A London-based forebear of Google has been lauded as the "most dynamic media company" in the UK after recording a 726 per cent hike in revenues last year.

Espotting, which provides contextualised adverts that are designed to tie in with specific pieces of online content, received the title at the Media Momentum Awards in London which recognised the 50 fastest growing British media companies.

The company pre-empted Google by introducing a "pay-per-click" business model, where clients pay a fee for each user who reaches their site through an online advert, in 2000. Google launched its contextual advertising programme, called AdSense, in June 2003

Despite a tough environment for the media sector, the companies honoured at the awards had successfully grown their revenues by an average of 149 per cent in 2004.

Old-media stalwarts, which have larger bases for comparison, failed to get close to those growth rates. WWP, the marketing services giant, recorded a 5 per cent increase during the same period. Emap, the publisher, posted a 3 per cent increase in revenues.

Manish Madhvani, of GP Capital, which ran the awards, said that established old-media players could no longer afford to ignore new media businesses and predicted a wave of acquisitions as American media giants in particular seek to profit from British expertise.

"In terms of outlook, the picture is better than it has been for some time," said Mr Madhvani. "In areas, such as interactive TV, Britain is leading the world and American companies are in the market to acquire pioneering ventures."

Espotting was itself acquired by FindWhat.com, the American online advertising giant, for $170 million (£90m) in July last year. Together with Google’s stock market float - at a market value of over $27 billion - and Yahoo's acquisition of shopping service Kelkoo for £318 million, the move was interpreted as sign that the new media sector has emerged from the doldrums that followed the dot.com boom of the 1990s.

Seb Bishop, espotting’s co-founder, is among those who see a positive outlook. He welcomed the launch of Microsoft’s search engine this week, identifying it as signalling an expansion of the market.

"CEOs are calling for their marketing directors to be more accountable and that plays directly to the beauty of the web where it is possible to see just how hard every last penny is working," he said.

Stoking bullish sentiment, this week shares in Google surged after the company posted sharply improved profits from its paid-search advertising operation. Yahoo, which claims to be the world’s most popular website, recently reported strong earnings growth. The company said a tipping point had been reached where advertising accounts were migrating online at the expense of old media rivals.

According to the latest figures from The Interactive Advertising Bureau and PricewaterhouseCoopers, internet advertising totalled around $2.43 billion (£1.3bn) in the third quarter of 2004 - the eighth consecutive quarterly increase for the industry and the fourth record-setting quarter and a 35.3 per cent increase over the same period a year ago.

Analysts say that the drivers behind this increase include the rapid growth of online audiences and advertisers’ improved accountability to clients.

Mr Bishop also highlighted espotting’s entry into the SME market through "pay-per-call" advertising, where users are given a phone number online through which they can contact local companies.

"Through this service a user looking for, say, a plumber in Birmingham can contact one directly. It offers an amalgamation of new and old media which could prove very exciting and offers espotting access to a vast number of small to medium-sized clients."

Unlike other content or contextual advertising programs, espotting's "Content Solutions" uses human editors to select the keywords that trigger the advertisements which appear alongside the website's content.

Unlike Google, espotting does not have a "destination website" such as the one Google uses to host its search engine.

Mr Bishop said that this has appealed to several clients who have not wanted to risk their brands being overshadowed by sharing a page with the distinctive Google logo.

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