Today

The amount of money spent on internet advertising in the UK has exceeded the amount spent on newspaper ads for the very first time, figures show.

Online advertising expenditure climbed 41.2 per cent to £2.01bn in 2006, according to a report by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PWC).

This rapid growth has increased the internet's share of all advertising revenues to 11.4 per cent, up from 7.8 per cent in 2005.

Spending on national newspaper ads grew by just 0.2 per cent last year to £1.9bn, taking its total market share to 10.7 per cent, down from 41.5 per cent in 2004.

TV advertising spend fell by nearly 5 per cent to £3.9bn in 2006.

"The incredible growth of online has beaten all the industry predictions," said Paul Pilkington, from PWC.

"The internet has now overtaken National Press as marketers have followed their audiences online and enjoyed measurable returns on their investment."

Total spending on advertising in the UK rose by just 1.1 per cent in 2006.

IAB chief executive Guy Phillipson said: "2006 was a tough 12 months for the advertising market as a whole, but once again the internet bucked the trend, recording a 41 per cent increase in ad revenues."

Paul Pilkington, PricewaterhouseCoopers LLP: "The internet has now overtaken National Press as marketers have followed their audiences online and enjoyed measurable returns on their investment."

The IAB attributes the growth in online advertising to a surge in the number of homes using high-speed broadband.

"Faster, cheaper broadband means marketers are increasingly experimenting with video and more engaging, creative advertising or rich media (graphics, audio, video or animation) adverts," the report said.

"These advertisers recognise that video is a catalyst for staying online for longer and awareness is higher when video ads are employed."

The explosion of user-generated content and social networking has also played its part, according to the report.

"During the past 18 months, user-generated content and social networking websites have opened up the internet to a new generation," the report added.

"As advertisers realise that mass audiences are uploading their own pictures, videos and blogs instead of consuming traditional media, they are discovering new ways to engage consumers through in-game advertising and online video technology."

The UK's online ad market share is now almost double the global average of 5.8 per cent and well above America's figure of 7.5 per cent.

Recruitment firms spent the most on internet advertising last year, followed by finance and technology.

However, the biggest gains were seen by technology, up 6.5 per cent, and property, up 3.4 per cent.

Looking ahead, the report predicts that internet advertising will continue to grow over the next twelve months.

Mr Phillipson added: "The internet is a hugely popular mass medium now, and advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers.

"With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the UK is set to continue unabated."

Online advertising expenditure was £653.3m in 2004 and £407.8m in 2003.