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The main engine for growth continues to be paid search on sites such as Google but analysis firm Enders claims it has also seen early signs that the popularity of online video is now making a small contribution to a shift in advertising from television to the internet.

"In total, we estimate online video advertising will amount to about £35 million or 1% of TV ad spend in 2008. Not all this money will come from TV budgets, but there are early signs of a direct shift in spend from TV to the internet over and above the broader shift to online."

"Our forecast for 2008 is that online advertising expenditure will grow 26.4% in nominal terms to £3.56 billion, overtaking TV ad spend, which we expect to fall 2.5% to £3.39 billion."

The report says Google will remain the biggest beneficiary of the growth in search advertising and predicted it will take 80% of UK spend on search advertising, up from 78% in 2007.

It predicted growth in online classified advertising, which increased 54% in 2007, would slow in 2008 due to declines in recruitment and property listings.