Online video ads drive internet advertising growth

The growth of online video and more ads on social media sites helped boost UK internet advertising last year by 14.4 per cent to £4.8 billion, new figures reveal.

Advertisers now spend more than £1 in every four on the internet, according to statistics compiled for the Internet Advertising Bureau (IAB) by PwC.

Driving the internet advertising boom are the retail and consumer-facing industries, which have embraced online marketing. Combined, the two sectors now account for more than one-quarter of UK internet display ads.

IAB’s director of research and strategy Tim Elkington told the Financial Times that new marketing formats, such as internet videos, are helping to push up the spend on retail display ads. The figures show online video display ads were up 10 per cent to £109 million in 2011.

Retail and consumer businesses are also using online advertising campaigns to drive up their high street footfall, Mr Elkington said.

“Online display advertising is becoming more attractive to consumer-facing businesses, and it is the retail and consumer advertisers who are increasing their ad spend budgets the most," he explained.

Advertising on social media sites such as Facebook rose by almost 75 per cent last year, slowing from the bumper 200 per cent growth levels recorded in 2010. Spending on banner display ads on social media sites went up 21 per cent year on year to £240 million in 2011.

Advertising through search engines such as Google, Yahoo! and Microsoft’s Bing grew by 17.5 per cent to £2.77 billion, and remains the most popular form of online marketing.

A report by advertising research group Warc due to be released next week is expected to show that UK online ad spending overtook the amount spent on press ads in 2011.