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Analysts are predicting that in spite of the economic slowdown, 2008 is still going to be a big year for online Christmas shopping in the UK, as everyone is turning to the web to save time and money. Research suggests that more shoppers than ever will look for their Christmas gifts online in 2008.

This echoes last year’s phenomenal online retail results, which some estimates suggest reached nearly £5bn in the fourth quarter of 2007, a growth of nearly 40% from the previous year. Last December’s most searched item was the Nintendo Wii, which vastly overshadowed searches for Apple’s iPod and iPhone, it’s anyone’s guess as to this year’s most searched item.

According to a recent YouGov survey, 54% of people polled said that they would be spending less money on Christmas gifts this year.  Whilst that might seem a depressing prospect, the same survey revealed a 10% rise in those using the Internet to purchase their gifts this year.  One in five people in the UK will buy half of their Christmas presents online.  Despite the decline in total amount spent, the average online shopper will spend £1600 this year.

Internet sales in United Kingdom are climbing at a dramatic pace.  Since the year 2000, Internet sales have risen by 3,500% to £42bn this year.  It’s expected that by 2010, that figure is set to climb further still to £72bn. As an indication of 2008 shopping trends, Primark, the clothing retailer announced that this year’s online sales have increased so far by 12% whilst High Street sales have fallen by 6%.

Despite the massive success of online Christmas shopping, it’s hard to believe that more than 50% of the top 100 retailers will not make any revenue from Internet sales during Christmas 2008, because they do not have their own website.

One surprise factor is the Christmas Day shopping phenomena.  Whilst the shops were already closed on the 25th December, four million Britons went online in 2007 and spent £84 million.  Without a website, without an online presence, businesses of all sizes are missing out on a huge slice of the Christmas retail pudding.

One of the reasons for the increase in online Christmas sales is that older Internet users between the ages of mid 40’s and 50’s are beginning to use the Internet for their own online shopping.  Previously, this age group didn’t shop online but as the UK’s population becomes more Internet savvy, a greater number of older customers are buying their Christmas presents online.

Kelkoo, the online shopping comparison website recently did an online survey in the UK and found that 78% of those polled stated that they would be buying the greater part of their Christmas gifts online.

Despite the rather undeniable financial crisis, online sales continue to rise and this Christmas will be no different.  Don’t expect deserted High Streets this year though, the key figure for 2008 is that only 17p in every retail pound is currently being spent online.  This figure is set to rise year on year, leading to the conclusion that this is just the beginning.

The increasingly devastating financial condition known as the Credit Crunch has hit the advertising industry hard. The traditional advertising media of television, radio and newspapers are all recoiling from the strong fall in sales figures for 2008.  Projections for traditional modes of advertising in 2009 are also depressingly glum.

Whilst traditional forms of advertising maintain a failing fingertip grasp on the market, Internet advertising is only percentage points away from surpassing all of these advertising methods in terms of annual market spend.

Steady Growth

Even as far back as 2001, media magnate Rupert Murdoch’s all-powerful ‘NewsCorp’ announced a massive slump in revenue from advertising.  At the same time, although weakened by the Dot Com Crash, Internet advertising revenue continued to grow.  Between 2003 and 2007, Internet advertising transformed itself from a niche in the market, to the third largest advertising source.

Since then things haven’t got much better for traditional advertisers. By 2006, Internet advertising in the UK had convincingly surpassed newspaper ads. In 2007, television giant ITV saw pre-tax advertising profits fall by 39%, as the market already recognised the value for money represented by online options. Reuters, the international news agency reports that during 2008, online ads will overtake television advertising too.

Newspaper advertising has also taken a heavy beating from the Credit Crunch.  Peter Williams, finance director at DMGT – the publisher that owns the Daily Mail, confessed that during the third quarter of 2008, advertising revenue had fallen and “we’re not relying on any pick-up in the near future”.   Businesses recognise the immediate and powerful results obtained by Internet advertising and have deserted newspaper advertising in droves.

Conversely, during this period of economic crisis, Internet advertising continues to grow. Whilst all advertising growth is clearly slowing down, predictions for online advertising in late 2008 and 2009 show a steady growth, revealing a trend towards increasing confidence in the effectiveness of Internet advertising and the valuable ROI it represents.

Internet Advertising Growing in UK

In 2008, Internet advertising presented a growth of 21% whilst traditional media fell.  Internet advertising within the United Kingdom represents 19% of the total share of advertising revenue.  It has been predicted that by 2011, the total online advertising spend will be £4.5 billion in the UK alone; this will be 30% of the UK’s total advertising share.

In the UK, paid search leads the way in web advertising sales with a growth of 28% across 2008.   Natural search hasn’t been slacking either with a 68% increase in growth in last twelve months.  Obviously this supports the message that a blended approach to online advertising is the best way to secure your own share of the market.

Positive Forecast

The Credit Crunch may have affected most of the global economy, with traditional advertising channels suffering badly.  However, online marketing and advertising appears to still be growing because it has proved itself as a cost-effective tool that provides crunch-proof results that matter during a difficult time.