Summary:

UK internet advertising spend defied the slowdown affecting other media in the first half of 2011, with the sector enjoying 13.5% year-on-ye…

UK internet advertising spend defied the slowdown affecting other media in the first half of 2011, with the sector enjoying 13.5% year-on-year growth as brands flocked to spend cash on online video ads.

Companies spent £2.26 ($3.48)bn on all forms of internet advertising in the first six months of the year, compared with a growth rate of about 1.4% across traditional media such as TV, newspapers and radio, according to the Internet Advertising Bureau’s latest half-yearly update.

The report shows that the amount spent on online advertising has overtaken that spent on TV for the first time since early 2009 – when the UK was facing the teeth of the recession and marketers pulled large chunks of budget from traditional media – with digital accounting for 27% of all ad spend and TV 26%.

Internet ad spend growth is also stronger than it has been in several years. The 13.5% year-on-year uplift recorded in the first six months compares with 11% in the same period last year and just 4.6% notched up in the first half of 2009.

The IAB, which produces the report in conjunction with PricewaterhouseCoopers, attributed the growth to a surge in fast-moving consumer goods companies, like Unilever and P&G, latching onto digital display and in particular the rapidly growing market for online video advertising.

Online display advertising accounted for almost a quarter of all digital spend in the first half, some £510 ($784.86)m, with a year-on-year growth rate of 18.5%.

Facebook is thought to account for a significant chunk of the online display ad spend, although the social networking website does not provide any figures.

Online video advertising is beginning to gather momentum, doubling in size year on year in the first six months to £45 ($69.25)m.

“What’s interesting about these figures is that the fastest-growing type of advertising on the internet is online TV advertising,” said Lindsey Clay, managing director of TV marketing body Thinkbox. “It underlines how the internet is a technology that’s helping TV advertising to expand.”

Paid-for search, dominated by Google (NSDQ: GOOG), grew 12.6% year on year to £1.3 ($2)bn. Online classified grew 3% to £385 ($592.49)m.

In terms of categories of spender finance companies were the biggest investors in online display advertising, accounting for 16% of all spend, closely followed by FMCGs on 15%. FMCG spend on digital display has grown dramatically in the past two years, up six percentage points.

“FMCG advertisers were relatively late to the party but are now firmly established as the second highest-spending category,” said the IAB chief executive, Guy Phillipson.

This article originally appeared in MediaGuardian.

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