Internet tops newspaper ad spending

Advertisers are set to spend more on internet ads this year than on national newspaper ads, as the web becomes the third largest channel for advertising, research suggests.

A report from GroupM found traditional media advertising growth is being set back by the "fragmentation of TV, erosion of the newspaper and the diversion of funds into trade marketing".

Adam Smith, futures director at GroupM, which published the report, told silicon.com that search marketing is accounting for a large part of the shift in spending.

He said: "If search is rising then another area falls and that money is coming from spending on banners and skyscrapers. The share is moving from display to click. Click spending is rising and getting cheaper because of the number of people online."

TV advertising will account for £3.48bn of all spending on ads this year (28.6 per cent), regional newspapers are to take up £2.38bn (19.6 per cent) and the internet will be £1.615bn (13.3 per cent), the report says. National newspapers are set to take just £1.610bn (13.2 per cent).

All the new money being invested in advertising this year (expected to be £500m) is mainly going into digital media, such as the internet, mobiles and interactive TV.

The report said direct and the other marketing investment will shrink over the next year because telemarketing is contracting - more than 12 million private numbers are now 'Do Not Call', a figure that has risen from two million in 2002, and also because offshoring reduces cost and hence expenditure.

Smith said: "A lot of money is coming out of TV. £3.5bn is being booked on TV this year but last year it was £3.6bn - they've lost £100m. It's almost all coming out of ITV1 and being spent on things like trade promotions in supermarkets.

"With regional newspapers there is money floating out of that partly because of high street retail. It's property and jobs. There is nothing to stop newspapers capturing that money again but they aren't doing it."

GroupM, a holding company, took the data from its media buying companies Maxus, MediaCom and MindShare.