Internet advertising buoyed up the UK advertising industry with 41.3 per cent year-on-year growth in the first half of 2007, new research revealed today.

The figure was reported in the biannual internet advertising spend study commissioned by the Internet Advertising Bureau (IAB) in association with PricewaterhouseCoopers (PwC) and the World Advertising Research Centre.

The study estimates that this growth takes the sector to a half-year high of £1.33bn, compared to £917.2m a year ago, and that online advertising expenditure could reach a new high of £2.75bn by the end of 2007.

The total UK advertising market grew by 3.1 per cent during the first half of the year to £9.1bn. Without the online contribution, UK media expenditure would have fallen by 1.9 per cent.

The internet has propped up the UK advertising economy and remains the fastest-growing advertising medium, overtaking the direct mail sector which has a market share of 11.8 per cent.

"The online market is developing at an astounding rate and once again we see exceptional growth and a significant increase in market share," said Guy Phillipson, chief executive of the IAB.

"Some 90 per cent of internet users are on broadband and nearly 40 per cent are using wireless.

"We are also seeing women and the over 50s spending far more time online, which makes the internet a very attractive medium to a broader set of advertisers."

Classified advertising is the biggest online advertising success, growing by 72 per cent year on year to £277.7m with a 20.8 per cent share of all internet advertising spend.

Paid-for search followed in second place, 44 per cent up year on year to £7 62.3m, and claiming a 57.1 per cent share of the online total.

Growth is attributed to the fact that at least half of all e-commerce transactions (£32bn in 2006) start with an internet search.

Surfers carried out 1.4 billion search queries in July 2007, over 80 per cent of which resulted in a clickthrough to a website.

"The latest results for the first half of 2007 show that the UK's internet advertising industry continues to strengthen," said Nicki Lynas, manager of entertainment and media practice at PwC.

"The growth levels seen by the companies in the survey prove that advertisers are increasing their online spend at a rate that shows no sign of levelling out. "

The report puts the continued surge in online advertising down to number of factors, including the increasing penetration of broadband and wireless internet in UK homes, the rise in average daily web usage, and the improvement in measurement and web analytics tools.