The link between broadband, online commerce and online advertising

Interesting question.

Advertising is fairly tightly linked to GDP at a fairly constant % in the medium term. A large part of the GDP is increasingly being created online. This is being driven by broadband penetration.

Some projections from the IAB and others imply that between now and 2010 in the UK

- Broadband Penetration will rise from just under 50% today, plateauing to about 60% by 2010
- Online shopping will rise from about 10% of shopping revenue today to 20% by 2010

Online Advertising is expected to be c10% of UK Adspend in 2006.

Online advertising predictions for 2010 vary hugely - some show that it will stay at c 11% of UK advertising revenue in 2010, others that it will overtake TV (c 23% + of UK adspend)

So which one is your money on?

I will add a year on year chart later, but in the meantime here are some factoids:

Broadband

- 9.9m households in the UK have a broadband connection (Continental Research, 2006).
- This accounts for 80% of all internet users, up from 61% a year before (BMRB, Feb 2006).
- Broadband penetration is expected to increase at its current rapid pace for roughly the next two
years before it plateaus at around 60% of all homes (Datamonitor, July 2005).

Shopping

- An estimated £35bn will be spent online in 2006 (IMRG, 2006).
- Ecommerce is expected to grow to £60bn in 2010, accounting for 20% of all UK retail spending.
(Future Foundation, Aug 2005)

Advertising

- The UK online advertising industry is valued at £917.2m for the first six months of 2006, taking a
10.5% share of the UK advertising industry (IAB/PwC,October 2006).
- In 2005 the share was 7.3%

And for Blogonomists, nota bene - Guy Kawasaki, who writes a Top 50 blog made a magnificent $3,350 in 2006 from all ad revenues. Here is his tongue in cheek tale.