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Online marketing is the most lucrative form of advertising, according to a joint study by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers.

The industry achieved above-expectation growth of 41.3 per cent this year, taking its market share to 14.7 per cent.

Guy Phillipson, chief executive of the IAB, commented: “The online market is developing at an astounding rate and once again we see exceptional growth and a significant increase in market share. Ninety per cent of internet users are on broadband now and nearly 40 per cent are using wireless.”

He added: “Importantly, marketers have a much better understanding of how online works and how to measure the effects of brand advertising as well as direct response.”

Classified advertising now accounts for 20.8 per cent of all internet advertising spend, growing by a staggering 72 per cent over the past year to £277.7 million.

Meanwhile, internet display advertising - which includes banners, skyscrapers and rich media formats - was up 33 per cent to a share of 21.5 per cent.

More than three-quarters of UK businesses have increased their affiliate marketing spending since 2005, according to a new survey by E-consultancy.

And the same proportion said they expected spending to have increased by a similar amount in two year’s time.

It is not hard to determine why, with 95 per cent of respondents deeming affiliate marketing to be cost-effective.

The survey suggests that multi-channel retail is now the norm, with 78 per cent of those questioned working for organisations which sell both online and offline.

Kevin Cornils, chief executive officer of buy.at, said in a statement: “As broadcast advertising has started to decline, performance marketing has emerged as the silver bullet of the marketing industry.

“Within that search marketing has reached its peak, but affiliate marketing is still in a high-growth phase.”

The survey shows that the vast majority of organisations are generating at least £1 million in online sales every year, with 42 per cent earning at least £10 million.

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