internet advertising to reach 36% of all advertising by 2013

UK internet advertising is expected to reach 36% of all advertising in the next four years, almost doubling its current position, according to PricewaterhouseCoopers, which advised firms to monetize their digital content.

PricewaterhouseCoopers, in its report into the UK entertainment and media market, said that UK internet advertising is expected to reach 36% of all advertising by 2013.

In April, PwC said internet ad expenditure grew by 17.1% year on year in 2008 to £3.35bn, an increase of £540m compared to 2007.

This increased its share of total UK ad expenditure from 15.5% to 19.2%. It now expects it to almost double.

PwC's report, its tenth forecasting entertainment and media earnings, revealed that the increase in advertising would happen over the next five years as digital technologies become increasingly widespread across all segments of entertainment and media.

However, at the same time PwC warned that companies must ensure they are monetising their digital content and capturing the revenues.

Phil Stokes said: "We anticipate fundamental structural change in many of the business models across E&M sectors to happen imminently.

"Perhaps surprisingly, a slowing economy will accelerate the migration to digital technologies among both providers and consumers of content, meaning the industry that went into the recession is very different from the one to emerge the other side.

"Segments will have to consolidate, the least loyal customers have already left, higher quality products will be valued by both consumers and advertisers, and digital distribution will have become mainstream -- commanding fees more in line with its value.

"For each of the industry's diverse segments, the winners will be those who focus on driving and leading change which delivers real value for consumers."

PwC also reported that the UK internet access market (wired and mobile) will increase at a compound annual growth rate of 7% from 2009 to 2013, an overall rise of 40% from $10.3bn to $14.4bn spend over the next five years.

Overall, PwC said that the UK entertainment and media market will experience a cumulative 7% decline in revenue from 2008 to 2010 from $92bn (£56bn) to $85bn.

The firm said a decline in advertising and change in consumer spending behaviour will push the market to its lowest revenue figures since 2005.

Following this low, the market is set to flourish, increasing to $98bn in 2013.

However, the only segments that will be larger in 2013 than in 2008 are internet access, internet advertising, TV subscriptions and license fees, filmed entertainment and video games.

Revenues in 2013 from television advertising, newspaper publishing, business-to-business publishing and consumer magazine publishing are all expected to be lower than in 2008.

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