UK online ad spend was worth £4.8bn in 2011, a £687m and 14.4 per cent year-on-year increase, according to the latest Internet Advertising Bureau UK (IAB) advertising expenditure report, conducted by PwC. Online display advertising topped £1bn for the first time. The figure of 1.13bn was 13.4 per cent up on 2010, as display accounted for 24 per cent of total online ad spend.

As we revealed a couple of weeks ago, ad spend on mobile devices rose by 157 per cent to a new high of £203m, (4.23 per cent of total online spend and 18 per cent of online display spend), as a result of increased smartphone ownership, the proliferation of touchscreen technology, 3G, and soaring tablet sales, which sparked a surge in interest from brands, especially in the Retail and Consumer Goods (FMCG) sectors.

The Retail sector showed the most overall growth in online display ad spend, but Finance and Consumer Goods remains the biggest sectors on 15 per cent share each, followed by Retail (12 per cent), Entertainment & Media (12 per cent), and Technology (9 per cent).

Expenditure on video advertising more than doubled, from £54m in 2010, to £109m in 2011. The medium now accounts for 10 per cent of all online display advertising. Banner ads on social media platforms such as Facebook, YouTube and LinkedIn, increased by 75% to £240m, an eight-fold increase since records began in 2008. 
Search marketing spend increased by 17.5 per cent to £2.78bn, representing a 58 per cent share of online advertising spend, up from 57 per cent in 2010. Total classified ad spend rose by 5.2 per cent to £785m, though its share as a percentage of total online ad spend fell from 18 per cent in 2010, to 16 per cent in 2011.

“Online and mobile advertising have experienced staggering growth since this study began in 1997,” notes Tim Elkington, director of research and strategy at the IAB. “The 2011 results are full of breakthroughs for digital; with online display passing the £1bn barrier for the first time, proving that advertisers increasingly recognise the central role that online plays in their marketing campaigns.”