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Facebook Effect Lifts Online Advertising In UK

The seemingly unstoppable rise of Facebook fuelled year-on-year growth of more than a quarter in the UK online display advertising market to almost £1bn last year, as the total internet ad market cracked £4bn for the first time.

The Internet Advertising Bureau’s annual report, compiled with PricewaterhouseCoopers and published today, attributed a 27.5% year-on-year surge in online display advertising to £945m to the Facebook effect as advertisers clambered on board the social media bandwagon.

In total the UK ad market grew by 12.8% year-on-year in 2010 to pass the £4bn mark, with £1 in every £4 spent on marketing and advertising by British companies now spent online.

According to industry sources, Facebook UK made about £100m in ad revenue last year. The IAB said that the spend on social media accounted for 14%, or £132m, of the online display advertising market – a 200% rise year-on-year.

In 2009 the online display advertising market was worth £709m, meaning growth last year of £236m or 33%, however the IAB has stripped out “new media entrants” in the online display sector to give a like-for-like growth figure of 27.5%.

The online display market also benefited from the rise of video advertising, which almost doubled in size to £54m. Online display now accounts for 23% of all internet advertising.

Advertisers’ appetite to tap into the Facebook generation reduced the skew of the proportion of the total £4bn spent on internet advertising attributable to paid-for search – effectively money spent on Google (NSDQ: GOOG) – down from 61% to 57%. The paid-for search market grew by 8% year-on-year to £2.35bn.

To put this in perspective the total UK TV ad market was worth about £3.5bn last year.

However, TV advertising bounced back strongly from the 2009 recession, with 15% year-on-year growth in 2010, outstripping the growth rate for internet advertising for the first time since it has been measured as a substantial media more than a decade ago.

Bucking the trend seen in print advertising, the online classified market grew 9.7% year-on-year in 2010 to £751m. Mobile advertising grew 116% to £83m.

This article originally appeared in MediaGuardian.

3 Responses to “Facebook Effect Lifts Online Advertising In UK”

  1. I agree.. Social networks is hot right now and they did a very well job on advertising platforms and systems. Some interesting statistic numbers you have up there but I have not much knowledge on UK companies since I mostly work with ads in US.

  2. Rupert Staines, RadiumOne

    The IAB’s figures prove that online advertising is showing no signs of relenting, but putting it all down to the Facebook effect may be a little premature. The key to this acceleration is that the entire Web is now social, rather than just what you would label “social networks”. All aspects of internet use, such as email, copying and pasting, URL shortening, in fact anything that involves sharing or some sort of social connection, is what is really responsible for this phenomenon. When you consider that comScore recently said that Facebook is responsible for 9.9% of web surfers online time, advertisers are clearly asking themselves “what about the other 90.1%?”

    Social networks do a good job of targeting their audiences, but they do also represent walled gardens. For advertisers looking to expand their presence, it’s all about targeting their prospective audiences across the open and social web.