Research conducted by the IAB has found that ad-supported, free-to-consumers digital services like streaming, social media and email are worth on average £14,600 per year to UK houeholds.
The Digital Dividend research, carried out by Public First for the IAB UK, used economic impact modelling, data analysis, and consumer opinion research to reach its conclusions.
The research found that the digital ad industry contributed a total of £129 billion in gross value added (GVA)2 to the UK economy in 2022, supporting 2 million jobs around the country – 6% of the total UK workforce. For every £1 spent on digital advertising, £4.80 was delivered back to the economy in GVA.
The total £129 billion in GVA encompasses both the direct and indirect economic impacts of the digital advertising industry. This breaks down as:
- £39bn directly generated by businesses within the digital advertising sector, such as agencies, social media platforms and ad tech companies. This is greater than the direct impact of the UK’s legal sector (£34bn GVA) and twice as large as the agricultural industry (£19bn GVA)
- A further £41.3bn from businesses around the country that advertise online benefitting from return on digital ad spend
- £48.5bn supported by digital advertising along supply chains i.e. generating increased demand for products and services such as office rentals or computer equipment
Meanwhile, the actual cost saving for UK households of not having to pay for ad-funded digital services stands at £580 a year3 – almost four times the annual BBC licence fee. The cost-of-living crisis is throwing the value of the ad-funded internet into sharper focus, with 70% of UK adults saying that it’s important to them that online services are provided for free, while over a quarter of people have used free online entertainment more in the last year as a result of budgets being squeezed.
The benefits of digital advertising for businesses are also highlighted by the report. Those that invested in digital advertising in 2022 saw a combined total of £73 billion in increased sales as a result, with £26 billion of that among small and medium sized companies.
Christie Dennehy-Neil, Head of Policy & Regulatory Affairs at IAB UK, said: “The vast majority of us rely on the internet every single day to stay in touch and informed – be it email, news, maps or social media – and the reality is that it’s only free because of advertising. This study provides much-needed insight into the huge contribution that the digital ad industry makes to the UK economy and how people value the vital services it funds.
“Having a deeper understanding of this is particularly important at the moment, with 85% of the population worried about rising inflation and the Government considering how to further regulate the digital ad sector. This can only be done effectively if the very real benefits that digital advertising delivers for people and businesses across the country are recognised and protected.”
John Whittingdale, Minister of State for Media and the Creative Industries, said: “Digital advertising is growing from strength to strength in Britain. It contributes hundreds of billions to our economy, supports millions of jobs and ensures that consumers can enjoy hundreds of online services without charge.”