Online advertising spend has outpaced advertising on mainstream TV in 2007, surging 40 percent to £2.8 billion, Ofcom reported today in its hefty annual survey of the British communications market. In comparison, ad revenue at ITV1, Channel 4, S4C and Five came in at £2.4 billion.

Internet advertising revenue was also six times the size of the radio market, and had attracted as much revenue as all outdoor and magazine advertising combined. It didn’t manage to overtake newspaper advertising, which still gets the majority of the UK’s ad spend, coming in at £4.7 billion.

Unsurprisingly, paid-for search dominates the online advertising market, growing in 2007 by 39 percent to reach £1.6 billion. Online display advertising revenues came in at £600 million, growing by 29 percent. Good news, meanwhile for the likes of Gumtree.com and Craigslist, as “other classified” was the fastest growing segment of online advertising, with revenues rising 54 percent to reach £0.6 billion.

Television advertising, meanwhile, was flat at £3.5 billion. Total television ad revenue at the three commercial public service broadcasters fell 16 percent, with ITV1 hit particularly hard. The losses across commercial PSBs, however, were offset by gains in their digital only channels, with their share of net advertising rising from 3 percent in 2004 to 10 percent in 2007.

Ofcom struck an ominous tone for TV advertising’s future prospects. Short term, the regulator warned, it could be hit by the slowing economy, while long term, the increasing DVR ownership could impact its revenue make ability. Eighty-percent of DVR owners said they usually fast forward through commercial breaks when watching recorded programmes.

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