For the first time, a major established market registers an online ad spending superior to the TV ad spending.
The UK Office of Communication, Ofcom (www.ofcom.org.uk), has just reported that online ad spending in the UK reached $5.3 billion. The figure in itself may not tell you much but it represents a huge 40% increase in 2007 from 2006. It now counts for 19% of all advertising across the UK.
Interesting enough, many others anticipated the shift in the ad spending structure and preached that online would, of course, overtake TV sooner or later – but they were wrong in regard to the timing. Take, for example, the “This Year, Next Year” report from GroupM (WPP Group): it predicted that 2009 would be the year of the big swap in the UK and they were wrong for only 2 years.
While this is great news for those of us working in online operations, there are many aspects to consider before jumping to conclusions:
– not all markets develop at the same pace, the Brits may have ditched TV ads for online but for now it’s just them;
– intensified competition in the online sector could likely lead to lower CPMs and lower profit margins;
– same competition will force content owners and networks to develop increasingly sophisticated ad products and user-targeting capabilities, in an attempt to make the most of their monetization opportunities;
– in-group and/or in-network cannibalization.
Resources: Ofcom Communications Market Reports ; GroupM Publications.