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Online takes 25% of the UK’s total advertising spend

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The UK’s internet advertising market is now worth £4bn, with £1 in every £4 spent online. That 25% share of UK advertising spend represents a new record for online advertising, according to a study by the Internet Advertising Bureau (IAB) and accountants PwC.

In 2009, the biannual study of advertising spend showed, online’s share of the market stood at 23%. But in 2010 25%, or £4.097bn of the £16.6bn spent on advertising in the UK went to the internet, representing a year-on-year growth of 12.8%.

Display advertising was the area that showed the largest growth, boosted by a near 200% growth in display ads placed in a social media environment, on a like-for-like basis, while consumer goods and retail advertisers both boosted the amount they spend online.

The biggest spenders on online display are finance, with 15.2% of the market in 2010, entertainment and media (14%) and consumer goods manufacturers (12%).

Other areas of significant growth included mobile advertising (up by 116%, like-for-like), paid search (up by 8%) and the online classified market (up by 9.7%).

Factors behind the growth included an increase in advertising spend, up by 7.2%, according to Nielsen as 77 of the top 100 advertisers upped their investment, and the expansion of the online audience. The IAB report cites analysis from the UK Online Measurement Company and Nielsen showing that the UK’s active online user base had grown to 40.3m by the end of last year.

Guy Phillipson, IAB chief executive, said: “Major brands restored their advertising budgets in 2010 and online was a big winner, breaking through the £4 billion barrier and accounting for a quarter of total UK media spend.

“The power of online to build brands is clearly reflected in the spectacular growth of display, thanks to the popularity of social media and video formats. And with mobile advertising finally coming of age, marketers are enjoying an incredible array of digital opportunities.”

Anna Bartz, strategy manager at PwC, said: “2010 was an exciting year for online advertising – full-year growth figures are strong at 12.8% on a like-for-like basis and some 15% in absolute growth.

“All formats – display, search and classifieds – contributed, although display showed the strongest recovery. This was driven by video, social media and mobile, channels which build a strong foundation for 2011.”

For more insight into the way the online advertising market is growing, here’s a video featuring Tim Elkington, director of research and strategy at the IAB.

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