UK digital ad spend grew by the biggest margin in 15 years, with expenditure increasing by 41% year-on-year to £23.5 billion in 2021, according to IAB UK’s latest Digital Adspend report, conducted with PwC. Mobile was responsible for 60% of that spend, up 43% to £14.13 billion.
The report shows that search received the largest share of overall spend, growing 38% to £11.7 billion, with £3.5 billion of that total being coming from search shopping ads, highlighting the growing strength of the ecommerce market.
Meanwhile, display ads saw spend increase by 53% to £9.7 billion, where both social and non-social display grew by more than 50%. Video continued to make up majority of display spend, rising 58% to £5.5 billion, while spend on banner ads jumped 60%.
Emerging formats, such as podcasting and gaming, also achieved big percentage growth. Podcast expenditure grew 61% to £54 million, while the wider digital audio space was up 58%. Static and dynamic in-game ads saw £9.8 million in spend.
Interestingly, if you were to exclude the industry’s five largest companies, total digital ad spend would still be up 33% on 2020.
“After a 5% rise in digital ad spend in 2020, we were confident that 2021’s results would be much stronger, but for the market to be up 50% on pre-pandemic spend is incredible and testament to the resilience of our world-leading industry. It’s particularly exciting to see emerging formats such as in-game advertising and podcasts continue to gather pace and offer new, untapped opportunities for growth,” said Jon Mew, CEO of IAB UK.
“However, we shouldn’t lose sight of the fact that 2021 still wasn’t a normal year. We spent half of it in some form of lockdown – bringing with it an increased reliance on digital channels – while the return of large-scale events such as the Olympics and Paralympics in H2 will also have impacted spend.
“Ultimately, while growth on this scale is truly brilliant to see, what matters most is how we sustain investment in the long-term, beyond recovery and in the face of growing regulatory scrutiny. As an industry, we should take confidence from the results announced today and channel that into pulling together to ensure a sustainable future for digital advertising.”
Responding to the new report, James Manderson, SVP, Customer Success at Braze believes that, while it’s encouraging to see digital ad spend rise yet again this year, there are storm clouds on the horizon: namely, the cost of living crunch and phaseout of third party data.
Manderson said: “While we’re seeing healthy spend dedicated to acquiring customers, with consumers tightening their belts, brands will need to fight harder than ever to retain them in the coming months. This is a time for brands to re-evaluate how they engage their existing customers, and convert newly acquired customers into long-term advocates. The key will be providing customer engagement in a sensitive, and personalized way that will build stronger brand loyalty in the long run and boost customer retention.
“Getting this right will rely on having strong first-party data. The phaseout of third party cookies means brands are facing their most significant data management challenge since GDPR was introduced four years ago. It will be crucial for brands to understand the data they have and use this to personalise communications and bring harmony to cross-channel messaging, blending both in-product and out-of-product messaging channels.”
Rhys Cater, Managing Director at Precis Digital London, commented: ”It’s exciting to see advertisers continue to show confidence in the critical role of digital in their marketing strategies. The IAB UK’s Digital Adspend report shows that as spend grows, so does complexity. While growth in Search as the leading channel is strong, mobile formats and visual channels such as Display, Social, and Video are accelerating rapidly.
“To succeed in an increasingly competitive market, and as budgets grow, advertisers will more than ever need to make sure that they have the capabilities and strategy to make their investments count. Digital-first creative is a must-have to maximise the effects of the visual channels. A modern approach to data, analytics, and attribution will be critical to understand the value of investments across an increasing number of channels. All of this must be done with data privacy and customer experience firmly in mind. Advertisers’ expectations for digital growth might be high, but so too are the expectations of consumers when it comes to the ads they’re served and the ways in which their data is used.”