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Digital ad spend crossed £10bn in 2016, driven by mobile video's huge growth

Tyrone Stewart

Woman on phoneMobile video is the fastest growing ad format, with spend more than doubling year-on-year to £693m. It accounted for 29 per cent of total digital ad spend growth in 2016.

According to the annual IAB UK and PwC digital ad spend report, digital advertising grew 17.3 per cent to £10.3bn in 2016 – it’s fastest growth rate in nine years. Mobile ad spend rose by 50.3 per cent to £3.87bn – accounting for 38 per cent of total digital ad spend, while accounting for 63 per cent of overall video spend, 76 per cent of content & native, and 79 per cent of social media.

Overall video saw growth of 56 per cent – driven by outstream/social in-feed, which grew 243 per cent to £465m. Outstream accounted for 56 per cent of mobile video, and 43 per cent of all video spend – while pre-roll and post-roll spend grew 12 per cent to £603m, representing a 55 per cent share of all video.

“The rise in people consuming mobile and video content has accelerated digital’s growth rate to its highest level for nearly a decade,” said the IAB UK’s Chief Marketing Officer, James Chandler. “Reaching the £10bn threshold has been made possible by brands breaking the mould, trying innovative formats and making the most of video to reach and amaze people. It’s impossible to ignore the issues the industry is facing at the moment, but digital never stands still and these figures are testament to the long-term strength and power of digital.”

The report also found that 72 per cent – or £2.71bn – of all display ad spend is traded programmatically. Total display ad spend rose by 26 per cent year-on-year to £3.77bn in 2016.

“The biggest change in how display ads are sold is the rise of programmatic direct, which now accounts for nearly half of sales,” says Dan Bunyan, senior manager at PwC. “Right now, considerations such as brand safety mean the advertiser is rightly demanding more certainty in the placement of their ads and the industry is evolving quickly to find new solutions to address brands' needs in this dynamic environment."  

Ad spend on social media sites grew 38 per cent to £1.73bn – which represents 46 per cent of display. Social media spend on mobile alone rose 54 per cent, while content & native saw an increase of 28 per cent.

Meanwhile, paid-for search grew 15 per cent to £4.99bn, mainly due to mobile’s 48 per cent growth, giving it a 48 per cent share of digital ad spend. Additionally, classifieds grew eight per cent to £1.48bn for a 14 per cent share.