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Online spend hits all time high

Growing investment in video and social media by FMCG companies helped drive online advertising spend to a half-year high of £2.26bn, according to the latest PwC IAB report.

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Online’s share of UK ad spend was 27% in the first six months of 2011, the report adds, up from 25% in the second half of 2010. Online ad spend - which does not include mobile ad spend - increased 13.5% over the same period last year.

The study claims the UK advertising sector grew by just 1.4% year on year in the same period.

According to the IAB, growth has been fuelled by an increase in FMCG spend online of which the category now accounts for 14.5% of all online display ad spend, second only to finance which accounts for 15.6%.

In 2009 the share of digital ad spend proportioned to FMCG was just 9%, showing a significant rise in just two years.

Guy Phillipson, chief executive of the IAB, says the continuing increase in spend on video and social media was helping to shift from a focus on direct response to brand spend online.

“If you look back three years the way people used the internet was to gather information and now it is about entertainment. If you add up the portion of time spent online on social sites (25%), games (10%) and video (5%) then that’s already 40% of time on entertainment.”

Matthew Cullum, Heinz Soup marketing controller, says social media is where consumers want to engage with his brands.

“Soup can be an emotive product and this [Facebook] taps into that. Our use of these channels doesn’t replace TV but it is a great compliment to it because it allows the consumer to spread the word and they engage more than they would with traditional channels such as TV or Radio.”

Similarly, speaking at the Mobile Marketing Association conference this week about a campaign it has run using Apple’s iAd network, Babs Rangaiah, Unilever VP of global communications planning said digital, and particularly mobile, was key to its brands.

“We’re really driving digital hard as we recognise the importance of it and that this is an important time.”

The continued rise comes despite concern from figures such as WPP chief executive about social networks Sir Martin who recently said he had “fundamental doubts” about the threat from social networks and that they have limited advertising potential for brands.

  • Display advertising grew by 18.5% year on year on a like for like basis to £510 million boosted by 100% growth of online video
  • Search increased 12.6% on a like for like basis to £1.3m
  • Online classifieds grew 3% like for like to £385m
  • Lead generation grew by 20% to £26m

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