UK Internet marketing spend grows in 2005

The Internet Advertising Bureau (IAB) has published the figures on UK advertising spend in 2005 which shows a further significant growth of 66% compared to the previous year, up to £1.4bn. At the same time, the IAB has also published research on the use of online marketing by business to business (B2B) advertisers.

The new IAB figures on online advertising continue to attract extensive publicity due to the significant year-on-year growth within this medium that bucks the trend for all other areas of advertising spend. Compiled from research by PricewaterhouseCoopers using a sample of 78 representative companies, the 2005 figures show that online was driving the advertising market compared to 2004, where only TV (+3.6%) and outdoor (+5.8%) saw growth.

More significantly, online advertising is now taking a 7.8% share of the UK advertising market, which is a larger share of spend than radio, consumer magazines and outdoor advertising. It is also expected to take a greater share than national newspaper advertising within the next 12 months.

Paid search also remained the fastest growing sector of spend within online advertising, seeing a 78.8% increase in spend to £768.4m, followed by online classifieds which grew by 62.4% on 2004 to £262.2m, primarily due to automotive and recruitment activity. Recruitment was also the highest spending industry category, worth 22% of the total market in the second half of 2005, followed by finance (17.4%) and automotive (12.4%).

In a separate survey published in March 2006, the IAB report that B2B companies are failing to take full advantage of the Internet as a marketing medium. Apparently only 39% of companies use search marketing or display advertising, and just 29% use online classifieds. However, the tool of choice appears to be email marketing, used by 89% of respondents primarily to promote products (54% of companies), send out newsletters (49%) or for customer acquisition (47%).

However, as the topline advertising spend figures suggest, the market is expected to grow rapidly and 63% of B2B companies surveyed said that the Internet will take up more of their marketing spend in the next year or so, either to build their brands, grow their client bases and to save on distribution and customer management costs. 96% of respondents also stated that online marketing was appropriate for a business audience.

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