UK Internet ad spending grew 41 pct in 2006-report

LONDON, March 28 (Reuters) - Online advertising spending in Britain surged more than 41 percent in 2006 to break the 2 billion pound ($3.9 billion) barrier, taking its market share to 11.4 percent and above national newspapers' share, data showed.

The Internet Advertising Bureau (IAB) in a report with PricewaterhouseCoopers said 2.016 billion pounds had been spent online by advertisers, boosting the entire ad industry, which grew 1.1 percent in 2006 from a year ago.

Online advertising's full-year share of the ad market of 11.4 percent -- reaching 12.4 percent in the second half -- was nearly double the global average of 5.8 percent.

The online market share in the UK for 2005 was 7.8 percent.

"With almost all expenditure on traditional media in decline, the upward momentum of the internet reflects a new era ... which is driven by high-speed broadband take-up and user-generated content," the report said.

Spending on advertising in national newspapers grew just 0.2 percent last year to 1.9 billion pounds for a market share of 10.9 percent. Spending online was just over half the size of the TV ad market, which experienced a fall of 4.7 percent to 3.9 billion pounds.

Online advertising consists of display ads such as banners, classifieds and paid-for search, and the main categories driving the growth were recruitment followed by finance and technology.

It also said marketers were increasingly experimenting with video and more engaging, creative advertising due to the spread of faster and cheaper broadband.

IAB Chief Executive Guy Phillipson said the market may not grow at the same speed for 2007, but there was still plenty of potential for further expansion.

"To (grow by another 40 percent next year) would be quite an ask, but having said that, there is lots of potential in display advertising, and we have new formats with video coming to the fore, and there are still categories yet to work with search," he told Reuters.

"So it can continue to grow. Maybe not as strong as 40 percent, but you might imagine 30 or 25 percent."

((Reporting by Kate Holton, editing by Will Waterman; Reuters messaging: kate.holton.reuters.com@reuters.net; +44 20 7542 8560))

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