In 2008, UK expenditure on Internet advertising was valued at £3.35bn. The Internet is the UK’s fastest-growing advertising medium and, in the first half of 2009, the UK became the first major European market in which online advertising expenditure exceeded television advertising expenditure.

The UK advertising market in general is being affected by the recession and revenues from other advertising media, including television, radio, newspapers, magazines and outdoor, are forecast to decline in 2009.

Although it is still important, television no longer monopolises the media schedule as it did in the past. Marketers have realised that digital promotion, including Internet advertising and UK search marketing, is an inexpensive and effective way of building their brands. This trend has been prompted by a fundamental change in consumer behaviour due to the rise of the Internet and media fragmentation.

Search marketing remains the largest single format within the Internet advertising mix. It has become a staple on the media schedule and is increasingly integrated into traditional and online advertising campaigns. UK search marketing is always on the increase. The second-largest sector of the Internet advertising market is classified advertising, expenditure on which now exceeds that on display advertising. E-mail advertising is now a very minor sector of the market.

One controversial area of Internet advertising is behavioural advertising, which works by constantly analysing customers’ Web surfing activity to determine their interests. The technology then delivers targeted advertising to users when they visit certain websites. In April 2009, the European Commission opened infringement proceedings against the UK as a result of concerns about the UK’s implementation of EU ePrivacy and personal data-protection rules. The Office of Fair Trading (OFT) has also begun an investigation into potentially misleading advertising on the Internet.

Original research for this report found that 97.3% of British Internet users now access the Internet at home. The survey also revealed that 96.3% of those who had used the Internet in the previous 12 months usually accessed the Internet using a broadband connection. Online shopping continues to increase in popularity, with 86.4% of the Internet users in a survey having shopped online. Concern about fraudulent card use, though still evident, appears to be in decline as a barrier to online transactions. UK search marketing companies are aware of these facts, and are constantly working to increase traffic to their client’s websites.

This report forecasts that expenditure on Internet advertising in the UK will continue to rise in 2009, although the rate of growth will be considerably lower than in previous years, as a result of the recession. Thereafter, the report projects that expenditure on online advertising will rise more rapidly, in line with the increasing popularity and use of the Internet.

We accredit Your Story with the inspiration for this article.