Online advertising in the UK increased by 14.4 per cent in 2011, with brands spending £4.78bn, according to a new report from the Internet Advertising Bureau UK (IAB) conducted by PricewaterhouseCoopers. This represents an increase of £687m compared to the previous year.

In terms of spending, fast-moving consumer goods (FMCG) moved to second place, with finance holding on to the top spot. Spending in the retail sector made the largest gain, due to the rise in the number of e-commerce shoppers.

The top five categories in 2011 were finance (15 per cent), FMCG (15 per cent), retail (12 per cent), entertainment and the media (12 per cent) and technology (9 per cent).

Spending on display advertising increased by 13.4 per cent to a high of £1.13bn (2010: £945m), while expenditure on online video doubled year-on-year to £109m (2010: £54m).

Search marketing recorded an impressive growth of 17.5 per cent to £2.77bn (2010: £2.37bn), while total classified ads increased 5.2 per cent to £785m (2010: £751m).

Due to the surge in smartphone and tablet use, mobile advertising increased by 157 per cent in 2011 to £203m.

Tim Elkington, director of research and strategy at IAB, said: “Online and mobile advertising have experienced staggering growth since this study began in 1997. The 2011 results are full of breakthroughs for digital; with online display passing the £1bn barrier for the first time, proving that advertisers increasingly recognise the central role that online plays in their marketing campaigns.”

Anna Bartz, strategy manager at PwC, said: “This year’s results reflect the continued appeal of digital media – on desktop, mobile or tablet – to advertisers for both brand advertising and direct response. All formats grew, with strongest increases in video and social media, and in search. Internet adspend’s 14.4 per cent growth is exceptional when compared to an estimated advertising growth of less than 2 per cent across all media in 2011.”