Online ad sales overtake billboards

The UK has become the fastest growing market in the European Union for online advertising, according to research by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers.

Online advertising sales rose an impressive 62 per cent to £490m in the first six months of this year and is predicted to top £1bn by year end.

The figures concur with newly published data from Jupiter Research which has tracked similar levels of growth and noted that paid-for-search offerings such as Google Adwords are the main drivers.

Jupiter Research estimated that paid-for search will account for 49 per cent of sales by year end. The IAB estimates it to be 40 per cent currently.

Julian Smith, online advertising analyst at Jupiter Research, said: "The UK benefits from a close relationship with US web activity, so we innovate first in Europe.

"Advertisers are moving away from old models of banner ads to rich media that allows more complex animation and richer formats. That means advertisers can get click-through and branding benefits."

But Smith predicted that the UK may not be able to sustain such growth. "The market may be maturing but there are new ideas coming through like 'pay per call', where advertisers can track calls to special lines, that will help drive sales further," he said.

The IAB identified the move to broadband and increased use of online shopping as major factors in driving growth.

The European Interactive Advertising Association has said that most of the spending on online advertising comes from traditional media budgets and particularly from TV budgets.