2018 IAB UK & PwC Digital Adspend Study: The Market Grows

The UK digital advertising market is worth £13.44bn, an increase year-on-year of 15%, reveals the 2018 IAB UK & PwC Digital Adspend Study.

Report highlights
  • The majority of all growth is coming from smartphone advertising, which has increased by £1.65bn (35%) from 2017.
  • Smartphone advertising now represents 51% of all UK digital ad spend, up from 45% in 2017.
  • Video is now the largest display format (£2307m), overtaking standard display banners (£1486m).
  • Outstream/social in-feed has increased its majority in total video spend, now occupying a share of 57%, up from 52% in 2017.
  • Social revenue now represents 23% of all digital ad spend.
  • Growth is predicted to slow during 2019, with 5% estimated growth (+9% digital, +11% display, +9% search) compared to 15% in 2018.
2018 marks the tipping point towards a mobile-first ecosystem

Tim Elkington
“For the past few years, industry commentators have been hailing the year of mobile. Each January the predictions come and the waiting commences for evidence to mark a tipping point, a shift to a mobile-first digital ad ecosystem. Well, drumroll… it was 2018! The latest Adspend report from IAB UK and PwC reveals that spend on smartphones outstripped spend on desktop for the first time last year. Brands spent 51% of total spend (which stands at £13.44 billion) on smartphones in 2018, up from 45% in 2017 – a significant milestone in the evolution of digital advertising.

“This evidence shows that advertisers are increasingly thinking mobile-first. Growth in investment has historically lagged behind the amount of time spent on the device and we expect to see growth continue at a rapid pace to keep up with audience behaviour – two thirds of time spent online is now on mobile, according to UKOM. Other areas of growth highlighted by the report include video, which accounts for 44% of the total display market, while mobile video now makes up 51% of smartphone display. This is no doubt down to bigger mobile screens, better 4G and more readily available WiFi making video ads an increasingly attractive option.

“Across the board, advertisers are investing in digital for longer-term brand building as well as short-term activation, with the direct-to-consumer market helping to drive this trend. What’s more, digital continues to be an accessible and popular route to market for businesses of all sizes, from leading advertisers to SMEs.”

Tim Elkington, Chief Digital Officer, IAB UK

Content & context crucial for attracting audiences

Kathryn Jacob

“As people spend more and more of their time on mobile, it’s comes as no surprise that advertisers will follow where audiences are with their marketing spend.

“Video has been the driving force in this growth, indicating that engaging visual content is still key in helping brands to achieve great results and to capture consumer attention in a vast sea of digital noise.

“Video still has a way to go if it is to reach the level of effectiveness of traditional formats like cinema, but it will be interesting to see how the format develops over the next year or so. Ultimately, brilliant content and properly considered context are crucial for advertisers hoping to attract relevant audiences and build strong brands long term.”

Kathryn Jacob OBE, CEO, Pearl & Dean

Mobile-first approach driving investment in user experience

James Cragg

“As a mobile-first approach has become the norm for many businesses, we’ve seen significant innovation and investment in the user experience that has fuelled the rise in mobile commerce.

“Yet, for some years, limitations in the technology and formats available have meant that mobile advertising couldn’t always keep pace with changing consumer behaviours – delivering weaker performance when compared to desktop.

“Fortunately, mobile has made huge strides in recent years. Mobile advertising affords great targeting opportunities for brands and a more interactive and immersive experience for consumers.

“There is no reason to doubt this trend will continue as advertisers design their media, creative, and targeting strategy with mobile at the heart – optimising performance, enhancing the customer experience, and delivering the best results.”

James Cragg, UK Managing Director, Tug

New technologies to improve investment efficiency

Carl Erik Kjaersgaard

“The UK digital ad market has continued to grow despite the various challenges that the market has faced, including the current socioeconomic climate and general changes in the industry. As spend increases, it’s important to look at how media buying can be made as efficient as possible, minimising waste and maximising the return on investment.

“Marketers will start to look to new technologies, like AI, to offer an impartial and more efficient approach to media buying, allowing marketers to measure effectiveness of campaigns and allocate spend accordingly.”

Carl Erik Kjaersgaard, Chief Executive, Blackwood Seven

Industry going from strength to strength

Anna Forbes

“This significant growth in ad spend is great to see and shows that our industry is going from strength to strength. It’s especially good to see that as advertisers invest more and more in digital advertising, they’re becoming more considered in where they’re spending their money – with a large portion of the growth coming from companies that are part of IAB’s Gold Standard.

“At The Trade Desk, we’ve long been ambassadors for the importance of transparency. These findings show that it isn’t just the right thing to do, but makes good business sense as advertisers increasingly choose partners who are demonstrating a commitment to best practice.”

Anna Forbes, UK General Manager, The Trade Desk

Advertisers embracing mobile

“As consumers spend more of their time online, it’s no surprise that digital ad spend has continued its rise, up 15% to £13.4bn. With digital, in every sense, becoming further embedded in our daily lives, it is inevitable that this number is set to rise further next year.

“Given the vast majority of people using their smartphone as their primary digital device, evident from site traffic stats we see across the board, the IAB report shows that advertisers have started to fully embrace this shift by following with ad spend. Over the last few years, a combination of faster wireless connectivity along with more capable devices has made it the go-to device for consumers to get online. This is set to continue over the next few years with 5G and even faster, more capable smartphones arriving (i.e. foldables) that will further cement ‘mobile’ as the main digital device to reach consumers.”

Wajid Ali, Head of Paid Search, ForwardPMX

Budgets must go to professionally produced content

Justin Taylor

“In the IAB’s latest ‘Digital Adspend Study’ it is positive to see that outstream continues to dominate video spend, showing close to a 10% year-on-year increase.

“Unsurprisingly, the study highlights that mobile is the most important distribution device (76% of all video spend is on the smartphone), and it’s great to see the format we invented dominating that space.

“However, it’s now more pertinent than ever that clients and agencies invest their outstream budgets into professionally produced content and not social infeeds. Budgets must go where content is being produced, rather than aggregators and distributors, where the content is read rather than where a click happened.

“We must remember how important local, national, and vertical press are to the global digital ecosystem. By unifying the best publishers at scale, delivering mobile-optimised creativity and outcome-orientated distribution, we are fighting to ensure publishers are getting their fair share of revenue in comparison to the social platforms.”

Justin Taylor, UK MD, Teads

UK market in robust health

“The latest IAB digital ad spend report shows encouraging signs that the UK digital advertising market is in robust health, with mobile advertising continuing its upward trend.

“The rise of up-and-coming ad formats like Shopping Ads, Google’s Responsive Search Ads, and Facebook Messenger Ads show that advertisers are looking for ways to capture consumer attention in the evolving digital landscape. As a result, the lines across search, social, and e-commerce are more blurred than ever with the introduction of features like Checkout for Instagram and Shopping ads on Google Images. Furthermore, with the rapid growth of Amazon’s ads business, e-commerce has quickly emerged as a third pillar of digital advertising, making it vital for marketers to have a complete view of the customer journey across channels and devices, if they hope to more accurately understand campaign performance and attribution.”

Wesley MacLaggan, SVP of Marketing, Marin Software

Digital identity resolution essential in understanding customer journey

Tom Rolph

“Last year’s figures show that UK ad spend is starting to mirror the behaviour of consumers who, according to UKOM data, spend two-thirds of their time online on a smartphone. The fact that mobile ad spend now surpasses that of ad spend on desktop highlights marketers’ understanding that digital identity resolution is essential, not a nice-to-have.

“Appreciating the cross-device behaviours of consumers allows brands to gain a better understanding of the customer journey and build stronger relationships with their audiences long term.”

Tom Rolph, VP EMEA, TapAd

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