• by Ross Fadner , December 17, 2003

While online ad spending is rebounding in the United States, its relatively robust 15-20 percent rate of growth in 2003 is nothing compared to projections for at least one other major industrialized market. With 2003 online ad spending up 85 percent through the first half of the year, the U.K. Web advertising marketplace is on a pace to grow more than four times that of the United States, according to estimates released by the Interactive Advertising Bureau UK.

The trade group estimated that U.K.-based Web publishers took in $264.3 million during the first half of the year - an increase of 85 percent over the first half of 2002.

At that rate, U.K. Internet ad growth far surpasses ad spending increases for other U.K. media. In fact, on the whole, ad revenue is down. According to the Advertising Association, 3.38 billion pounds were spent on advertising in the third quarter of 2003, representing an inflation-adjusted decline of 2.6 percent from a year earlier.

U.S. Internet ad spending growth pales by comparison. For the first half of 2003, according to the IAB, online ad spending rose to $3.29 billion - a somewhat disappointing 10.5 percent increase over 2002's decidedly sluggish spending figures.

Britain is Europe's largest online advertising market, and by year's end it should comfortably reach the 300 million-pound milestone for the first time, giving online advertising a two percent share of total UK ad spending. This is a 100-million-pound increase over 2002.

"The tide has turned," said Danny Meadows-Klue, chief executive of the IAB, adding that this has been "fuelled by rapid product innovation and unstoppable audience growth as British consumers have turned to the Internet for everything from entertainment and job hunting to shopping and news."

Many attribute the upsurge to increased U.K. broadband adoption. In fact, according to ZDNet UK, last Wednesday British telecommunications regulator Oftel announced that the United Kingdom's three millionth high-speed Internet connection had been installed. ZDNet sources further suggested that the precise figure for weekly broadband adoption could be as high as 49,000 new connections per week.

David Edmonds, director general of Oftel, said in a statement last Monday that broadband is "transforming the way consumers and businesses use the Internet, and is now becoming an important market in its own right." He adds that "in the last five years the Internet has moved from the margins to the mass market, with half of all U.K. households and two-thirds of all businesses now online."

While broadband adoption in the United Kingdom is certainly expanding rapidly, 3 million broadband connections account for just 12% of the its online population, compared to the United States, where 40.9% of users have access to a high-speed connection, according to data compiled by the MediaDailyNews.