Despite marketing budget cutbacks, online advertising spend is up.

Online advertising grew by 4.6% to a record £1,752.1 million in the first half of 2009, despite the entire advertising sector contracting by 16.6% during the same period, according to a recent study.

The research by the Internet Advertising Bureau (IAB), in conjunction with PricewaterhouseCoopers (PwC), is conducted twice a year and found that the internet has overtaken TV advertising to become the UK’s biggest advertising medium. 

Chief Executive of the IAB, Guy Phillipson, commented: “Internet advertising has beaten all expectations to achieve growth in the most challenging market conditions. Online display has performed notably well against its peers in TV, print and radio despite more than £1.5 billion being wiped off the advertising industry.”

According to the study, the big spenders in online display marketing are the technology, telecoms and finance sectors, accounting for 19.1%, 13.3% and 13.2% respectively. All have grown compared to the previous year.

The biggest winner, however, is search marketing, which has proved itself to be recession-proof. Marketing spend totalled £1.05 billion in the first six months of 2009 – over half of all online advertising expenditure.

Editor of New Media Age, Justin Pearse, blogs that the argument for companies using online advertising is overwhelming: “Research finds only 27% of people surveyed thought online video ads annoying, compared to 44% feeling that way about TV ads.” He also says that considering the price of online advertising, it consistently sells out.

However, Lindsey Clay, Thinkbox’s Marketing Manager, argues that TV and online advertising should not be pitched against each other. She says: “To set them up in competition is a mistake and misses their complementary relationship.”

This week the Daily Mail and General Trust Group (DMGT) said in its financial trading statement for the 11 months to 31 August 2009, that it has suffered from a drop in advertising spend.  Advertising fell 31% at Northcliffe Media, which publishes DMGT’s regional papers.