I started today with my usual tech news digs on Twitter and RSS feeds BUT this release from the IAB (Internet Advertising Bureau) and article from the Guardian stood out from my endless stream of tech new articles and blog updates. They are both about Online advertising expenditure finally surpassing TV advertising spend. It was inevitable but I really didn’t expect it to happen so quickly!
The summary of the two articles was that:
- Online advertising expenditure in the first half of 2009 was £1.75 billion
- TV advertising over the same period (H1 2009) was £1.6 billion
It’s not a huge margin but considering that the entire advertising industry contracted by 16.6% in H1 2009 and TV advertising declined by 17% in H1 2009 (year on year); online advertising proved to be a recession buster with 4.6% year-on-year growth in the first half of 2009. Freaking amazing…I’ll say!
Lets dig a little deeper to find out the sectors in online advertising that actually tick:
Paid Search a.k.a Google AdWords - Yes you guessed it, grew by 6.8% in H1 2009 (year-on-year)
Paid Search now accounts for a massive 59.8% of online marketing spend with a total of £1.05bn spent in H1 2009
Paid Search which is clearly dominated by the almighty Google via its Google AdWords platform probably accounts for over 80% of £1.05bn spend in H1. Google actually recorded revenues of a total of £973m in H1 2009 – which is about 92.6% of H1 2009 UK Paid Search spend. Paid search provides a direct response advertising platform with very measurable results.
Advertising on classified sites actually recorded the highest growth of 10.6% in H1 2009 (year-on-year)
Classified advertising now account for 22% on all online marketing spend with a total of only £385m spent in H1 2009
It looks to me that over the course of the recession, advertisers woke up to the reality that newspaper classified ads were not working for them and then started to migrate to online classified advertising for lower costs and it’s reach. Only time would tell whether this trend would be on the up 12 months from now. A 10.6% year-on-year growth is none the less pretty impressive.
Display advertising was the upset of the lot, with a H1 2009 year-on-year decline of 5.2%.
Display advertising accounted for about 18.1% of online advertising spend in the UK, at £316.5m in H1 2009
Display ads have not always met marketers expectations for sales and lead generation. They are akin to newspaper advertising as they are mainly used as branding tools. In a recession, marketers want fast measurable results, but display ads unfortunately do not deliver like Paid Search.
With plans for broadband in every UK home by 2012, I see advertisers pouring more and more money into online advertising. 70% of UK households currently have internet access, so there is room for an increase in online advertising spend to cater for the remaining 30%. I am in no doubt that the online advertising industry is still a growth sector and that paid search would emerge as the winner before the online marketing industry starts to mature. I can’t wait for H2 2009 results!