The financial crisis has brought the progress of the UK’s digital marketplace almost to a halt.
eMarketer projects that growth in online ad spending will be minuscule this year, just 0.9%.
“In 2009, online ad spending has been hit harder than most UK marketers thought possible even a few months ago,” says Karin von Abrams, eMarketer senior analyst and author of the new report, UK Online Advertising: Spending and Trends. “Budget cuts have affected all industry sectors, including many that contributed significantly to online ad spending, notably banks and financial services, automotive and retail.”
On the bright side, Internet spending is expected to regain some momentum in 2010, when the economy begins to rebound, and approach 10% growth in 2011. The London Olympics will fuel a further spurt of activity in 2012 and push spending growth into double digits.
“Moreover,” adds Ms. von Abrams, “in the UK, online advertising still accounts for a higher proportion of total advertising spending than in any other European market.”
And UK online advertising is proving to be resilient.
“The economic crisis seems to be actually accelerating the shift of marketing funds online,” says Ms. von Abrams.
The £3.38 billion ($6.25 billion) that will be spent online this year represents more than 20% of all UK ad spending.
In addition, while Internet ad spending growth will be small this year, it will present a sharp contrast to traditional media. According to PricewaterhouseCoopers (PwC), the Internet Advertising Bureau (IAB UK) and World Advertising Research Center (WARC), since the beginning of 2008 most other media channels have seen revenue drops of between 5% and 18%.
“In 2010, online spending should recover more quickly than spending in other media,” says Ms. von Abrams. “The Internet is likely to be the only medium demonstrating positive growth.”
To peer deeper into the future of advertising, take a look at the new eMarketer report, UK Online Advertising: Spending and Trends.