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The Internet Advertising Bureau claims expenditure on the web increased to £1.68 billion in the first six months, despite the total advertising market falling 0.7% year-on-year.

The total market would have been down 4.6% without the internet's growth, the report claims, explaining that all other major advertising mediums such as television, press and radio fell.

"Online is not immune from the economic

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downturn, but while other sectors see falls in expenditure the internet is still experiencing an incredible increase and is propping up the entire advertising market," says IAB's Guy Phillipson.

"The growth in internet advertising spend is beating all expectations as advertisers look to maximise their budgets, and take advantage of new display advertising formats such as video.

"They are also increasing their investment in paid-for search marketing because it delivers measurable returns on investment."

Phillipson says online advertising spend could exceed £3.2 billion in 2008.

The British report, which is produced by the IAB, PricewaterhouseCoopers and the World Advertising Research Centre, says online spend had exceeded expectations, increasing its market share to 18.7%, only 3% behind TV.

Advertising spend on search engines grew by 28% year on year, taking a market share of 58.3% of the total online spend, while internet display spending rose 16.3%.