Recent weeks have brought a raft of estimates and forecasts for UK advertising spending in 2010 and 2011. For digital media, the news is excellent; for traditional channels, more sobering.

Spending on internet ads grew 10% in the first half of 2010, the UK’s Internet Advertising Bureau (IAB) declared in October. As reported by MediaTel, online spending came to almost £1.97 billion ($3.09 billion), or 24.3% of all UK advertising during the period.

According to the IAB, online display returned to healthy growth in H1 2010, with spending of £381 million ($598 million)—a rise of 6.4% compared to the first half of 2009. Banner ads accounted for 72% of the display market, or £272 million ($427 million), while pre- and post-roll video ads shot up to £20.7 million ($32.5 million), and display placements on social media sites contributed around £41 million ($64 million).

Display ad impressions (excluding video) rose even more steeply than spending between Q3 2009 and one year later, to judge by figures from comScore Ad Metrix. This suggests that advertisers were getting much better value for their display budgets in 2010, which doubtless encouraged more committed spending.

Classified ads also staged a comeback in 2010, the IAB reported, climbing 11.4% to £379 million ($595 million) during the first half of the year. Paid search marketing rose by 8.9%, to claim 59.9% of all online ad spending, or just over £1,180 million ($1,853 million).

The IAB saw the double-digit rise in online ad spending as part of a more general recovery; by its calculations, total UK ad spending reached £8.1 million ($12.7 million) in H1 2010, 6.3% higher than spending in the first half of 2009.

The Bellwether report, issued by the Institute of Practitioners in Advertising (IPA) and accountancy firm BDO LLP, was less upbeat, noting that the ad budgets of UK marketers rose by an average 0.5% in Q3 2010—a marginal gain, though a welcome contrast to the 4.6% fall registered in Q2.

Like the IAB, the IPA found that the internet delivered the outstanding success stories, with spending on search up 9.9% in Q3 2010, and display spending up 13.3% compared with the previous quarter.

The IPA did point out that most of the 300 or so firms polled for the report were less optimistic about the financial prospects for their industries than in Q2. Moreover, the report’s author ventured that the strong economic performance in Q2 “likely marked the peak of the recovery cycle.”

Looking ahead to 2011, the latest Consensus Forecast from the World Advertising Research Centre (WARC) projected that worldwide ad spending will rise by 4.5%, following a gain of 4.4% in 2010.

Most of that growth will be driven by emerging markets, such as Brazil (where ad spending is predicted to leap 11.4% in 2011), China (13%), India (14%) and Russia (16.3%)

The UK and most other major European countries can expect minor gains by comparison. UK ad spending will rise 2.7% in 2011, said WARC, or just over half the 5% growth anticipated for 2010.

France and Germany will see 2% growth in total ad spending, while Spain will register a gain of 2.2%, after a decline of roughly 1% in 2010.

Globally, WARC foresaw average 2011 increases in Internet ad revenues (13%) far outpacing growth rates in traditional media (5.2% in TV, for example).

The UK, long a leader in internet advertising, will show the lowest growth rates, according to WARC. But even then, online ad spending will be an estimated 6.2% higher in 2011 than in 2010.

Most recently, key companies in the WPP Group, including agencies Ogilvy & Mather and Mindshare, raised their overall forecasts for revenue growth in 2011. According to CEO Sir Martin Sorrell, the revisions were based in part on WPP’s own 4.5% growth between January and October 2010. Group companies had earlier suggested that they anticipated expansion of between 3% and 4% in 2011.

Where does this leave UK ad spending, and online ad spending in particular? Some key aspects to keep in mind:

1. The economic situation remains volatile. In the past week alone, the UK has been buffeted first by news of another national financial bail-out in Ireland (the UK’s number one trading partner) and then by claims that the economy grew by 0.8% in the third quarter, and that spending cuts by the Conservative/ Liberal Democrat coalition government will not have as drastic an effect on public sector jobs as previously feared. The arrival of good and bad economic news in quick succession has been a hallmark of 2010, and looks set to continue as 2011 approaches. This uncertainty will weigh on advertisers, but most have little choice but to maintain spending at or above current levels. After the declines of 2009, further trimming might affect their market shares.

2. For the moment, the consumer mood is largely positive, buoyed by the prospect of Christmas. Many high street retailers—and several online players, including Amazon—are already offering mark-downs, and sales are healthy in many sectors. In the week ending November 13, the John Lewis group recorded sales of £76.93 million ($120.78 million), up 11.5% on the previous week, and 6.8% higher than the corresponding week of 2009. January may bring a less happy mood, however, as the holiday spirit recedes, some jobs are in jeopardy and value-added tax on most purchases goes up to 20%.

3. While growth in total ad spending may languish in the low single digits, there is little doubt that digital will again outpace traditional media, as in 2009 and 2010. Industry observers are unanimous in predicting that display (driven by sharply higher spending on video ads and social media placements) will gain further momentum, while paid search also thrives and mobile marketing moves up a gear.

The Daily Telegraph has released results of a TNS study into consumer spending intentions, following government announcements of public sector budget cuts and a rise in value-added tax (VAT) to 20% from January 2011.

Almost three-quarters (73%) of UK adults polled said they planned to curtail their spending as a precaution. At the start of 2010, 44% of consumers said they intended to tighten their belts.

Richard Hyman, chief retail adviser to the accountancy firm Deloitte, commented: “Since the Budget [in June 2010] reality has kicked in for many consumers. … If interest rates go up, alongside an increase in VAT in the new year, suddenly people will be feeling a lot less wealthy and they will spend less. This is going to make life awfully tough on the high street.”

The Telegraph reported that adults with children were even more worried about their immediate financial future, with 82% of respondents in this category saying they would buy less.

The Internet will play a vital role for consumers hoping to stretch their buying power. According to Fleishman-Hilliard and Harris Interactive, 30% of UK Web users polled in January 2010 said the Internet was “absolutely essential” or “extremely important” as an information source. No other source—including family, friends and colleagues—came close to this level of authority.

We can also expect to see more of the attitudes noted by the e-Dialog Center for Digital Marketing Excellence in Q1 2010. The Center asked UK and US Web users what information they most wanted to see in e-mail marketing messages. Top of the list were discounts on future purchases and advance notice of money-off sales.

For retailers in particular and advertisers generally, the message is clear: until confidence levels rise, most consumers in the UK will want to see value for every penny.

A new forecast from the Online-Vermarkterkreis (OVK) sees spending on Internet display advertising rising between 8% and 9% in Germany during 2010. The OVK noted that interest in a range of display formats, including video and banners, has been growing faster than expected since the beginning of the year, prompting it to revise its predictions upward.

Advertisers were also more willing to invest than last year, said the OVK, now that the worst of the global economic crisis appears to be over.

Further rises in Germany’s online population are also encouraging marketers to boost their Internet presence. The most recent edition of “Internet Facts” prepared by the Arbeitsgemeinschaft Online Forschung (AGOF) reported that 49.7 million residents had been online in Q1 2010. 

Men still dominate online, accounting for 53.7% of Web users in Germany. The direct correlation between youth and Internet use remains too; 97% of individuals ages 14 to 19 were estimated to be online in Q1 2010, compared to 71% of those ages 50 to 59. These figures are unchanged from Q4 2009.

Interestingly, 35.2 million people in Germany were estimated to go online only or primarily for private reasons, and did not use the Net for work. Almost 64% of respondents said they regularly shopped or bought items online – roughly the same number who said they used the Web to follow world news.

Detailed results from “Internet Facts 2010 – I” are available here.

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How do you ensure a successful holiday selling season during a tough economy? David Lonczak, the Vice President and Chief Marketing Officer of drugstore.com, chatted with us about what — despite the recession — his team does to boost sales, retain customers, prioritize marketing initiatives, and more. Here’s a snippet of the full interview, which is available on eMarketer Total Access.

eMarketer: How has the economy forced you to alter some of your business priorities, meaning marketing priorities, technology priorities, things like that?

Mr. Lonczak: A year ago, when we saw the horrific economic impacts going on, like most companies, we had to take some steps. For example, we reduced our capital expenditures related to technology by some 30% to 40% to preserve capital, preserve cash.

With regards to marketing, we continued to lean on the analysis that we had done related to lifetime value of channels, and we constantly are looking at the cost per order per channel. And there were some channels that became less effective than others, so we adjusted our marketing mix slightly to make sure that we were continuing to be profitable, either on the first-order basis, or a lifetime-value proxy.

Earlier this year, recognizing that people were stretched to even buy some of the basics, we lowered prices on several thousand products. We featured coupons and made sure those coupons were not buried on the site. We actually added a coupon tab about this time last year, and that tab continues today as part of our global navigation.

eMarketer: Can you please be more specific about some of the areas where you increased your focus and some areas where you were forced to cut back?

Mr. Lonczak: A must-have on the site would be, for instance, your list, which is a key part of our value prop for repeat customers. What that gives customers is a complete history of their purchases on the site.

We’re continually updating that with regards to new functionality, making it easier for you to sort your purchases. You can do last purchase, or you can do it by category. You can sort by date of purchase or site, because we have Beauty.com as well as drugstore.com, [and] because it’s a shared cart.

We also announced a partnership in which we’re powering a site for Medco, which is one of the largest pharmacy benefits management companies in the country, if not the largest.

But when it came to things like adding blogging capability on the site, which is a nice to have, it wasn’t a competitive or business imperative in 2009.

eMarketer: Do mobile commerce and social commerce fit in the must-have or nice-to-have category?

Mr. Lonczak: Those are right in the gray area. We could spend a whole bunch of money developing mobile applications, a mobile-ready site. We could develop and spend a whole bunch of money on social media, widgets for Facebook, etc.

What we have done is to take a very pragmatic and systematic approach getting into these new media. And we are on mobile quite significantly. We have a store for both drugstore.com and Beauty.com on mobile, primarily right now for the BlackBerry and non-iPhones, and we do that through a partner called Digby. By partnering with them, we’re able to reduce our up-front investment.

With social media, we are out there on Twitter with several different accounts. We have Beauty.com and drugstore.com on Twitter. We have Ask the Director, which is a customer service twist to another Twitter account that we have. We are on Facebook. And we’ve been on MySpace for quite some time.

But we’re doing these things either through partnerships or affiliates, or we’re doing them in a grassroots way without spending a whole bunch of money on agencies and design. We do our own design in-house, and so it’s a matter of trading-off time, as opposed to making these urgent projects and spending a lot of money on overtime or with an outside agency. We’ve been patient in terms of getting these things live out there on Facebook.

The full version of this interview is available here, to eMarketer Total Access subscribers only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs.