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UK Internet marketing spend exceeds £2bn in 2006

The Internet Advertising Bureau have just released the latest figures on Internet advertising expenditure in the UK for 2006, which show that total spend broke the £2 billion barrier for the year, due to a 41.2% surge in growth as marketers continued to move their budgets online and away from other ‘traditional’ media.

The new figures published by the IAB are from the biannual online advertising spend study carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC). They show that the £2.016 billion spent online by advertisers in 2006 has increased the Internet’s share of all advertising revenues to 11.4%, up from 7.8% in 2005.

In a difficult market, advertising across all traditional media combined fell by £466.1 million year-on-year (a 2.9% decline), whereas the increase in online advertising spend led to an overall market growth of 1.1%. The continuing upward momentum of the Internet for a further year reflects the new era in marketing communication and consumer behaviour, which is driven by high-speed broadband take-up and user-generated content.

The results reveal that expenditure on the Internet overtook advertising in national newspapers, which last year recorded growth of 0.2% to £1.9 billion and a market share of 10.9%. In 2006, the internet was just over half the size of the TV advertising market, which experienced a fall of 4.7% to £3.9 billion.

In the second half of 2006, online advertising experienced its highest market share ever reported when expenditure topped £1.098 billion - a 12.4% share of total UK advertising.

Breaking down the Internet spend by media format, online display advertising (including banners, skyscrapers and online sponsorships) rose 35% year-on-year to £453.7 million. Traditional advertising formats, such as banners, were reinvigorated by an increase in the use of rich media, which includes graphics, audio, video or animation. Once again online display advertising is experiencing growth far greater than any other display medium.

The growth of paid-for search (sponsored listings that advertisers pay for when a consumer clicks through to their site) was sustained, increasing by 52% to £1.2 billion of total online ad spend or a 57.8% share.

Online classified advertising was also up 45% to £379 million, a share of 18.8%. This is in contrast to traditional press classified advertising, which experienced a significant decrease of 7.8% year-on-year.

These figures have demonstrated again that the Internet is now proving itself to be a hugely popular mass medium and advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers. With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the UK is set to continue unabated.

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