Internet Advertising Market

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Internet Advertising Market

Report price : $ 1 618
Publication date : October 2008

The growth in the take-up of Internet packages, coupled with the growing penetration of broadband, continues to be a main driver of the market for Internet advertising.

Internet advertising remained the fastest-growing advertising medium in 2007, with expenditure on Internet advertising continuing to rise.

Paid-for search marketing — first adopted in 2001, largely by online businesses in the travel and finance sectors — continues to be an increasingly important element within the Internet advertising mix. It is popular with media buyers because it is simple and its success is easily measurable.

A turf war and consolidation have been experienced in the Internet advertising industry from 2006 to 2008. Large, traditional agencies are acquiring assets to build their presence and compete with small, independent agencies that have emerged in the early 2000s.

Measurement of the effectiveness of Internet advertising, which has been a problem for several years, is improving as a result of initiatives by the Internet Advertising Bureau (IAB). It has produced several guidelines to assist in such measurement.

Key Note's original research found that 93% of respondents who had accessed the Internet in the 12 months leading up to the survey could now access the Internet at home. The survey also revealed that 92% of those who had used the Internet in the previous year had broadband Internet access, at home, at work or in their place of education.

Online shopping continues to be popular, with 82% of respondents to the survey having shopped online. However, there has been a growth in the fear of fraud: 48% of the respondents said that they were deterred from shopping online due to the risk of fraudulent card use.

The marketing of websites through other media continues to be successful. 57% of respondents were influenced by magazines, and the percentage who had been directed to websites from advertisements on other sites had remained fairly stable (at 60% in 2008, compared with 61% in 2006) according to the findings of Key Note's research.

More than a quarter of Internet users (28%) said that they had clicked on Internet advertisements, and 52% said that they thought rich-media Internet advertisements that included music and/or animation worked better or attracted more attention than those without. However, despite this implied interest in online advertising, there was a 6-percentage point growth in the proportion of Internet users who stated that they had software that blocked Internet advertisements (with the figure reaching 79% in 2008).

E-mail marketing was acceptable to 40% of Internet users, and 8% claimed to be influenced by information/advertising texted to them on their mobile telephones.

Key Note forecasts that the Internet advertising market will continue to expand at a strong pace in the immediate future (with a predicted 31.4% increase in expenditure in the UK in 2008), and that it will experience a less steep but steady momentum thereafter, to 2012.

Executive Summary

1. Introduction

OVERVIEW

DEFINITION

2. Strategic Overview

BACKGROUND

INTERNET ACCESS

Table 1: Households in Great Britain with Access to the Internet (%), 2002-2008

Figure 1: Households in Great Britain with Access to the Internet (%), 2002-2008

Reasons Why Some Households Still Do Not Have Internet Access

Table 2: Reasons Why UK Adults May Not Have Internet Access at Home (% of UK adults without Internet access at home), Third Quarter 2006

Broadband Take-Up

Residential Consumers

Table 3: UK Take-Up of Broadband and Narrowband as a Share of All Residential Connections (% of UK adults with Internet access at home), Fourth Quarters 2004-2006

Figure 2: UK Take-Up of Broadband and Narrowband as a Share of All Residential Connections (% of UK adults with Internet access at home), Fourth Quarters 2004-2006

Small and Medium-Sized Enterprises

Table 4: UK SME Internet Access by Main Connection Method (% of UK SMEs with Internet access), 2002-2006

THE CONSUMER

Variations in Internet Access

Table 5: Households with Home Access to the Internet by Government Office Region and Type of Connection (%), 2005-2007

Table 6: Reasons Why UK Households May Not Have Broadband Connection (% of UK households with non-broadband Internet access), 2007

Internet Usage

Table 7: Most Recent Use of the Internet by Sex and Age (% of UK adults), 2006-2008

Table 8: Recent Internet Users' Frequency of Use of the Internet by Sex and Age (% of UK adults who had recently used the Internet), 2006-2008

Table 9: Reasons Why Recent Internet Users Do Not Use the Internet More (% of UK adults who had recently used the Internet but would like to use it more), 2007

Table 10: Places of Access by Recent Internet Users (% of UK adults who had recently used the Internet), 2006-2008

Table 11: UK Adults Who Had Used the Internet in the 3 Months Prior to Interview by Purpose of Access and Sex (% of UK adults who had used the Internet in the past 3 months), April 2006 and 2007

Table 12: UK Adults Who Had Purchased Goods or Services Over the Internet by Recency of Online Purchasing by Sex (% of UK adults), 2006-2008

Table 13: Internet Purchases by UK Adults in the Past 12 Months (% of UK adults who had bought goods or services online in the past 12 months), 2006-2008

Table 14: Purchases Downloaded From the Internet in the Past 12 months by Sex (% of UK adults who had purchased items available as downloads), 2008

TRADE ASSOCIATIONS

Internet Advertising Bureau

UK Association of Online Publishers

MARKET SIZE

MARKET FORECASTS

3. Market Analysis

MARKET SIZE

Table 15: Total UK Internet Advertising Expenditure at Current Prices (£m), Years Ending December 2003-2007

Figure 3: Total UK Internet Advertising Expenditure at Current Prices (£m), Years Ending December 2003-2007

Table 16: Share of UK Advertising Expenditure by Medium (%), Years Ending December 2003-2007

SEGMENTATION

Table 17: Share of UK Internet Advertising Expenditure by Industry Sector (% of half-year revenues), Second Halves 2005 and 2007

Table 18: Top Ten UK Advertisers on the Internet by Number of Campaigns and Number of Banners, January to April 2007

INTERNET ADVERTISEMENT FORMATS

Table 19: Share of UK Internet Advertising Expenditure by Display Format (% of full-year revenues), 2006 and 2007

Search Marketing (Paid Listings)

Classified Advertising

Display Advertising

Table 20: Internet Advertising by Display Format as a Percentage of Half-Year Revenues, First and Second Halves of 2006 and 2007

Banners/Embedded Advertisements

Tenancies

Interruptive Advertisements

Digital Video In-Stream Ad Format Guidelines

Ad Unit and Rich Media Creative Guidelines

COMPETITIVE STRUCTURE

MEASURING EFFECTIVENESS

MARKETING & MEDIA ECOSYSTEM 2010

Phase I

Phase II

RECENT CAMPAIGNS

THE CONSUMER

4. An International Perspective

OVERVIEW

EUROPE

European Industry Bodies

European Interactive Advertising Association

Interactive Advertising Bureau Europe

Online Advertising Expenditure in Europe

Table 21: EU-15 Media Share (%), 2004-2009

Allocation of Time Spent by Consumers on the Internet in Europe

Table 22: Allocation of Time Spent by Consumers on the Internet in Europe by Selected Countries (average number of hours per week), 2006 and 2007

Online Activities Throughout Europe

The Role of Online Advertising in Europe

Table 23: Trends in Internet Advertising Expenditure During 2008 (% of respondents), 2008

THE US

Table 24: Trends in Internet Advertisement Formats in the US (% share of market revenues), Full Years 2006 and 2007

5. PEST Analysis

POLITICAL FACTORS

ECONOMIC FACTORS

SOCIAL FACTORS

TECHNOLOGICAL FACTORS

6. Consumer Dynamics

OVERVIEW

Table 25: Summary of Original Research Findings — Use of the Internet and Attitudes Towards Online Advertising (% of all respondents and % of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

INTERNET ACCESS

Access to the Internet in the Previous 12 Months

Table 26: Internet Access in the Previous 12 Months (% of all respondents), August 2006 and May 2008

Access to the Internet Via Broadband Connection

Table 27: Internet Access Via Broadband (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Location of Internet Access

Table 28: Internet Access From Home (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 29: Internet Access From Work (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 30: Internet Access From School, College or University (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 31: Internet Access From a Library (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 32: Internet Access From Elsewhere (e.g. an Internet Café) (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Frequency of Internet Access

Table 33: Frequency of Internet Access — Less Than Once a Month (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 34: Frequency of Internet Access — More Than Once a Month But Less Than Once a Week (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 35: Frequency of Internet Access — Weekly or More Than Once a Week (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 36: Frequency of Internet Access — Daily or More Often (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

INTERNET SHOPPING

Attitudes Towards Purchasing Goods Over the Internet

Table 37: Actual Purchasers of Goods or Services Over the Internet (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 38: Potential Purchasers of Goods or Services Over the Internet (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 39: Those Deterred From Purchasing Goods or Services Over the Internet by the Risk of Fraudulent Card Use Online (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

INTERNET ADVERTISEMENTS

Responses to and Attitudes Towards Internet Advertisements

Table 40: Those Who Had Clicked on Internet Advertisements (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 41: Belief That Online Advertisements That Use Music or Animation Work Better/Attract More Attention (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Use of Software to Block Internet Advertisements

Table 42: Use of Software to Block Internet Advertisements (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

CLASSIFIED ADVERTISEMENTS ON THE INTERNET

Visiting Internet Sites That Include Classified Advertisements

Table 43: Visiting Internet Sites With Classified Advertisements (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Responding to and Placing Classified Advertisements on the Internet

Table 44: Responding to Classified Advertisements on the Internet (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 45: Placing Classified Advertisements on the Internet (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Attitudes Towards Promotion of New Products and Services by E-mail

Table 46: Attitudes Towards Promotions by E-Mail (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

VISITING WEBSITES AS A RESULT OF ADVERTISING/INFORMATION VIA OTHER MEDIA

Television, Newspapers, Magazines, Billboards, Other Websites and Mobile Telephone Text Messages

Table 47: Visiting Websites as a Result of Advertising/Information Seen on Television (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 48: Visiting Websites as a Result of Advertising/ Information Read in Newspapers (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 49: Visiting Websites as a Result of Advertising/Information Read in Magazines (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 50: Visiting Websites as a Result of Advertising/Information Read or Observed on Billboards (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 51: Visiting Websites as a Result of Advertising/Information From Other Websites (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

Table 52: Visiting Websites as a Result of Advertising/Information Via Mobile Telephone Text Messages (% of respondents who had accessed the Internet in the previous 12 months), August 2006 and May 2008

7. Company Profiles

INTRODUCTION

CONCHANGO

Corporate Strategy

Profitability

Table 53: Financial Results for Conchango (UK) PLC (£000), Years Ending 31st December 2005-2007