Top 100 online advertisers

While total adspend in the UK remained flat in 2006, up less than 1%, according to Nielsen, digital was one area that prospered. UK marketers continued to plough money into web campaigns, with more than 80% of the top online advertisers boosting their investment in the medium last year.

As in previous years, the biggest spenders - BSkyB, Virgin Money and Personal Loan Express - used the web primarily as a channel to acquire customers. However, brand-building activity reached a new high last year, with advertisers rushing to take advantage of web 2.0 opportunities.

'The growth of internet advertising shows no signs of slowing,' says Guy Phillipson, chief executive of the Internet Advertising Bureau (IAB). 'We're on course to hit the £2bn mark this year as companies continue to move their spend online.'

Data compiled for Marketing by Nielsen Media Research shows that the UK's top 100 online advertisers spent more than £257m on digital display alone last year. The figures exclude the expanding disciplines of search and affiliate marketing as well as production costs for building websites to promote products. However, they offer a rare insight into which brands are leading the digital charge by investing in banners, buttons and skyscrapers. Rich-media formats have also become more popular as the rise in broadband uptake has brought with it further commercial opportunities.

A 54% increase in spend to just under £20m meant BSkyB was the UK's biggest online display advertiser in 2006. The satellite broadcaster dedicated almost 20% of its £93m media spend to the web as part of a strategy to promote its triple-play offering. 'The internet is a central plank of our marketing,' says Scott Gallacher, Sky's director of affinity acquisition. 'Consumers are spending far more time online, so it makes sense to target them there.'

The battle for control of the converging media market has spurred telecoms providers to invest in digital, with Orange, O2 and BT all hiking their spend.

O2 increased its investment in digital display by 70% to more than £11m. This level of spending looks set to continue as the operator plans a major digital drive to promote its broadband offering this year.

Orange increased its online budget, by 37% to nearly £11m, as parent company France Telecom backed the extension of the Orange brand to fixed-line telephony and broadband. It is also planning to launch a branded IPTV channel later this year.

BT hiked its digital spend by 96% to almost £7m. It is using the web to promote BT Vision, its nascent TV-over-broadband service, and is set to run a raft of online activity to raise awareness of BT Fusion, a wi-fi handset that allows cheap internet calls to be made outside the home. 'The web is becoming the default medium for a lot of our campaigns because it is so accountable,' says Steve Huddlestone, head of media at BT.

BT principally uses the web for customer acquisition and direct response, but it is keen to experiment with rich-media formats to build its brand online this year. 'We can afford to be far more creative next year if we concentrate on buying our digital inventory more efficiently,' adds Huddlestone.

Financial-services companies have always been among web advertising's biggest ad-vocates, seen most clearly in Virgin Money increasing its spend by 387% to £18.7m. The brand set itself apart from rivals including Egg and Norwich Union by using the web as a brand-building channel. Last month it launched a campaign through digital agency Glue, using video ads to promote its credit cards and financial services. 'Virgin Money realised the value of the web for brand-building from day one,' says Seb Royce, creative director at Glue. 'It has been innovative in a sector that is notoriously bland.'

The automotive industry was another early adopter of the internet as a marketing channel. But while the big marques increased their spend on display advertising last year, their budgets remained limited. Instead, many chose to up their investment in search and affiliate marketing to drive traffic to their websites. BMW, Ford, Vauxhall and Toyota all added to their online spend, while Peugeot overhauled its digital roster ahead of a tranche of activity.

Mercedes-Benz boosted its online budget by 167% and picked up an IAB Creative Showcase award for its recent R-Class online campaign. 'People are going online to empower themselves with information before visiting one of our showrooms,' says the company's communications manager, Richard Payne. 'We're increasing our online adspend during 2007 to drive as much traffic as possible to our website.'

Last year's growth in online video advertising resulted in new opportunities for entertainment companies looking to reach consumers online. Accordingly, Buena Vista International boosted its spend on digital display advertising by 62%, while 20th Century Fox's home-entertainment division boosted its spend by 126%.

ITV spends less than £1m on internet advertising, but David Pemsel, the broadcaster's new group marketing director, intends to invest more heavily in reaching consumers online. 'We're planning to increase the role of the internet in promoting our key programmes during 2007,' he says.

In other sectors, McDonald's began to realise the potential of the web, hiking its digital display spend by 971% to £2.8m. The company is working on a wide-ranging digital strategy that will see it invest in a global web portal to act as a single point of contact for its 30,000 outlets across 118 countries.

Not all advertisers have embraced the web with such gusto, however, and a number of big-name brands cut their digital spend. Having reduced its overall media budget by 50%, Hewlett-Packard scaled back its digital outlay by nearly 80% to less than £2m. However, it recently hired Modem Media as its global digital agency to update its online advertising strategy.

The world's biggest PC manufacturer, Dell, also slashed its online spend by 49%, to less than £4m, though it is working with digital consultancy AKQA to shift its online strategy from direct response to brand-building. 'The video ads we created for Dell were responsible for a 20% increase in sales,' claims AKQA chairman Ajaz Ahmed.

The sector is in rude health, and the number of big-name brands increasing their spend on digital advertising over the past 12 months bodes well for the industry's fortunes this year. While traditional formats including banners, buttons and skyscrapers are likely to remain at the core of activity, web 2.0 looks set to provide brands with increasingly innovative commercial opportunities.

If brands can take advantage by making social networking pay genuine returns, the digital investment made during 2006 will seem a drop in a rapidly swelling ocean.

Top 100 online advertisers 2006

Source: Nielsen Media Research Tables cannot be republished without
prior written permission from Nielsen Media Research.

METHODOLOGY

Internet advertising expenditure is based on display only, and is calculated using ad impressions captured from more than 600 sites. The majority of the sites covered are based on the nominated top UK sites, combined with audience/internet traffic, tracked by Nielsen//NetRatings. Costs are calculated by using a cost-per-million rate card, devised directly with key sites, enabling advertiser activity to be placed into number-of-impressions bandings. All media figures refer to the estimated costs of buying media space based on factors such as rate card, industry discounts and viewing figures. Data includes TV, radio, consumer press, cinema and outdoor (excluding ambient, international sites or point of sale) as well as online display. It does not include actual billings or agency revenues.

This article was first published on Marketing