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Robust Outlook for UK Ad Spend Growth

Online claims one in three ad dollars this year

NEW YORK, NY (July 25, 2012)—After record growth in 2011, the internet now remarkably accounts for more than one in three ad dollars in the UK—a figure that will rise to nearly one in two by 2016—according to a new forecast by eMarketer.

UK online advertising will rise to $8.64 billion in 2012, eMarketer estimates, up from $7.72 billion last year.

Total media ad spending is set for a slight bump in growth this year due to the Olympics, eMarketer forecasts, with total spending set to reach $24.21 billion, up 4.5% from last year—despite continued uncertainty about the European economy.

A record amount of total ad spending in the UK will go to internet ads—35.7% in 2012—as several digital formats see faster-than-expected growth.

Mobile advertising in the UK will reach $558.1 million in 2012, up 70.3% from 2011, according to the new forecast. Mobile spending is still growing from a small base, however, and as total spend increases, growth will moderate. By 2016, mobile spending will be nearly six times this year’s estimated spending.

eMarketer previously forecast in October 2011 that mobile advertising spending in the UK would reach just $314.8 million in 2012, while overall online ad spending would reach just $7.84 billion.

The significantly higher revisions for overall online and mobile ad spending are the result of several factors, most notably the record actual figures put forth by eMarketer’s benchmark source for online advertising in the UK, the Internet Advertising Bureau.

“Mobile adoption drives far more dollars than expected into display and search—particularly mobile search,” says eMarketer. “In addition, advertisers will continue to increase spending on mobile ads in applications and social media sites where smart device users spend significant time.”

eMarketer is also seeing faster than expected growth in several categories of mobile advertising, notably search, banner ads and text links, and other display formats.

UK mobile search advertising spending will grow 71.1% to $370.6 million this year. That’s up significantly from eMarketer’s previous estimate from October, which forecast mobile search advertising in the UK would reach just $212.1 million in 2012.

Likewise, spending on mobile banner ads will also see more than 71% growth to $164.7 million in 2012—nearly double the previous 2012 prediction of $87.2 million from eMarketer’s October forecast.

eMarketer estimates display advertising in the UK will grow 17.8% to $2.14 billion in 2012, up from $1.82 billion in 2011, driven primarily by strong demand for banner and text link advertisements.

Meanwhile, advertisers will spend $4.91 billion on search ads in the UK this year, up 10.1% from 2011. In October, eMarketer previously forecast search advertising in the UK would reach just $4.45 billion in 2012.

eMarketer’s estimates of UK digital ad spending are based on the analysis of data from benchmark source IAB UK/PwC, for which the last full year measured was 2011, as well as estimates from other research firms and consumer mobile usage trends.

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Clark Fredricksen
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Posted on July 25, 2012.