Online advertising breaks through £4bn barrier

Advertising on social networking sites soared in 2010

The internet now accounts for a quarter of all advertising spending in the UK, according to figures.

They show that the value of online advertising grew by 12.8% in 2010, breaking through the £4bn barrier.

A study by the Internet Advertising Bureau (IAB) and the accountants PwC found that online advertising spending grew three times as rapidly as in 2009.

It also outpaced the rest of the advertising market, which has recovered after dipping during the recession.

Guy Phillipson, the chief executive of the IAB, said: "Major brands restored their advertising budgets in 2010 and online was a big winner."

The biggest growth area was display advertising on social networks, which grew by nearly 200%.

Print media's pain

Facebook has made big advances in the last year in persuading advertisers to see social networks as a place to promote their wares.

With figures showing that UK internet users spend 25% of their online time on social networks, advertisers are keen to tap into this audience.

Online video advertising also nearly doubled in 2010, with £54m spent on adverts that appeared before, during or after video clips.

Mobile advertising raced ahead too, with finance, telecoms and consumer brands trying to reach audiences on the move.

Search advertising, still dominated by Google, remains the biggest earner, although growth in this more mature business was just 8%.

Ian Barber of the Advertising Association says there is one clear attraction which is boosting online spending: "It's targeted, it makes it easier for brands to work out who they're advertising to."

Other areas of advertising recovered last year, with television spending bouncing back after a steep decline.

But much of the Press is still suffering, with magazines and regional newspapers seeing revenues continue to fall. Classified advertising, once a key element in regional newspaper revenues, has now nearly all migrated online.

But Lynne Anderson of the Newspaper Society says local newspapers are capturing some of that online advertising spending on their own websites: "They are getting pretty savvy at capturing audiences in new ways."

She added: "Regional newspapers - print and online - are resilient, innovative and well-placed to benefit when wider market conditions improve."

The IAB expects online spending to continue to grow, as faster broadband makes new formats increasingly attractive.