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JUNE 7, 2006

Online advertising is thriving on both sides of the pond.

Figures released by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), show that US spending on Internet advertising set a record in the first quarter of 2006, reaching $3.9 billion. That represents a healthy 38% increase over Q1 2005, when the total was $2.8 billion, and a 6% increase over the Q4 2005 total of $3.6 billion.

“The Internet continues to shape the media landscape as more advertising dollars are going online,” said Peter Petrusky of PwC. “It is abundantly clear that marketers are seeing a compelling opportunity to leverage the Internet as a powerful medium that drives both branding and sales results.”

Across the water in the UK, the impact of Internet advertising on other media was even more apparent.

According to “This Year Next Year UK” from WPP’s GroupM, the Internet is currently the driver of advertising growth in the UK and it now accounts for 13% of all advertising expenditure.

In fact, the report predicts that online advertising will overtake national newspaper advertising in the UK by the end of 2006, when the Internet will account for 13.3% of the £12.2 billion ($23 billion) UK advertising market, compared to newspapers with a share of 13.2%.

“Every year, people think the Internet must slow down because the growth rate looks high, but it keeps going,” Adam Smith, futures director at GroupM, was quoted as saying in several sources. “If anything, there has been some low-balling of the Internet estimates. Overtaking national newspapers is another milestone.”

GroupM predicts that by the end of 2007, the national newspaper share of UK media advertising will fall to almost two-thirds of its share in 2000. By comparison, six years ago the Internet accounted for only 1% of the multibillion-pound UK ad market.

GroupM projects that total advertising spending in the UK will reach £12.7 billion in 2007. The firm attributes the growth almost exclusively to the Internet and other forms of digital media, noting that otherwise UK media growth was flat in 2005 and this year’s non-Internet spending is expected to be down 2%.

For more information on this subject, read the eMarketer report Ad Spending Trends: The Internet and Other Media.