In a key milestone for the digital industry, Ofcom UK Communications Market Review 2008, has just revealed that online advertising spend has finally outpaced advertising on mainstream TV. A whopping growth of 40 percent sees £2.8 billion in spend online against £2.4 billion of the combined revenues of ITV1, Channel 4, S4C and Five as well as six times the size of spend on radio and as much revenue as all outdoor and magazine advertising combined. However, online is still in second place behind press advertising, which still commands a hefty £4.7 billion of the £14.9 billion total UK ad spend.
“The success of the internet remains a particularly UK-focused phenomenon; accounting for a higher proportion (18.9%) of total 2007 advertising spend than in the USA, France, Germany or Italy for example. Paid-for search makes up the majority of UK internet advertising revenue, accounting for £1.6bn of the total £2.8bn,” says Ofcom, with online display advertising revenues coming in at £600 million, growing by 29 percent.
This is more pertinent in the fact that the growth of advertising is outstripping inflation for the first time in the UK since 2005.
In a stark contrast, TV advertising has remained flat, though in the case of the three commercial public service broadcasters, has fallen 16 percent, ITV1 being the hit the hardest. Losses were offset in gains in their digital-only channels (10% in 2007 up from 3% in 2004). Yet with 23% of homes now owning a digital video recorder (DVR), it makes no surprise that 88% of those regularly fast-forward through commercial breaks when watching recorded programmes. This follows a McKinsey study who claim that ‘traditional TV advertising is set to be a third as effective in 2010 when compared to 1990’.
With confidence riding high in digital advertising right now, it can only be a great help in shifting the dark cloud of the doom-and-gloom talks of recession and credit-crunch, which is not only good news for advertisers, but timely as we move towards the seasonal Q4 rush of the Christmas holiday spend.