April 01, 2008 | Tuesday

UK online ad spend to pass £5bn within 5 years

By Jackie Danicki - Blogger in Marketing |News |Online Sales |Search Engines |Google |Yahoo |Microsoft

Recent days have been good to those who like to put some numbers against what’s happening online.

A new report projects investment in online advertising in the UK to exceed £5bn by 2012. In the more immediate future, it predicts a £3.4bn spend in 2008 and £4.3bn within the next two years. Annual growth for search is, unsurprisingly, cited for its enduring robustness, with the report’s author calling it “remarkable”.

This dovetails nicely with Mintel’s latest findings about online shopping in Europe. Its analysis of web retail shows that the UK outshines its continental cousins, with sales hitting £12.8bn (approximately €18.5bn) in 2007. The closest any other country got to Britain was Germany’s €13bn showing.

Mintel’s director of research Richard Perks was clear on the reasons why Britain leads in online retail revenues:

The UK has by far and away the most developed online market in Europe. The main reason for this is the sophisticated online offering of the UK’s food retailers and the fact that so many of us now more than happy to turn to the internet to do our weekly shop.

So there is significant investment being ploughed into even more substantial returns. As it turns out, Google is getting the lion’s share of that online ad spend. In total, 69 per cent of all online ads are served by the search giant. A breakdown of the figures shows that 35 per cent of that belongs to Google’s recently acquired DoubleClick, and the other 34 per cent to Google itself. As NMA‘s Will Cooper points out:

Yahoo! came third with 12% of the market, followed by Microsoft with 10%, suggesting that if the latter’s bid for the former does go through, it would still be 47% behind Google.

Ouch.