Spending on internet advertising will overtake that in the television sector next year, according to analysts.

The Internet Advertising Bureau's report on performance in 2007, put together with PricewaterhouseCoopers, found online spend increased by 38% year-on-year in 2007 to £2.8bn.

Although that constitutes a smaller increase than in the previous two years, it exceeded the IAB's forecast and took the internet market share to 15.3%, up from 11.4% in 2006. TV accounted for 21.8% and press display adverts for 19.9%.

The IAB predicts further significant growth this and next year.

Chief executive Guy Phillipson said: "With broadband speeds on the up and consumers spending more time on more sites, the outlook for online advertising is rosy - in fact we expect it to overtake TV in 2009 when it will become the UK’s biggest medium."

One of the drivers is the success of internet-based video on demand, said the IAB: "(The) launch of services such as BBC iPlayer and Channel 4’s 4oD are breaking the barrier between video entertainment and the internet as a communications or shopping tool.

"More online familiarity means more time online, again attracting more advertisers."