The increasing array of activities and time spent online as companies develop more services to benefit people’s lives, particularly on smartphones, meant the amount spent on internet advertising hit a high of £11.55 billion in 2017.
IAB UK (Internet Advertising Bureau UK) and PwC’s Digital Adspend study says this represents a 14.3 per cent increase on 2016, while the amount spent on smartphone ads rose by 37.4 per cent or £1.41 billion. As a result, 45 per cent of all internet ad spend went on smartphones – compared to just 9 per cent five years ago.
2017 was the first year that UK adults spent more time online on smartphones than on computers and tablets combined, with smartphones accounting for 59 per cent of time in the final quarter of 2017. Reflecting this change in people’s behaviour, video ads on smartphones were the fastest-growing online ad format, as advertisers spent £476 million more (+69 per cent) on them than in 2016.
“People are spending more time online and doing a wider variety of things, particularly on smartphones, be it learning a new skill, listening to podcasts or following stories on the likes of Snapchat and Instagram,” says the IAB’s chief digital officer Tim Elkington. “Digital is enhancing people’s lives, and the ad community is responding by developing new ad experiences that fit seamlessly into their environment, particularly within mobile and video.”
Accompanying online YouGov data produced specifically for the report reveals that in terms of online smartphone activities, in the past 12 months, listening to a podcast has seen the biggest rise, with a ‘net’ increase of 30 per cent of British adults with a smartphone saying they do this more followed by viewing social media ‘stories’ (up 29 per cent), reading news articles (up 24 per cent) and learning a new skill (up 22 per cent).
Tom Tryon, Strategy Manager at PwC, said, “While this data relates to 2017, before some of the recent headlines that have been dominating the industry, it’s clear that there has been considerable momentum in the market. What stands out to us is the number of success stories we’ve seen across a diverse range of formats, from audio to sponsored content, and across all parts of the industry value chain. More than half of the companies submitting to the study this year are in growth, which points to a robust and competitive marketplace.”
In terms of other formats, social media advertising also enjoyed strong growth last year as spend rose 38 per cent to hit £2.39 billion, or one in every five pounds spent on internet advertising. Eighty-three percent of social media ad budgets now goes to smartphones.
Elkington acknowledged, “The fact that digital is growing is a good sign, but there have been some growing pains within the industry, so we’re focused on building a sustainable future for advertising through initiatives such as the IAB Gold Standard, which aims to reduce ad fraud, improve the digital ad experience for the consumer and increase brand safety so their ads feature in the right environments. These and other industry initiatives clearly indicate the desire for the whole sector to work together to address the key issues.”