While total UK ad spend fell by 3.5% in 2008 to £17.5bn, the IAB research, carried out in partnership with PricewaterhouseCoopers and the World Advertising Research Centre, found that online ad spend increased its share to 19.2% of total UK ad spend - up 3.7% on 2007.
In the second half of 2008, the internet's share of all UK ad spend peaked at 19.8%. The research showed the UK is now the world's most advanced market for online advertising, with £1 in every £5 of media budgets spent online.
Online display was the only display medium to increase in 2008, up 7.7% to £637.4m, accounting for 19% of all online ad spend.
The continued growth of rich media-embedded formats and video, the study concluded, is accelerating the decline of formats such as pop-ups, which only accounted for 0.4% of all online spend in 2008. The IAB predicted pop-up ads will be "virtually extinct by the end of the decade".
Paid-for search was labelled "the advertising recession-buster" by the study, with such ad spend increasing by 22.7% to £1.99bn, a 59.3% share of all online advertising.
Throughout the year, the fastest-growing display sector was entertainment and media. In the first half of 2008, it accounted for 10.7% of all online display advertising, and in the second leapt almost 6%, to 16.3%. This meant that it overtook other sectors to be the highest spender in display at the year-end, followed by technology and finance.
Guy Phillipson, chief executive of the IAB, said UK advertisers have become "digital savvy" and are consequently now using rich media, ad networks and search increasingly.
There were 133 companies that participated in the survey, representing thousands of websites, although the IAB highlighted the figures do not cover all UK websites.
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