Brand Republic

Internet advertising expenditure grew 21% year on year in the first half of 2008 to £1.7bn as the total ad market fell by 0.7%, according to the Internet Advertising Bureau.

In real terms, online adspend increased by £348.2m when compared with the same period in 2007.

The rise came as the total ad market fell 0.7% year on year to £9bn, as TV, press, outdoor and radio all experienced falls in expenditure.Online has therefore increased its market share by four points to 18.7%, only 0.6% behind total press display (19.3%) and 3% behind TV (21.7%).

Paid-for search continues to lead the way, growing by 28% year on year and was worth £981m in the first half of 2008, with its market share marginally up to 58.3% of total online advertising (57.8% in first half of 2007). 

Total internet display ad spend rose 16.3% year on year to £334m.  This was boosted by a 36.6% increase in spending on embedded formats such as banners, rich media and video.  

Classifieds grew by 30.2% year on year to £361.6m as recruitment, property, automotive and small ads continued their migration to the internet from print classifieds, which declined 10% year on year.

Guy Phillipson, chief executive officer of the IAB UK, said:  "Online is not immune from the economic downturn, but while other sectors see falls in expenditure the internet is still experiencing an incredible increase and is propping up the entire advertising market.

"The growth in internet advertising spend is beating all expectations as advertisers look to maximise their budgets, and take advantage of new display advertising formats such as video." 

The research was carried out in partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC).