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Viewing report
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Internet Advertising Market Assessment 2011
Key Note Publications Ltd, Oct 2011
In 2010, total UK Internet advertising expenditure stood at £4.1bn, up from £3.5bn in 2009, according to figures from the Internet Advertising Bureau (IAB) and Pricewaterhouse Cooper (PwC). Internet advertising is by far the fastest growing sector within the overall advertising market and it is probable that it will overtake television as the leading advertising sector in the UK over the next few years.
The recession had a huge affect on the advertising market in 2009, which experienced losses in market value as a result. Despite this, the Internet advertising sector continued to perform well in 2008 and 2009, achieving a 5.7% increase in value at the height of the recession. This fact reflects industry sentiment that television advertising is no longer the best way to advertise a new product or service.
In terms of specific trends in the Internet advertising market, social media advertising experienced a boom in the past couple of years, with a 200% rise in expenditure observed in 2010. It seems that advertisers are realising the potential of targeted advertising, for example, Facebook offers an advertising service that allows companies to target a specific demographic. Companies are also taking full advantage of free advertising by setting up company pages on social networking sites, where consumers can also ‘interact' with the company.
Search advertising still remains the main Internet advertising format in the UK by expenditure, although display advertising has experienced the highest levels of growth over the past few years. Search advertising accounts for 57.2% of Internet advertising expenditure in the UK, although this is set to shrink to around 50% over the next few years, mainly due to the growth of display advertising.
One major issue in the industry currently under discussion is behavioural advertising. As it stands, the EU has created a new law stating that companies require a user's consent before it can use cookies and user information stored as a result. There has been an ongoing debate regarding Internet user's privacy rights and, as it stands, only five EU member states have written this EU legislation into their national laws.
An original survey commissioned by Key Note found that 79.3% of 1,000 respondents had used the Internet in the past 12 months. Of these Internet users, 89.2% have bought goods online, thus showing the potential for highly effective Internet advertising. However, not all Internet users are receptive to advertisement, with 77.4% of Internet users revealing that they used computer software to block some forms of advertisements.
Key Note has forecast an extremely promising future for the market, with expenditure topping the £6bn mark within the next 5 years. The social media sector is expected to continue to grow rapidly, as is the video advertisement sector.
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