A quarter of all UK advertising spend now online

Advertising spend in the UK has topped the £4bn mark online for the first time. Could this mean the recovery is nigh?

by Emma Haslett
Last Updated: 30 Mar 2011
It’s been a difficult few years for the advertising market, but things may finally be looking up: according to figures published by the Internet Advertising Bureau, online ad spend grew by 12.8% last year, taking it above the £4bn mark. In fact, the web now accounts for a quarter of all ad spend in the UK. And it’s not just online that things are going well: according to separate figures from the Advertising Association, spending across all media grew by nearly 7% to £15.5bn in 2010, its biggest increase since 2000. Given that the industry is traditionally seen as a bellwether for the economy as a whole, that’s the sort of news that should put a smile on the faces of businesses everywhere.

The figures show that some 'old' media channels are making a comeback: TV advertising, for example, outpaced the web’s growth, with a 15.8% rise since 2009 (although the Advertising Association says it expects growth to slow to 2.9% in 2011 as the industry settles down).

However, the upsurge in overall ad spend was largely driven by the internet. Pay-per-click ads (the ones displayed next to search engine results), were still popular, growing by 8% last year (having enjoyed constant growth throughout the recession, whereas TV advertising declined). But the big winner was online display advertising – the banners and pop-ups you see displayed on content-driven websites. It’s been lagging behind PPC for the last few years, but the IAB said Facebook’s decision to include relatively low-cost display ads on its pages helped it to grow by 27.5%. In fact, spending on social media advertising as a whole has grown by almost 200% on a like-for-like basis, with Facebook at the forefront of that. And while it’s still relatively small, at just 5% of total ad spend, the figures suggest Facebook could eventually even overtake Google’s display ads business (i.e. not including its pay-per-clicks stuff).

One social media site that still hasn’t managed to persuade advertisers to part with much in the way of cash is Twitter, where co-founder Jack Dorsey is set to return after fellow co-founder (and CEO) Evan Williams decided to take a step back from day-to-day operations. Dorsey, who had done the same thing himself in 2008, will return to lead product development – and presumably play a part in finding ways to help the company monetise its 200m-odd users.

It’s been a tough few months for the company, which started displaying ‘sponsored tweets’ last year. But analysts have pointed out that because users are still at the ‘experimental’ stage, Twitter isn’t exactly reaping the benefits of repeat custom. Let’s hope Dorsey can help the company cash in on some of this renewed enthusiasm for advertising...

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