UK online ad spend to overtake TV: report

People surf the web during the annual ''Campus Party'' Internet users gathering in Sao Paulo February 13, 2008.

LONDON (Reuters) - The Internet will usurp television as the biggest advertising medium in Britain by the end of 2009, according to a report published on Monday.

Britain has the most developed online advertising market in the world which the report by the Internet Advertising Bureau (IAB), PricewaterhouseCoopers and the World Advertising Research Centre said was worth 2.8 billion pounds ($5.6 billion) in 2007.

It said last year's 38 percent online ad growth was driven by the rising number of people online, the introduction of cheap laptops and the growing popularity of catch-up TV on the Internet through services such as Channel 4's 4oD.

"With broadband speeds on the up and consumers spending more time on more sites, the outlook for online advertising is rosy -- in fact we expect it to overtake TV in 2009 when it will become the UK's biggest medium," IAB chief executive Guy Phillipson said in a statement.

The report said the Internet was the biggest driver of overall advertising growth in 2007, with the entire sector in Britain experiencing 4.3 percent growth to 18.4 billion pounds.

Online ad spend had a market share of 15.3 percent, up from 11.4 percent in 2006, but behind display press advertising at 19.9 percent and TV at 21.8 percent.

Display online advertising, such as banners and video, grew 31 percent while paid-for search marketing was "maturing, but not slowing" as marketers and brands learned to secure a greater return on their investment through "key phrases" and accurate targeting.

Advertising spend on search grew 39 percent, in line with overall growth, to 1.6 billion pounds, while its market share remained largely the same at almost 58 percent. Classified advertising showed 54 percent year-on-year growth.

Among the different sectors, recruitment led the market with 25.7 percent market share, ahead of the automotive sector and technology, which overtook finance for the first time.

(Reporting by Kate Holton; Editing by David Hulmes)