Search advertising expenditure across Europe grew by 26% to €5.6bn (£4.8bn) in 2008, according to figures released by IAB Europe.
According to the 2008 online advertising expenditure report, search remains popular with marketers because of its measurement and performance capabilities and that "in times of recession advertisers are more focused on proving return on investment for every Euro spent".
Search accounted for 43% of European advertising budgets last year compared to 41% in 2007.
The report found classified spend increased 17% since 2007 and represents a quarter of overall ad spend, at a market value of €3.8bn. Display grew 17% to €3.3bn and email spend remained flat at €200m.
In total the European online advertising market grew 20% in 2008 to €12.9bn, but IAB warned growth was slowing.
Smaller markets in Eastern Europe saw exponential growth, such as Slovenia (77% year on year), Poland (60%) and Austria (45%), albeit for minimal spend -- Slovenia's online ad market is valued at €19.6m.
The top 10 countries, which account for more than 90% of market value, saw growth closer to the 20% mark, including Italy, with the UK, Germany and Sweden coming in at 19% and France at 18.5%.
Just beating the 20% barrier, Belgium grew 21% and Denmark and Norway hit a 22% growth rate. Spain by comparison saw relatively strong growth at 26%.
The Netherlands, Europe's earliest adopter of online advertising, grew only 9% in 2008.
The study said: "While the pan-European figure is one of growth, it is no secret that 2008 was one of the worst years for advertising in any medium.
"The online sector was not immune and experienced a challenging year, particularly in the 10 most mature markets. The key difference is it did still manage growth - albeit at a lower rate."
Eva Berg-Winters, an analyst with PriceWaterhouseCoopers, which oversaw the study, said 2009 is shaping up to be a difficult year for advertisers as well, but hope is on the horizon.
Berg-Winters said: "Decline is likely in a number of mature markets and, where there is still growth, we expect it to be much lower than previously.
"However, online continues to outperform other media and to increase its ad market share. The post-downturn era should therefore see another growth spurt for online."
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