Revenue from Online Ads eXceeds £4bn Due to Facebook

Lucas Gilmore, “Big 4″ observer
April 02, 2011 /

As online ads turn to social media such as Facebook to attract more customers, a report from an internet advertising body and PricewaterhouseCoopers showed that ad revenue has exceeded £4 billion for the first time last year.

The annual report by Internet Advertising Bureau (IAB), compiled by PricewaterhouseCoopers, revealed that online ads in UK have grown 12.8 percent year-on-year in 2010 owing to referrals from one of the largest social networking sites, Facebook.

According to the advertising bureau, the figure is equal to 25 percent (or more than £1 billion) of all advertising growth in UK in 2010, up 2 percent from the previous year’s result.

The result suggests that UK online ads spend £16.6 billion in 2010, meaning £1 in every £4 allocated for advertising is spent by British companies for online ads.

According to the report, social media has gained the most significant growth over the last couple of years, with its advertising having grown over 200 percent year-on-year.

Facebook online ads in particular have generated approximately £100 million in revenue for UK last year. This accounted for 14 percent of display advertising online.

“Major brands restored their advertising budgets in 2010 and online was the big winner,” IAB Chief Executive Guy Phillipson said about the reason behind the surge.

The report shows that budgets in the market have risen over the previous year, which is said to be the reason behind the growth in revenue from online ads.

The report also cited other catalysts of the surge, including increased number in online audiences, faster internet connectivity that speeds up online ads in video formats, and the more than 25 percent of social media use in UK.

Increasing to more than £50 million, online video advertising has particularly benefited the online ads market.

On the other hand, the growth in ad revenue has taken its toll on paid-for search ads like that of Google, with its AdSense service.

The report said while social media has escalated ad revenue to surpass £4 billion, the portion shared by Google ads declined from 61 percent to 57 percent, though this market grew year-on-year by 8 percent to £2.35 billion.

The report concludes that while the conventional advertising media has started recovering from the recession in 2008, online ads are outpacing them at a significant rate.


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