UK online ad spend up 4.2 pct in 2009 -report

* UK online ad spend grows to 3.5 bln stg

* Paid search, video growth offsets display fall

By Kate Holton

LONDON, March 30 (Reuters) - Online advertising in Britain grew 4.2 percent in 2009, outperforming the overall UK market albeit at a much lower rate than in 2008, helped by demand for paid search and video ads, a report showed on Tuesday.

The Internet Advertising Bureau (IAB) and PricewaterhouseCoopers report said online advertising had weathered the economic storm and enjoyed an overall stronger second half, enabling online ad expenditure to grow to 3.5 billion pounds ($5.3 billion).

Growth was well down on the rate of 17.1 percent on a like-for-like basis achieved in 2008, but still compared well with the overall British advertising market, which media buyer ZenithOptimedia (owned by Publicis (PUBP.PA)) said in December had shrunk an estimated 13 percent in 2009.

ZenithOptimedia saw the UK market down around 2 percent in 2010.

Online advertising was dominated by paid-for search, which grew 9.5 percent to reach 2.15 billion pounds or 60.7 percent of all online ad spend, offsetting a small 4.4 percent decline in online display adverts, the report showed.

Online display spend fell despite a 140 percent increase in online video spend, which is run before, after and sometimes during online video clips which are becoming more professional and popular on the Web.

"In the past year we've seen some real success stories as search passed the 2 billion pound mark and online video advertising experienced spectacular growth," IAB Chief Executive Guy Phillipson said.

Of the different categories, retail and consumer goods vendors became two of the biggest spenders in 2009, alongside telecoms, entertainment & media and consumer goods.

"Ten years ago online was a new medium with high expectations, but backed by little commercial reality," Eva Berg-Winters of PricewaterhouseCoopers said in a statement.

"Since then it has matured to become an integral part of our lives, which marketers have learned to trust." (Editing by David Holmes) ($1=.6652 Pound)