U.K. online advertising market grows 40%

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LONDON -- The burgeoning U.K. online advertising market was worth about half as much as television advertising in the first half, according to new research published Wednesday.

Research from the Internet Advertising Bureau and PricewaterhouseCoopers said the Internet advertising market here grew 40.3% year-over-year to ?917.2 million ($1.7 billion) for the January-June period.

By contrast, television advertising declined 1.3% to ?2 billion ($3.8 billion) for the same period.

Paid-for search services, online banners and embedded formatting all showed significant growth to boost the online advertising category.


Overall, the online space also remained the major growth area in an otherwise depressed U.K. advertising market that saw newspaper, radio and direct mail all record spending declines during the period.

News of the continued growth momentum in the U.K. Internet ad space comes at a time when investors and industry observers have debated the health and outlook of the U.S. market.

Yahoo! Inc. recently warned that its third-quarter revenue would come in at the low end of expectations because of slower-than-expected ad gains (HR 9/20). Some observers have predicted that higher fuel costs and other broader economic trends would hold back spending growth on Web ads late this year.

However, at least one analyst recently said that these assumptions seem to be wrong. "Online advertising volumes remain strong," RBC Capital Markets analyst Jordan Rohan said in a recent report (HR 9/12).

Media and online players also still seem bullish on the further growth outlook of the Web ad market. For example, Time Warner Inc.'s AOL unit has refocused its business model to take advantage of the continuing Internet ad opportunities.

Georg Szalai in New York contributed to this report.
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