UK online ad spend has overtaken that spent on national newspaper advertising for the first time, while Google has also extended its dominance of the market.

New figures from the IAB and PwC reveal that online ad spending passed the £2bn mark for the first time last year, with the market growing by a massive 41% from 2005.

Meanwhile, ad spend on traditional media declined, with TV advertising spend falling by 4.7% to £3.9bn, and national newspaper advertising growing only slightly, by 0.2% to £1.9bn.

Google also confirmed its dominance of the UK online ad market, gobbling up 43% of total UK online ad spend and increasing its ad revenue from £483m in 2005 to £872m last year.

In addition, 75% of paid search spending in the UK last year went straight into Google’s pockets. In 2005, 63% of the paid search market went to Google.

Here are some other highlights from the IAB report:

  • The UK now has the world’s highest proportion of online ad spend, with online accounting for 11.4% of total ad spend last year.
  • By contrast, online advertising accounts for around 7.5% of total ad spend in the US, while the global average is 5.8%.
  • National newspapers’ share of UK ad spend last year was 10.9%.
  • Paid search accounted for 57.8% of the UK’s online ad spend last year, a total of £1.2bn. (E-consultancy predicted that the paid search market would reach £1.26bn in May’s Search Marketing Buyer’s Guide).
  • Online display advertising (inc. banners, skyscrapers and online sponsorships) rose 35% last year to £453.7m.
  • Classified advertising online also grew, by 45% to £379m, a market share of 18.8%.
  • Online advertising achieved its highest market share ever in the second half of 2006 when expenditure topped £1.098bn – a 12.4% share of the market.

Further Reading:

Search Marketing Buyer’s Guide (2006)