Online ad spend overtakes mainstream TV

LONDON (Reuters) - Spending on online ads overtook advertising on mainstream TV in Britain last year, growing 40 percent to 2.8 billion pounds and accounting for 19 percent of all advertising, regulator Ofcom said.

In its annual report on the 51 billion-pound communications industry, the watchdog found that Britons spent four times as much time on computers, or 24 minutes a day, and twice as much time on mobile phones in 2007 as in 2002.

Average household spending on communications fell slightly, however, as bundled services and broadband bargains drove down prices, while more consumers shopped around and switched providers to get better deals, Ofcom said on Thursday.

"We are spending more and more time with our communications devices but spending less on them," Ofcom's strategy and market development partner Peter Phillips said in the report, which covers TV, Internet, mobile and fixed-line telephony and radio.

Online advertising spending was dominated by paid-for search, in which sponsored links appear as Internet search results. Paid-for search accounted for 1.6 billion pounds, with the rest split equally between display and classified ads.

According to Ofcom's comparative figures for 2006, the latest available, Internet advertising in Britain generated more revenue per head -- 33 pounds -- than in any other G7 country.

TV advertising was flat at 3.5 billion pounds, with digital TV channels, mainly those owned by public service broadcasters, gaining in share to make up about one-third of TV ad sales.

The share of total TV advertising revenue going to Britain's main free-to-air channels fell to 67 percent from 83 percent in 2002, as ITV lost share. Channel 4 and Five managed to maintain market share over the period, Ofcom said.

"We may not yet have felt the full impact of the economic downturn on consumer and advertiser spend," Ofcom said. "While television advertiser revenue has remained relatively steady in nominal terms, future stability cannot be taken for granted."