The Internet Advertising Bureau (IAB) report, conducted by PwC, shows advertising on the internet increased by 14.4% to £4.8bn in 2011.
It claims that the UK has led the way in terms of moving advertising money from traditional areas of spending like newspapers and radio to online due to the high level of Internet access and the surge in the use of smartphones.
The IAB said 39.7 million people were on average accessing the Internet each month, while 27% of all the time spent online was spent on social networks.
Among the fastest growing areas, online video ads doubled in spend in the year to £109m and has now grown eight-fold since 2008. Spending on social media platforms such as Facebook, YouTube and LinkedIn was up 75% to £240m.
And spending on mobile devices was up 157% to £203m due to the increasing number of people who own smartphones.
IAB director of research and strategy Tim Elkington said: “Online and mobile advertising have experienced staggering growth since this study began in 1997.
“The 2011 results are full of breakthroughs for digital; with online display passing the £1bn barrier for the first time, proving that advertisers increasingly recognise the central role that online plays in their marketing campaigns.”
Of the different sectors, finance brands were the biggest advertisers in display advertising, ahead of consumer goods and retail.
Rocket Fuel managing director for Europe Dominic Trigg said: “The IAB’s findings are backed up by recent Bellwether data and are symptomatic of the overall trend in online advertising. Ad budgets are increasingly flowing away from big audience traditional media into highly targeted and increasingly sophisticated online advertising.
“The industry has evolved massively in recent years and marketers are rapidly waking up to life beyond clicks. Online advertising is fast becoming a core part of companies’ brand armoury.
“It’s now possible to carefully target the exact audience at exactly the right time, with the right message and to measure effectively against real brand metrics. This is immensely valuable to brands and brand-building, so we can expect big growth in online ad spend for many years to come.”
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