Facebook drives soaring digital ad expenditure

March 29, 2011

Recession, what recession? None at all where expenditure on digital advertising is concerned. After the merest hint of a stutter the year before last, the engine of growth has surged to new heights of performance. Annual spend is up nearly 13% according to the latest, and much awaited, biannual study by the Internet Advertising Bureau and PwC. That’s close to double the rate of recovery in the rest of UK media spend (7.2%) over the same period.

The easiest way to grasp the overall significance of the survey’s data – which is rich to the point of indigestion in statistics and trends – is to remember the 3 Quarters.

One quarter of all UK media spend – or £4.1bn – now goes online. That makes it nearly, but not quite, the biggest medium. Television remains ahead by a whisker (26% versus 25%), but is likely to experience slower growth. You can draw your own conclusions about what is happening to press and the rest.

One quarter of that £4.1bn (£945m precisely) is now spent on display. Search is still dominant (57%), but is enjoying a growth rate of “only” 8%. IAB chief executive Guy Phillipson attributes the power of digital display to 3 underlying factors: the general recovery in advertising confidence during 2010;  more importantly, “the power of online to build brands” (an issue which has held it back in the past); and faster and more reliable broadband delivery, which has helped to stimulate video streaming.

One quarter of all time spent online in the UK is dedicated to social media, of which by far the largest component is Facebook. According to ComScore, cited in NMA, the social network accounted for 81.6bn page impressions in Q4, 2010 alone. More than anything else, we could speculate, it is Facebook – with its enviable reach, dwell time, and video opportunities – which has given advertisers the confidence to plunge into online display in such a committed way.

Two other accelerants of growth are worth noting. First, packaged goods companies, for long sceptical about dipping their toes in the digital pond, are now within the top three digital online spending categories, outgunned only by finance and entertainment and media.

Second, mobile advertising budgets more than doubled (116%) last year to reach £83m. That may still be a small figure, compared with the online total, but it demonstrates beyond doubt advertiser confidence in smart phone platforms. While on this subject, a report just out from US consultants Borrell Associates identifies mobile as the key revenue driver in the internet’s most hotly contested battlefield, “local” (see Groupon, Craigslist etc).

For more on the IAB survey, check out its website.

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