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Boosted by surging mobile ad investment, UK digital advertising grew at its fastest rate in nine years in 2016, according to the Internet Advertising Bureau UK (IAB UK) and PricewaterhouseCoopers (PwC).
Digital ad spending rose 17.3% for the year on a like-for-like basis—the highest rate since a 38% gain recorded in 2007—to £10.30 billion ($15.74 billion).
Paid search spending—the largest segment of digital ad spending, with a 48% share—rose 15% on a like-for-like basis (14.4% in absolute value) to £4.99 billion ($7.63 billion). Like-for-like display ad spending rose 26% (15.5% in absolute value) to £3.77 billion ($5.76 billion). Classified ad spend grew 8% on a like-for-like basis (7.8% in absolute value) to £1.48 billion ($2.26 billion).
Thirty-eight percent of total digital ad spending was devoted to mobile efforts, compared with 29% in 2015, with investment up 50.8% to nearly £3.87 billion ($5.91 billion).
Overall, mobile received a disproportionate share of spending compared with the 48% of UK internet users’ time that takes place via mobile devices, according to IAB UK and PwC. Ads destined for smartphones and tablet consumption accounted for 63% of digital video ad investment, 76% of content and native ad spending (including social media newsfeeds) and 79% of social media ad outlays.
Mobile video advertising was the fastest-growing of any digital ad format in 2016, IAB and PwC found, up 103% over 2015 to £693 million ($1.06 billion), and was responsible for 29% of overall growth in UK digital ad spend for the year. Video also had the fastest growth among digital ad formats more generally, up 56% over 2015.
Video’s performance was helped by a 234% rise in outstream and social in-feed advertising to £465 million ($710.6 million), and a 12% gain in pre- and post-roll video ad spend to £603 million ($921.5 million).
“The rise in people consuming mobile and video content has accelerated digital’s growth rate to its highest level for nearly a decade,” said James Chandler, IAB UK’s chief marketing officer. “Reaching the £10 billion threshold has been made possible by brands breaking the mold, trying innovative formats and making the most of video to reach and amaze people.”
Social media ad spending grew 38% to £1.73 billion ($2.64 billion), accounting for 46% of display advertising. Social media spend on mobile alone grew by 54%. Content and native ad spending, which includes advertorials and ads in social media newsfeeds, expanded 28% to £1.17 billion ($1.79 billion), or 31% of display investment.
Shifts in how retailers and consumer packaged goods (CPG) brands think about ecommerce, combined with an accelerating acceptance among consumers for buying food digitally, have boosted online sales of groceries. Retailers and brands are taking note of these changing consumer behaviors and offering more digital options for grocery shopping and delivery, which will continue to drive the trend upward in 2017 and beyond.
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