The advertising market as a whole grew by 2.5%, but with all advertising except online falling by nearly £200m over the year, the rise in the market is entirely due to the growth of online advertising. The online advertising figures confirm that more businesses are taking advantage of online advertising to promote their products and services – acknowledging what the internet industry already knew – the online market is bigger, more lucrative and as yet, relatively untapped.

Online advertising figures grow across the board
The IAB’s report also showed that the growth was consistent among the three main online formats: display, classified and search, which recorded the following growth:

Display – growth of 44% (£103m), largely driven by broadband speed, enabling advertisers to provide rich content.

Classified – growth of 62.4% (£100.8m), largely driven by the recruitment and automotive sectors, with a related decrease in the number of print classifieds bought.

Search – growth of 79% (£338.7m), driven by the realisation that the internet is the first place many people search for products and services, and is still under-exploited in terms of advertising spend across the marketing mix.

Recruitment leads growth
It’s clear from these online advertising figures that some sectors have grasped the benefits of online ads whilst others still trail behind. The Recruitment sector was one of the first to take real advantage of online opportunities and remains the best performing sector in terms of spend, accounting for 22.1% of the total market. Their closest rivals, Finance and Automotive are also increasing their spend, but the most significant growth came from the Entertainment sector, which has begun to exploit the medium in an increasingly sophisticated and creative style. The sector’s spend grew from 6.2% of the market in 2004 to 10.2% in 2005 and is set to increase still further throughout 2006.

The widespread uptake of broadband connections across offices and homes alike has contributed to this market, as online users are available for longer and become more used to searching online and more comfortable with responding to online advertising. This trend likely to continue to affect the growth of the market, which is summed up by IAB Chief Executive, Guy Phillipson. “To see such a massive increase yet again is testimony to online’s strengths as a medium to reach mainstream audiences. Out next milestone is £2 billion – a real possibility within the next 12 months, which would make online bigger than the national press.”