The internet has almost caught up with radio's share of the advertising market as online spending rocketed by 76% in the first half of 2004 fuelled by the growth of broadband and sponsored search.
Big budget spending by the likes of BMW, BT and Audi have helped push the UK online's revenues in the last six months to £266.8m, according to figures compiled by PriceWaterhouseCoopers and released today by the Interactive Advertising Bureau.
Internet giants such as MSN, Yahoo!, Wanadoo and AOL will point to the surge in advertising spend as evidence the web is finally being taken seriously by mainstream advertisers.
The IAB said it was confident the total spent on internet advertising during 2004 would comfortably top £500m.
Despite consumers spending an ever increasing amount of time on the internet thanks to the growth of high speed, always-on broadband lines, websites have found it difficult to persuade advertisers burnt by the dotcom crash to divert money away from TV, print and billboards.
But the IAB, the trade body for ad-funded websites, said today the rise in advertising spend made the internet the fastest growing advertising medium in history.
Having last year overtaken cinema advertising, the internet now commands a 3.24% share of the billions spent on advertising in the UK every year. It now has the radio industry, which takes a 3.7% share of all advertising revenue, in its sights.
In certain sectors, such as car advertising and financial services, the internet plays an increasingly important role in launching campaigns.
"We're charting a permanent shift in how the marketing process works. This is still firmly about integrated marketing, but as more brands tap into online, marketers are discovering its role in the media mix should be even greater," said the IAB chief executive, Danny Meadows-Klue.
"And the staggering pace of innovation means we're only scratching the surface of what this marketing channel can."
Much of the growth over the past 18 months has also been fuelled by the impact of so-called sponsored search.
Search engines such as Google, Yahoo! and Ask Jeeves charge put "key words" up for auction, and whenever a user searches for that term the results are displayed alongside the normal search listings. If the user then clicks on the link, the advertiser is charged the amount that they bid to sponsor the key word.
The lucrative technology has proved particularly attractive to companies who rely on driving users to their website, such as online retailers, travel sites and financial institutions.
Its popularity was underlined last year when Yahoo! agreed to pay over £1bn for search marketing company Overture and has been rewarded with a significant boost in revenues.
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