Internet Ad Spending to Overtake TV in Sweden, UK
Spending on internet advertising in the UK is projected to overtake television advertising by 2009, and Sweden will this year become the first country to see advertisers spend more on the internet than on TV ads.
Group M, the media planning and buying operation owned by WPP, forecasts that the UK will be on the brink of passing the milestone at the end of 2008, when the internet will account for 24.8% of UK media spend, just behind the 26% share held by the TV ad sector. After that, UK internet ad spend will need to grow just another 6% year on year to overtake TV in 2009, Group M predicts in a report published in The Guardian newspaper.
Group M predicts that UK internet revenue is likely to climb by 30.8% this year, to £3.4 billion, compared with just 1% year-on-year growth in TV ad spend to around £3.56 billion.
The UK is a special case. Its TV share [of all media spend] is depressed by the BBC and there is still a large and healthy print sector and Britons are among the world’s heaviest internet users.
Most of the growth is coming from search advertising, which Group M estimates accounted for 63% of all internet ad revenue in 2007 and will take a 65% share this year. Search will grow by around 35% this year, while the smaller display and classified sectors will see growth of around 20%, Group M predicts.
In Sweden, at the close of last year TV ads accounted for 19.8% of all media spend, compared with the internet’s 16.7% share, according to Group M.By the close of 2008 the internet will have grown to take a 19.5% share of all media spend in Sweden, compared to the 19.2% share held by TV advertising. Television’s share of advertising spend in Sweden is small because it is a relative latecomer to commercial TV.
The opposite is true in the US, where Internet advertising has a long way to go to overtake TV, though it is having an impact on the industry. Publicis Groupe’s ZenithOptimedia expects the amount spent on Internet advertising in the US to overtake spending on radio in 2008, and spending on magazines in 2010, according to the Wall Street Journal (Subscription required).
The Web’s emergence is forcing ad executives to succumb to marketers’ demands that agencies reinvent how ads are created, and forgo their TV-centric approach.
According to Paul Kedrosky’s Infectious Greed blog, JPMorgan has raised its estimate of spending on internet search advertising to a 31.9% increase this year, while Citigroup has lowered its estimate of US internet ad growth to 22%.
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