UK Online Ad Market Nears 2Billion

Leading interactive marketing across Europe

UK online ad market nears €2billion

IAB UK/PWC research reveals record breaking results for 2005
www.IABeurope.ws

Online advertisingspend nears €2 billion(£1.37billion) in UK for 2005Figures for 2005 show 65.6% year on year increase Internet advertising’s market share jumps to 7.8%

UK’s Online advertising nearly £1.4billion in 2005

The latest results of the Online Advertising Spend survey have shown that spend on online advertising for 2005 has increased by 65.6% year on year, to £1.37 billion, giving online a 7.8% share of the total advertising market. The bi-annual survey is carried out by IAB UK in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC). The growth was so dramatic that it fuelled the 2.5% increase shown by the advertising market as a whole from 2004 to 2005.

Phenomenal growth across all formats

This terrific performance by internet marketing was driven by substantial increases in all formats. Display increased by 44.2% year on year to £334.9 million in 2005, encouraged by the increased opportunities for rich media campaigns. Online classifieds increased 62.4% to £262.2 million, primarily driven by the recruitment and automotive sectors. Search recorded the largest increase of 78.8% year on year to £768.4 million, as advertisers recognized its contribution in both direct response and brand-building initiatives.

Entertainment sector harnesses online advertising

The recruitment sector remained the highest spending industry category, accounting for22.1% of all online advertising spend in the second half of 2005. In second place was finance with 17.4% and in third was automotive with 12.4%. Entertainment and media saw the most significant growth and was worth 10.2% of spend in the second half of 2005 compared to 6.2% for the same period in 2004. The entertainment industry has capitalized on the ability of broadband to engage consumers through video-streaming and sophisticated rich media adverts.

Classifieds impact press

Online classifieds saw a 62.4% increase year on year – up from £161.4m in 2004 to £262.2m in 2005 - primarily driven by the automotive and recruitment sectors. The growth of online classifieds is making a significant dent in traditional press classified expenditure where revenues fell by 5.1% year on year. The shift is a recognition that online is more immediate and convenient for buyers and sellers.

Industry comments on the new figures

Guy Phillipson, Chief Executive of IABUK, said: “These figures surpassed all our initial expectations. To see such a massive increase yet again is testimony to online’s strengths as a medium to reach mainstream audiences. Our next milestone is £2 billion – a real possibility within the next 12 months, which would make online bigger than national press.”

Layla Pavone - President of IAB Europe said " The UK figures give to all the European countries the concrete idea of how will be the future of the interactive advertising everywhere. Italy is also reaching the tipping point that right now it’s very close to us. For the second month of 2006 the italian online adspendig is growing more 50% on the year before. I think that we are facing the results of a decade where all the online advertising industry has demonstrated the power of interactivity and the added values of Internet compared to the others media ".

Danny Meadows-Klue, Chief Executive of IAB Europe said ‘Because the use of online marketing is more advanced in the UK than most countries, these figures offer a model of what is likely to happen as other European countries cross their tipping point. With Search accounting for more than half of online advertising it is clear that direct marketers have realized the power of the web, and with online accounting for around 8% of total advertising spend the wider media mix is changing’

Notes for journalists

Background to the study

IAB UKhas been working with PwC since 1997 to survey the value of the online advertising market. PwC has run projects in Europe and North America to assess the size of the interactive media markets in the UK. These figures have become the industry standard for measuring advertising spend and in the UK are now used by the Advertising Association. 78 companies have participated in this phase of the tracking, representing thousands of websites. Reported figures are not adjusted to account for other organisations that have not participated in the survey

Total advertising revenue is reported on a gross basis. The figures are drawn up on the basis of site declaration. They cover thousands of UK websites, but by no means all.

Market growth remains rapid

The web is accounting for around 5% of advertising spend in several developed markets and increasing at rates between30% and 60% year-on-year in many markets. However with the internet accounting for more than 20% of consumer media time across Europe, IAB Europe has identified a key disconnect between where audiences have moved to and where marketers remain focused.

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Unless otherwise indicated, PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP ( a limited liability partnership incorporated in England. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited

About the IAB

Founded in 1996, the IAB is the global network of interactive marketing trade bodies and think-tanks. IAB Europe coordinates activities in the region and handles all pan-European issues of research, marketing, lobbying, standards and best practice. Its mission is to grow the interactive advertising markets among pan-European clients and to nurture the development of national markets. It does this through a national network of fifteen IABs across Europe and its five activity programmes:

Marketing of interactive media…promoting online advertising
Developing powerful standards …raising profitability by tackling barriers, reducing costs
Producing powerful research…proving the effectiveness and power of online
Educating the markets about the medium (events)…persuasion: training marketers how to use new media
Effective government affairs and external representation…protecting the freedom to advertise online

IAB Europe is a federation of 15 national IAB associations and think-tanks set up to help marketers get the most from the new digital channels. Supported by every major media group, agency, portal, technologist and service provider, the IABs across Europe embraces more than two thousand companies. Their challenge is to help firms discover the potential online marketing has to enhance their business.

About IAB UK

The Internet Advertising Bureau (IAB) is the trade association for online advertising. With over 200 members, it's run for the leading media owners and agencies in the UK internet industry. Online is an exciting and fast-growing medium and th remit of IAB UK is to work with members to ensure marketers can identify the best role for online, helping them engage their customers and build their brands. Through the dissemination of research and the organisation of regular events, IAB UKaimsto put online on the agenda of every marketer in the UK, acting as an authoritative and objective source for all internet advertising issues.

About the IAB Europe expansion

First phase: appointment of the leadership team
Second phase: launch of the Leadership Council, corporate membership and the IAB in Denmark
Third phase: Events programme expands
Fourth phase: Standards programme expands
Fifth phase: Government Affairs programme expands
Sixth phase: For briefings about the sixth phase journalists should register for our press service on

Further information for journalists

Press interviews and comments can be arranged by contacting directors of IAB Europe directly:

IAB Europe Chief Executive: Danny
IAB Europe President: Layla Pavone,
IAB Europe Vice Presidents available for interview: Bruce Hoang and Constantine Kamaras
IAB Europe press office (handled by Digital Strategy Consulting)+44 207 244 9661

Online resources for journalists

IAB Europe– (intranet for members)
IAB US– (US research and events)
IAB UK– (UK case studies, guides and events)

Sign up for our press briefing service

IAB Europe operates a press briefing service, providing background information and commentary for journalists about a range of interactive topics, and an access points for information about the . Writers should contact us by email for more.

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