• by Seana Mulcahy , April 2, 2007

I was emailing back and forth with a colleague/friend a week or so ago and he dissed me for being such an American. He asked that I mention other countries in my Spins. I used to write from an international perspective but haven't for a while. It's probably due to the fact of the amount of domestic work I've been doing.

Anyhow on the heels of him saying that, I saw some pretty cool stats coming out of the U.K., where online ad budgets grew like wildfire this past year. In fact they grew by 41%, overtaking national newspaper ads (10.7% share) and about half the amount spent on TV ads (which actually dropped 4.7%). Talk about excellent news for digital marketers.

Where do we fare? Well online ad spend still lingers at about 5% of a total of ad budgets.

Before we scratch our heads too hard, we can note that Europeans spend more online per capita than Americans do The latest figures from the Internet Advertising Bureau, prepared in conjunction with PricewaterhouseCoopers, showed that British advertisers spent just over £2 billion online last year -- overtaking the amount spent in national newspapers.

Advertisers are already spending more online than on radio (£582m), outdoor-poster sites (£932.5m) and in business magazines (£1 billion). But what is more striking is the continuing rate of growth. Online grew by 41% last year, and the IAB's Guy Phillipson is forecasting the sector to attract at least another £500m this year. "The Internet is a hugely popular mass medium now, and advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers," he said. "With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the U.K. is set to continue unabated," he added.

So where was the money spent? As a result of such heavy spending on online adverts, the U.K.'s online ad market share is almost double the global average of 5.8%, the report added.

Recruitment spent the most on Web advertising -- increasing expenditure by 2.7% -- followed by finance and technology. In Britain the growth in online advertising has been primarily driven by Google and search advertising. With revenues of about £870m last year, the search giant makes more from U.K. advertisers than either Channel Four, Sky or Five. Ask anyone you know in the business in the U.K. about search. Most of them will say it is still new. There remains a tremendous opportunity for agencies and brand marketers alike to educate clients about the power of search.

My guess is that the improvement of broadband speeds will help fuel online display ads, rich media and the like. Now search is scalable, easy -- and Europeans like the pay-per-click model. I think we'll see an uptick in video penetration by year end.

Younger generations are also fueling online popularity in the U.K. To no surprise, they are flocking to MySpace and Bebo for social networking, downloads of video clips, wallpaper and icons of newly released movies. MySpace also offers users the ability to store 300 photos.

Like the U.S., the U.K. is diving deep into behavioral targeting. Mobile is a challenge for them as well. The mobile Internet is not widely used. Many companies are looking at it from a content standpoint. They also have in-depth usage and location data. I suspect faster connection speeds will fuel this too. Carriers have begun to team up with social networking sites. Vodafone is working with YouTube and MySpace, and Orange just cut a deal with Bebo.

So what do you think? Do you think the U.S. will follow suit in regard to spend? For those of you in the U.K,. tell us about online activities that are appealing to the brands you represent. Is search hot? How about the potential for video as broadband becomes more mainstream? Post to the Spin blog.