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UK online advertising spend nears £5bn a year

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Advertisers spent almost £5bn online in the UK last year, according to new figures.

More than £1 in every £4 spent on advertising in the UK in 2011 was spent on online or mobile, according to newly-published IAB/PWC figures. In all £4.8bn was spent online, 14% more than the year before.

When the first IAB study was published, in 1997, advertisers spent £8.1m in online advertising. Ten years ago that spend had risen to £196.7m and today it is £4.8bn.

The new figures show that retail advertising accounted for 12% of online spend in 2011, equal with entertainment and the media, and behind the 15% of spend allocated both to fast moving consumer goods and finance.

They also show a fast growing audience, with 39.7m people now online each month. That’s 375,000 more than the monthly average in 2010. Some 27% of time spent online was spent on social media in 2011.

More than half of the ad spend went on search marketing. Spending in this area grew by 17.5% in 2011 to £2.8bn, up from £2.3bn in 2010. It now accounts for 58% of all online advertising spend.

Display advertising grew by 13.4% to a spend of over £1.1bn, from £0.9bn at the same time last year. Of that total spend, banners and other embedded formats accounted for 73%. Video advertising grew to £109m, from £54m last time, and now accounts for 10% of all online display advertising.

Some £240m was spent on banner ads on social media platforms such as Facebook, YouTube and LinkedIn. That’s an eightfold increase since records began in 2008. Advertising on mobile devices was up by 157% in 2011 to £203m as more people bought smartphones and tablet computers. Some 18.8m people – 38% of the UK’s mobile audience – used their mobile device to access social media in the three months to January 2012. That’s a rise of 35.6% compared to the same time last year.

Tim Elkington, director of research and strategy at the IAB, said: “Online and mobile advertising have experienced staggering growth since this study began in 1997. The 2011 results are full of breakthroughs for digital; with online display passing the £1billion barrier for the first time, proving that advertisers increasingly recognise the central role that online plays in their marketing campaigns.”

Anna Bartz, strategy manager at PwC, said: “This year’s results reflect the continued appeal of digital media – on desktop, mobile or tablet – to advertisers for both brand advertising and direct response. All formats grew, with strongest increases in video and social media, and in search. Internet adspend’s 14.4% growth is exceptional when compared to an estimated advertising growth of less than 2% across all media in 2011.”

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