Digital beats TV for adspend in the UK for the first time ever …

It’s been widely reported over the last 24 hours that in the UK digital adspend has finally overtaken TV.

That is what research by the IAB in the UK has uncovered.

“In the first half of 2009 internet advertising weathered the recession and grew by 4.6% to £1,752.1m, despite the entire advertising sector contracting by 16.6% during the same period.

“According to the bi-annual online advertising expenditure study from the Internet Advertising Bureau (IAB) – the trade body for digital marketing – in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC) – the internet has now overtaken TV advertising to become the UK’s single biggest advertising medium.”

This figure – like the local IAB figures – is made up of paid search, display and classifieds.

In the UK digital grew by 4.6% in the first half of 09, compared with all media which contracted by 16.6%

Looking deeper into these figures, Paid Content found that display was down 5.2% year on year but the overall figure remained positive thanks to search increases (6.8% YOY growth) and classifieds (10.6% YOY)

It’s interesting to compare the UK market to here. In the UK revenue is split as follows

– search 59.8% of digital ad spend
– display 18.1% of digital ad spend
– classifieds 22% of digital ad spend

In AU it splits out as follows …

– search 49.1% of digital ad spend
– display 27.8% of digital ad spend
– classifieds 23.1% of digital ad spend

Also, in the UK consumer goods make up 8.1% of total spend … whereas in AU FMCG makes up 4.66% presently.

So the questions are

– will AU follow the UK and invest more of the digital pool into paid search? At current levels a spend share increase from 49% to 59% would effectively represent a $180m injection into Googles revenues. And will this investment come at the expense of display or in addition?

– how has the UK managed to generate more investment from FMCG and what can we do locally to mirror this?  FMCG increased from just over 6% to 8% (which is a significant increase) YOY – which might indicate that we will see a similar increase in AU over the next 6-12 months as direction trickles out of UK head offices into AU.


5 responses to “Digital beats TV for adspend in the UK for the first time ever …

  1. Let’s hope the local FMCGs do follow suit because I for one am getting jaded by hearing “this is year the FMCGs start taking online seriously” at the start of every fin year.

    Why do their head offices seem to give this territory a digital exemption? Our local publishers’ offerings aren’t that far behind the US & UK’s, are they?

  2. Fionn Hyndman

    I think the issue with AU following the UK on digital becoming bigger than TV is e-commerce. Whilst digital in the UK gets more revenue through advertising and brand as well as a greater proliferation of DR such as Affiliate Marketing there is also a lot of money through digital which relates to e-commerce.

    Affiliate Marketing is a great example of an industry worth a few hundred million pounds which has a large percentage of revenue from e-commerce.

    With Australians not buying online it is going to create an additional gap in the revenues overtaking TV (along with average ad spend per online user).

    The IAB release says;

    “Ecommerce booming: In a time of recession, people buying and shopping are taking to the internet for the best deals, making online the best place to reach bargain-hungry consumers. The continued annual growth in the online retail market is evidence that online is withstanding the challenges of the economic downturn and the retailers that continue to expand and improve their online presence.”

    It also lists tech, telecoms and entertainment within the four largest VM’s who are advertising and the ad spend within these is quite dependent on e-commerce.

    I think AU has a good way to go in terms of investing more into paid search. I think if you spoke to most of the paid search people they would say they have very few campaigns which are at a point of saturation. Many may be at a point of diminishing return but compared with other channels I think they could mostly be expanded.

    On the FMCG point – maybe it is related to the e-commerce and a greater degree of direct purchase? There is also a much simpler and easier vouchering system in the UK for brands to send consumers in store and track results along with a bigger advertiser culture of collection of details of consumers to contact them directly.

  3. talkingdigital

    hey jamie – maybe it’s a mix of things. lack of case studies, lack of sound ideas from agencies and publishers, level of talent etc? i’d say there’s loads of factors that contribute.

  4. Ben,
    I would agree with your response to Jamie – to hang Australia’s internet advertising growth on just the FMCG sector is a very narrow view and an easy one to take. Whilst that sector does provide probably a $AU 1 billion opportunity for migration to online from print and TV, as does retail, there are a myriad of challenges this industry faces in this country to accommodate that level of increased expenditure, and Ben you named a few of them. Infrastructure – the way online is bought and sold and booked and served, all needs to be revitalised. Talent and resourcing, especially in agencies in my view as well as in national advertisers needs major increases. Broadband infrastructure we all hope will be addressed by the NBN albeit over the next 8 years. Video will eventually be a major sector in online advertising but will continue to grow at spectacular rates from a low base for the enxt couple of years. Mobile internet access and usage will grow similarly. Online measurement, not just audience measurement but advertising effectiveness measurement will have to evolve to corss over to multi-media camapign tracking, so-called 3 screens measurement as well as de-duped print and online. More research and tangible evidence of online avdertising effectiveness need to be placed in the hands of marketers as well as agencies. And we haven’t even started to understand how IPTV will affect the media industry!!
    To end on a positive note, in the 6 mths to June 30 2008 online ad expenditure held a 11.9% share of the AU total ad market. IN the 6 mths to 30 June 2009, that had increased to 14.5%.
    So even without the infrastructure, the measurement, the FMCG and the retail dollars, the AU online ad industry is still growing strongly and heading for that 20% + share and number one ad medium, probably sometime in 2013 maybe 2014 on current grwoth rates.

  5. talkingdigital

    hey paul – cheers for the comment.

    I agree with you around the infrastructure elements that need to be improved.

    In many ways we need to almost start again – many of the habits already established are to the detriment of making life easy.

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