Increasing outlay on internet advertising saw UK companies’ marketing budgets rise slightly in the third quarter of 2006, according to the Institute for Practitioners in Advertising.

Although budgets have now declined for eight consecutive quarters, the IPA’s latest Bellwether Report found the rate of decline had slowed for the third time in a row.

Online advertising continued to outperform other sectors with strong gains. Some 11.5% of companies are now diverting more than 15% of their budget to internet marketing alone, more than double that seen since the apex of the dot.com boom in 2000.

IPA president David Pattison said: “The growth is driven predominantly by direct marketing and internet advertising at the expense of the more established media sectors, continuing the trends that we have seen over the last 18 months.”

Traditional content companies like ITV, GCap and Trinity Mirror have seen their income from advertising fall in recent months and many are rushing to acquire or develop online services that could captalise on the growth in web ads.