet Advertising Bureau UK, taking it well ahead of national press and closing the gap on TV.

Phillipson says: “We can see online overtaking TV in terms of share of total spend before the end of the decade.”

UK marketers spent 917m on online advertising in the first half of 2006, an increase of 40% over the previous year. That equates to a 10.5% share of total UK ad spend. By comparison, TV spend fell by 1.3% to 1.98bn to take a 23% market share. National newspaper advertising took 11.4%.

The figures come from the latest bi-annual survey of online ad spend, conducted by the IAB, PricewaterhouseCoopers and the World Advertising Research Centre (WARC).

But the 40% growth recorded in the first half of 2006 suggests that the rush into online may be slowing down, albeit gradually – six months ago, the annual growth rate was 66%.

Phillipson says: “The rate of growth may be down, but from a higher base – we’ve grown at more than 60% for three years running.”

The internet is now double the size of outdoor (5.1%), double the size of consumer magazines (4.6%) and three times the size of radio advertising (3.4%).

The only online advertising medium to record a fall in value was the so-called interruptive format – including “pop up” ads, which have attracted much consumer criticism – which declined by 9% to 6.8m, just 0.7% of all online advertising expenditure.

According to figures from YouGov, UK consumers spend an average of 23 hours a week online, a major driver in the switch of advertising budgets to the internet.