Earlier this year, eMarketer estimated that spending on UK online advertising would hit £3.36 billion ($6.41 billion) in 2008—a rise of 27.1%.
These figures were based in large part on the extraordinary growth of UK online advertising through early 2008.
According to the Internet Advertising Bureau UK (IABUK), PricewaterhouseCoopers (PwC) and the World Advertising Research Center (WARC), the Internet’s share of all UK ad spending rose from 2.5% to 18.7% in just five years.
Then the roof fell in.
Now the UK, like most countries throughout the world, is facing an economic crisis. In fact, the International Monetary Fund predicts that the UK will experience a deeper recession than any other developed nation in 2009, with the economy shrinking by 1.3%, and struggling to reach 0.4% growth in 2010.
As a result, eMarketer trimmed its projections for UK online ad spending in 2008 and 2009 to £3.34 billion ($6.15 billion) and £3.58 billion ($5.30 billion), respectively.
Note: Shifts in the currency exchange rate will cause a plunge in the dollar value of the UK’s online ad market in 2009.
“The good news is that even though advertising in traditional media is down sharply, online is bucking the trend, at least to an extent,” says Karin von Abrams, eMarketer senior analyst and author of the new report, UK Online Ad Spending.
Still, 2009 will cast a cloud over the industry.
“Budgets are being trimmed, marketers will be less experimental and the focus will be on getting the best from proven strategies,” says Ms. von Abrams. “Fortunately, many forms of online advertising, such as paid search and e-mail marketing, rank high in terms of accountability and return on investment.”
As in the US, where advertisers are moving millions of dollars from traditional media to the Web to take advantage of greater measurability and cost-effectiveness, there will be a similar trend in the UK in 2009, though the rate of growth in online ad spending will fall below 10%.
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