Web Ads Will Top TV Ads in UK in '09

Online advertising spending looks set to overtake spending on television in the UK by the end of 2009, according to a recent report.

Web ads became the third-largest market in 2007 from being the smallest in 2003.

In the UK advertising market, the Internet was the biggest driver of growth, according to a study by the Internet Advertising Bureau (IAB) -- the UK online advertising trade body -- in conjunction with PricewaterhouseCoopers and the World Advertising Research Centre.

"It doesn't surprise me that online advertising will overtake TV," Frederic Joseph, global CEO of Zed Digital told CNBC.com. "In media consumption, people spend 20 percent of their time on the Internet and although there is a gap between time spent online and advertising spend, it is likely to lessen."

The UK Internet advertising market is accelerating nine times faster than the entire advertising sector, the study found. Comparable spending grew 38 percent from the year before to $5.5 billion and market share gained 3.9 percent from the previous year.

"To grow 38 percent from 2 billion pounds to 2.8 billion pounds is a very powerful performance," IAB chief executive Guy Phillipson said in the report. "The UK is head and shoulders above all other major world markets."

Internet advertising spending in 2007 outpaced that of national and regional press classified ads as the UK online audience grew to 32.5 million people.

Cheap laptops, catch-up TV and social networking sites, like MySpace and Facebook, were the key drivers for growth.

"We've seen high-profile acquisitions, mergers, and a rise in social media and online video and a higher than ever usage of the internet," Nicki Lynas, senior manager of entertainment and media practice at PricewaterhouseCoopers said.

The recruitment sector remained the lead in the online advertising market with a 25.7 percent market share. Second place went to automotive and third was technology.

Total Internet advertising spending increased by 31 percent year-on-year, while embedded formats spending doubled during the past two years.

Classified advertising grew by 54 percent and was worth $1.17 billion in 2007.

© 2008 CNBC.com