Almost two-thirds of UK ad spend to be online by 2020

Britain is now the largest online advertising market in Europe and third-largest globally, with £1.34bn worth of spend going online last year.

Britain is racing ahead as one of the world’s largest online advertising powerhouses behind only the US and China, with UK advertisers set to spend 62% of their budget online by 2020.

UK online advertising expenditure, relative to the size of the economy, is now the highest in the world at 0.63% of GDP.  In 2018, online advertising contributed 57% (£13.4bn) of the UK’s total advertising spend of £23.6bn. Twenty years ago, online expenditure didn’t even register in published statistics.

This is according to the latest Advertising Pays report by the UK’s advertising thinktank Credos and Enders Analysis, which also shows how the UK’s strong online economy has powered the growth of online advertising.

At £1,868 per person, the UK retail ecommerce expenditure per capita is higher than in any other G20 market, with both online advertising expenditure and internet retail expenditure almost trebling since 2010.

This has resulted in the development of a tech sector that employs tens of thousands of people and comprises more than 300 UK-headquartered companies. Since 2013 it has attracted more than £1bn in investment.

Together, these UK ad tech companies employ more than 19,000 UK workers, almost four times as many as the largest advertising tech platforms in the UK, such as Google and Facebook, combined.

At the same time, the report demonstrates how online advertising boosts UK small and medium-sized businesses (SME). More SMEs advertise now than ever, rising from 30% in 2013 to 42% in 2017.

“The UK is a global online advertising powerhouse with the capabilities to drive economic growth and drive societal change,” says Stephen Woodford, chief executive of the Advertising Association.

“Looking ahead, the challenge for our industry working with the Government is to find the right balance of statutory and industry regulation to encourage growth, ensure fair and healthy competition, minimise societal harm and accelerate positive societal change. With the right conditions, UK advertising can play a fundamental role in the UK’s future growth, not just within our borders but in how we do business with people worldwide.’’

Hotwired launched the first banner ad in 1994, which is when the Telegraph became the first major UK newsbrand to go online with the Electronic Telegraph.

It wasn’t until the year 2000, when Google developed AdWords, that advertisers started spending online. 350 advertisers signed up to AdWords in its launch year, with £153m out of a total adspend of £14.7bn going online.

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