Internet adspend 'to overtake TV this year'

The Internet will overtake television as the biggest advertising medium in Britain this year, with more than 19% percent of total ad spend, according to a new report.

The forecast, from research firm Enders Analysis, cites paid search on sites such as Google as the main engine for growth in the Internet sector.

However, Enders said the growth of online video is also starting to make a small contribution to a shift in advertising from television to the Internet.

The report states: "Rising internet consumption and surging consumer e-commerce continue to drive strong growth in online advertising, particularly paid search, in spite of the deteriorating economic outlook.

"Our forecast for 2008 is that online advertising expenditure will grow 26.4% in nominal terms to £3.56bn, overtaking TV ad spend, which we expect to fall 2.5% £3.39bn."

The report said Google would remain the biggest beneficiary of the growth in search advertising and predicted it would take 80 percent of UK spend on search advertising, up from 78 percent in 2007.

Meanwhile, growth in online classified advertising, which increased 54% in 2007, is predicted to slow in 2008 due to declines in recruitment and property listings, the report said.

One source of growth is online video, however this could still be hard to develop as many of the most popular videos are short and user-generated clips put on sites like YouTube.

The report said broadcasters and online portals were achieving high CPMs -- the all important cost per 1,000 views of an advert and a common industry metric -- for in-stream video ads, reportedly averaging around £20, compared to £6 for TV ads.

However, the report warned that the high prices were a result of limited supply and said they would fall as volumes increased.

"In total, we estimate online video advertising will amount to about 35 million pounds or 1 percent of TV ad spend in 2008, with many advertisers using existing TV spots, the report said.

"Not all this money will come from TV budgets, but there are early signs of a direct shift in spend from TV to the Internet over and above the broader shift to online."

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