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Digital advertising crosses the £5 billion mark

Digital ad spend

According to the latest Internet Advertising Bureau UK (IAB) digital ad spend report, conducted by PricewaterhouseCoopers, digital advertising increased, like-for-like, by 12.5% on 2011 to a record annual high of £5.42 billion in 2012.

Compare those figures to the UK internet advertising spend of £200 million in 2002 and you can see how digital ad growth has exploded over the last ten years.

And as digital spend reached a landmark figure, so mobile spend also crossed a significant milestone. Triggered by increased smartphone ownership (64% of the UK population), mobile advertising hit the half billion pound mark with like-for-like growth up by 148% to £525 million in 2012 compared to £203.2 million in 2011.

In just three years, mobile has seen a huge increase and now accounts for 9.7% of all digital advertising spend compared to 1.1% in 2009.

Digital advertising formats

Display advertising across the entire digital landscape, boosted by the increase in video and social media advertising, grew in line with the market at 12.4% on a like-for-like basis to £1.30 billion from £1.14 billion in 2011, representing a 24% share of digital ad spend in 2012.

Video advertising grew 46% to £160.0 million from £109.0 million, accounting for 12% of online and mobile display in 2012; up from 10% in 2011. In the last three years video ad spend has increased almost six-fold (471%).

Social media advertising grew 24%to £328.4 million from £265.0 million. In the last three years social media spend has increased almost four-fold (383%).

Online and mobile sponsorship advertising grew 34% to £65.7 million from £49.0 million, accounting for 5% of digital display. In the last three years digital sponsorship spend has increased 128%.

Online in-game advertising revenue grew 30% to £23.4 million from £18.0 million in 2011.

Paid-for search marketing increased 14.5% on a like-for-like basis to £3.17 billion from £2.77 billion – representing a 58% share of digital advertising.

Classifieds grew 6.3% like-for-like to £853.8 million from £788.0 million – accounting for 16% of digital ad spend in 2012. Recruitment classifieds showed strong growth of 7.6% from £276.6 million in 2011 to £297.7 million in 2012.

Anna Bartz, Senior Manager at PwC, said:

“Over the past two years, the digital advertising revenue model has also changed from an emphasis on direct response to being more about branding and awareness.”

The top five display advertising sectors in 2012 are completed by:

  • Finance (15%)
  • Entertainment & media (13%)
  • Retail (12%)
  • Technology (9%) 

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