Digital ad spend growth slows as brands try mobile

UK digital ad spend growth slowed slightly in 2012 as more marketers chose to experiment with mobile formats, which command cheaper rates than desktop.

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Digital advertising spend increased by 12.5 per cent to £5.42bn in 2012, according to the latest IAB digital ad spend report, conducted by PwC. Growth was down slightly from the 14.4 per cent registered in 2011.

The slowdown in growth of digital spend is against a backdrop of just a marginal 0.8 per cent growth in overall ad spend, according to the latest quarterly AA/Warc Expenditure report, which blamed the budget cuts on a “deteriorating economic outlook”.

The IAB/PwC full-year study found mobile spend more than doubled (147 per cent) to £525m, up from £203.2m, accounting for 9.7 per cent of digital advertising spend in 2012. In 2011 advertising on mobile devices grew 157 per cent, although this came from a lower base.

Tim Elkington, IAB director of research and strategy, says: “Mobile has reached this milestone because marketers are becoming more attuned to the ‘always on’ nature of consumers who expect to engage with content wherever they are. Consequently, advertisers are increasingly buying integrated campaigns across online and mobile rather than regarding mobile as an afterthought.”

In the last six months, 20 more of the UK’s top 100 advertisers launched mobile-optimised sites. EE’s launch of 4G – which is set to double its average download speeds in major cities – and other operators’ super fast internet launches this summer are likely to drive mobile advertising’s growth even further in 2013.

The IAB is currently working with all tiers of the mobile advertising industry to standardise in-app ad measurement to boost mobile ad spend even further.

Display advertising across the entire digital sector was boosted by the increase in video and social media advertising. Video grew 46 per cent to £160m (up 50 per cent in 2011), while social media advertising grew 24 per cent to £328.4m (75 per cent in 2011 – although this figure just accounted for banner ads in the previous report).

Elsewhere, paid-for search marketing now accounts for 58 per cent of all digital ad spend, having increased 14.5 per cent to £3.17bn in 2012 (17.5 per cent in 2011).

Classifieds, another major sector, grew 6.3 per cent to £853.7m (5.2 per cent in 2011), accounting for 16 per cent of digital ad spend.
The FMCG sector overtook finance as the biggest spender on digital display for the first time last year, accounting for almost 16 per cent of spend.

Anna Bartz, senior manager at PwC, says: “The advertising market is shifting toward storytelling and integrated campaigns which give greater prominence to video and display formats with a higher degree of interactivity with the target audience. 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.”

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