TechWinter

British readers enjoy.

By LOUISE STORY and ERIC PFANNER

If you want a glimpse of the future of advertising, you can hire a consultant or you can travel to Britain.

Online advertising is racing ahead in Britain, growing at a roughly 40 percent annual rate, and is expected to account for as much as 14 percent of overall ad spending this year, according to media buying agencies. That is the highest level in the world, and more than double the percentage in the United States.

There are big differences between the advertising markets in Britain and the Unites States. In Britain, much of the advertising is national, while there are strong local and regional ad markets in America. Still, some believe that online advertising in Britain provides somewhat of a roadmap for where online ads in the United States and elsewhere may be heading. The U.S. is so behind, said Terry S. Semel, the chief executive of Yahoo, in a recent speech in London. It is certainly lagging the U.K. by at least a year or two.

More than their American counterparts, British marketers seem to have bought into the oft-touted benefits of Internet advertising: that it is easy to track, enormously effective and a relative bargain. In Britain, as Internet ad spending surges, the overall advertising pie is not growing much at all, and traditional media are the ones losing out.

However, British media are nearly all aimed nationwide in contrast to the United States newspaper and television markets, where local and regional markets are big players. These local markets in the United States have, so far, been slow to move ad money online.

As recently as 2002, many British advertisers were reluctant to go online, too. That year, British advertising online was 1.4 percent compared with 2.5 percent in the United States, according to the Internet Advertising Bureau in Britain and the Interactive Advertising Bureau in the United States. Each bureau tracks online ad spending in their respective countries.

In the following year, Britain overtook the United States, and it has not looked back. In 2005, nearly 8 percent of British ad dollars went online, compared with 4.6 percent in the United States. And, this year, the two bureaus say, the Internet will account for 10.5 percent of British ad spending compared with 5.6 percent in the United States.

Media buying agencies like Group M, the media-buying division of WPP Group, estimate that online ad spending in Britain will be even higher, close to 14 percent of the total this year.

Source: The Future of Web Ads Is in Britain - New York Times