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Online ad spend overtakes mainstream TV

Online ad spend overtakes mainstream TV

More money was spent on internet ads than on the mainstream TV channel ads last year, according to a new report from Ofcom. The UK communications industry watchdog said that online ad spend grew 40% £2.8bn last year, representing 19% of all advertising. In contrast, TV advertising was flat at £3.5bn, with the mainstream commercial channels (ITV1, Channel 4, S4C and five), accounting for £2.4bn. This represents a fall to 67% from 83% in 2002, as ITV lost share. Channel 4 and Five managed to maintain market share over the period. Digital TV channels, mainly those owned by public service broadcasters, gaining in share to make up about one-third of TV ad sales. The report stated: "We may not yet have felt the full impact of the economic downturn on consumer and advertiser spend. While televiseon advertiser revenue has remained relatively steady in nominal terms, future stability cannot be taken for granted." Ofcom's annual report on the £51bn communications industry covered TV, Internet, mobile and fixed-line telephony and radio. Spending drops The regulator found that Britons spent four times as much time on computers, or 24 minutes a day, and twice as much time on mobile phones in 2007 as in 2002. Despite the rise in consumption, average household spending on communications fell slightly. The average UK household spend on communications in 2007 was £93.63 a month - a fall of £1.53 on 2006. Ofcom cited the rise of bundled services and broadband bargains as the key cause of falling prices. Ofcom's strategy and market development partner Peter Phillips said: "We are spending more and more time with our communications devices but spending less on them." Online ad formats Online advertising spending was dominated by paid-for search, in which sponsored links appear as Internet search results. Paid-for search accounted for £1.6bn, with the rest split equally between display and classified ads. Internet advertising in Britain generated £33 per head, more than in any other G7 country. TV consumption Vs Internet TV remains the most popular pastime, with the average person watching for 3 hours and 38 minutes a day last year. In 2007 the average person in the UK spent 24 minutes per day on their computer and 10 minutes using their mobile. Britons watched TV for an average of 218 minutes per week, up from 216 in 2006. The proportion of those with an Internet connection watching TV online more than doubled to 17 percent, helped by the launch of the BBC's iPlayer catch-up service. Broadband penetration Among households with access to the Internet, 32% watched video clips on sites such as Google's YouTube, or webcasts, up from 21% in 2006. Broadband penetration reached 58% of British households, up from 52% the previous year. By the end of 2007, Britain's population of 60 million had almost 74 million mobile connections, and Britons spent on average 10 minutes a day talking and texting on their cellphones, double the time they spent in 2002. The average time spent talking on landline phones slipped to 14 minutes a day from 15, and consumer use of VoIP Internet calling services such as Skype dwindled as the cost of making landline calls continued to fall. Overall telecoms revenue rose to £38.8bn from £37.3bn in 2006. Mobile broadband on the rise Mobile broadband usage surged, following a big marketing push by mobile phone companies selling so-called "dongles". Between February and June this year, monthly sales of these devices, which give internet access to laptop users, rose from 69,000 to 133,000 a month. According to Ofcom figures, two million people say they have used mobile broadband via a dongle or similar device and three-quarters of them say they use it at home as well as on the move - evidence that the mobile operators are beginning to compete with fixed-line businesses for broadband customers. British consumers are also spending more time on the phone than ever before, with a 21% increase in minutes spent on mobile calls. Even fixed-line calls are holding up with Ofcom seeing just a 2% fall in minutes spent calling. More than one in 10 mobile phone users accessed the Internet on their cellphone as the number of third-generation (3G) connections leapt 60 percent to 12.5 million. For the first time an interactive version of the key points in the Ofcom document is available online at http://comment.ofcom.org.uk/cmr08.

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