Digital Advertising is (more than ever) the future : UK Internet ad spend overtakes TV for first time

LONDON (Reuters) - Spending on Internet advertising in Britain grew 4.6 percent in the first half of 2009, outperforming the wider ad sector, which slumped 17 percent, and making it the country's biggest ad medium ahead of TV.

According to the biannual report from the Internet Advertising Bureau (IAB), ad spend on the Internet grew to 1.75 billion pounds, with the medium accounting for 23.5 percent of all spend, ahead of television for the first time.

Guy Phillipson, chief executive of the IAB, told Reuters the jump ahead of TV as the leading medium had come earlier than he expected and that the growth boded well for the rest of the year.

He believes there will be some growth in 2010 for online advertising, and double digit percentage growth by 2011.

"This is a significant milestone," he said. "This is the first major market where online has overtaken television to become the biggest single medium."

Online growth had slowed considerably compared with the 21 percent reported for the first half of 2008, but it still fared far better than television, print and radio, the report by PricewaterhouseCoopers and the World Advertising Research Center said.

"Perhaps surprisingly, a slowing economy has accelerated the migration to digital technology," Eva Berg-Winters of PWC said. "Hence the continuing shift from more traditional forms of advertising to online, which promises return on investment and measurability in a period of instability."

According to the report, the Internet accounted for 23.5 percent of all spend, compared with 18.7 percent in the first half of 2008. Television accounted for 21.9 percent, press display for 18.5 percent and direct mail for 11.5 percent.

The shake-up in market share followed a 16.1 percent fall in television spend, and a more than 20 percent fall in press display, outdoor advertising and directories. Spend on press classified fell 37 percent.

The report confirms the torrid time suffered by commercial media groups of late, such as free-to-air broadcasters, newspapers and radio, which rely on advertising and are now looking for alternative revenue streams.

ITV, Britain's biggest commercial free-to-air broadcaster, said net advertising revenue for the family of ITV channels fell 15 percent in the first half of the year.

The IAB report said the Internet had avoided this slump, due to the strong demand for paid-for search on sites such as Google and resilience shown by classified online ads.

Paid-for search grew 6.8 percent from the first half of 2008 to 2009, with marketers investing 1.05 billion pounds, equating to 60 percent of all online advertising expenditure.

Classified adverts, which are moving from print to online, grew by 10.6 percent to 385 million pounds, while online display adverts fell 5.2 percent.

Britain remains the world leader in terms of market share for online advertising, due to the use of online networks to place advertising, the availability of fast and cheap broadband and the popularity of new formats such as video adverts.

(Reporting by Kate Holton, editing by Will Waterman)