UK Digital Ad Spend Up 12.5% To Almost £5.5 Billion

UK Digital Ad Spend Up 12.5% To Almost £5.5 Billion

Digital advertising spending in the UK increased by 12.5% to almost £5.5 billion last year, that’s according to a new report from the Internet Advertising Bureau (IAB).

Conducted by accountancy firm PwC, the report breaks down ad spending and it’s no surprise as to what is the big story – mobile.

Smartphone ownership in the UK is now around 64%, so it is only natural to see mobile accounting for almost 10% of overall spend, with advertisers investing some £526 million in the channel.

That spending represents a growth of 148% from the £203.2 million spent in 2011 and a real-term increase of £322.7 million – making up 53% of the total spend increase. If you were in any doubt as to the rapid rise of smartphone usage in the past few years, the 9.7% of digital ad spend that mobile now accounts for is up from just 1.1% in 2009.

“Mobile has reached this milestone because marketers are becoming more attuned to the ‘always on’ nature of consumers who expect to engage with content wherever they are,” said Director of Research and Strategy at IAB Tim Elkington. “Consequently, advertisers are increasingly buying integrated campaigns across online and mobile rather than regarding mobile as an afterthought.”

Elkington also believes that mobile will maintain its momentum over the coming year, with tablets expected to outsell desktops by the end of the year and 4G ushering in a whole new era of richer content consumption. However, even without the still relatively new 4G, mobile video advertising grew from £0.8 million in 2011 to £13 million in 2012 – a rise of 1,601%. Display advertising (including video) also grew, showing a year-on-year increase of 121% to £150 million, as did mobile search ad spend, growing 164% to £365 million – accounting for a massive 69% of all mobile ad spend.

The report also revealed that the remaining £11 million of ad revenue comes from smaller mobile advertising channels such as SMS/MMS and classifieds.

Other Digital Formats

Wider digital display advertising showed less of an increase than mobile, with investment increasing by 12.4% from £1.14 billion in 2011 to £1.30 billion in 2012. While it does not compare to the growth of mobile display spend, 12.4% is still a significant increase and owes a lot to video and social media advertising.

Video advertising investment grew 46% from £109 million in 2011 to £160 million this year, accounting for 12% of mobile and online display in 2012. Interestingly, the last three years has seen video ad spend increase by 471%.

As one would expect, social media advertising grew by almost a quarter (24%) from £265 million in 2011 to £328.4 million in 2012, with growth benefitted greatly from new products rolled out by both Facebook and Twitter over the last year.

Once again, paid-for search led the way in overall advertising spend, accounting for some 58% of all investment and increasing 14.5% on 2011, from £2.77 billion to £3.17 billion.

Other areas of growth included:

  • Online and mobile sponsorship growing 34% to £65.7m in 2012 from £49.0 in 2011
  • Online in-game advertising growing 30% to £23.4m from £18.0m
  • Classifieds growing 6.3% to £853.8m from £788m in 2011


Advertising shifting towards interactivity

The IAB report listed the top five display advertising sectors in 2012 as finance (15%), entertainment and media (13%), retail (12%) and technology (9%). For mobile display, the top sectors were entertainment and media (16%), consumer goods (13%), retail (12%), finance (12%) and technology (11%).

Senior Manager at PwC, Anna Bartz, put the shift in display trend down to advertisers looking “toward storytelling and integrated campaigns which give greater prominence to video and display formats with a higher degree of interactivity with the target audience.”

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