Fast Company

Online Ads Turn a Corner: More Spent on Internet Ads Than TV in U.K.

A new report by the Internet Advertising Bureau and Pricewaterhouse Coopers has revealed something amazing: The U.K. has become the first major economy to see advertisers spending more on internet adverts than traditional TV ones.

The actual figure is a £1.75 billion ($2.82 billion) spend in the first six months of this year--representing a 4.6% growth over the same period in 2008, which means that Net advertising spend took up 23.5% of all ad spending in the U.K. And that's the important statistic: Net spending now has the majority share of ad revenues, with TV following behind with a 21.9% share. These figures also represents an industry in the midst of an explosive expansion--in 1998 spending on internet advertising was a mere £19.4 million, so it's roughly a hundred-fold growth in ten years. 

The fact that Net advertising spend is growing at all (faster than the U.K.'s inflation rate of around 1.8% at the time) is newsworthy, given the number of websites that have suffered through recessional ad-spending cutbacks.

So why has the Net been able to beat television right now? There are a plethora of reasons, primarily driven by greater net penetration thanks to falling prices, a more computer-savvy public and improvements in technology. Thanks to things like Adobe's Flash, internet ads can be as rich (or richer, if you think about interactivity) as TV ads... or can relay more information in a smaller space, which consequently costs less. Improved audience targeting is also possible on the Net--it's easier to track consumer habits online than through difficult TV audience polls--and that can equate to reduced costs per advert as companies don't need to waste ad space on unreceptive consumers. With smartphones, the net is user-accessible in many places a TV isn't. And finally users are beginning to spend more leisure time online, including watching video content over youTube or net-TV services, which is reducing the impact of TV. 

What this switch indicates is that a corner has been turned in consumer and advertising habits, and there's probably no turning back, given the relentless rise of the Web as an entertainment medium. When the same corner is turned in the U.S. advertising business--which equated to roughly $60 billion in the first six months of 2009--it'll have enormous after-effects for the future of TV and even other media like newspapers and magazines.

[via The Guardian]

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1 Comments

  • ahawkinson

    I think the data that is somewhat buried about the slowdown from Q1 to Q2 is really interesting with potential implications for the shift towards social media and engagement rather than traditional advertising (TV, search or otherwise) methods. More thoughts on my view of the data here - http://bit.ly/ihbm6.

    As social media and online engagement grow in importance, they will show up as labor and tool investments rather than explicitly measured advertising spend.