Technology Changing the UK's Advertising Landscape
Technology has changed the UK’s advertising landscape. The UK is the only country apart from the US where Google generated more than 10% of its revenues; and now in 2011 Google's UK advertising business is big business and set to overtake ITV, a UK television station and the country’s biggest advertising earner.
Figures released by the technology giant show that the UK generated $969m (£593m) of revenue in the first quarter of 2011. Therefore, on present growth rates of around 25% per quarter, which it has sustained since September 2009, the search engine giant will generate between $5.2bn (£3.2bn) and $5.6bn (£3.4bn) in the UK; which is far more than the £1.7bn ITV will manage if it achieves a 15% growth during 2011. Lorna Tilbian, head of media analysis at Numis Securities says, "The significance is that everybody who is advertising now wants to see a return for their spending, and on the internet you can do that exactly. Whereas for television, it's still the case that, in the famous quote, half your money is wasted, but you don't know which half."
ITV’s results for 2010 show that that its net advertising revenue was £1.496bn, up 15.9% from 2009, while total revenues, including sponsorship, itv.com and media sales income, was £1.77bn; up 14.8%. However, even if ITV’s entire business grows at 15% for 2011, it will only bring in £2bn. While ITV's business is growing, it is not expanding as fast as Google's, and while it is expecting to benefit from an advertising boost around the royal wedding this April, it is still not expected to push advertising growth beyond 15%. All this still leaves Google in the lead. The company's online portal for programming, itv.com is offering a path to internet growth and technology, where it would know its audience and be able to target adverts.
However, there is little risk that Google will overtake ITV as the biggest source for spending as they are about different things. Google is about search and ITV is pure entertainment. Yet, both involve people’s time and ITV as a station won't want people to spend time searching when they could be watching; though numerous studies show that the younger generation is capable of doing both at the same time. ITV has come through a bad patch where advertising revenues dropped, and overall receipts are no greater now than in 2006; and in 2006 Google UK was a small thorn with revenues of $1.6bn (£1bn). Yet, since then times have changed through technology, and the search engine has never seen a fall in year-on-year growth. Its quarterly revenues are typically four times larger than in 2006.
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