Digital ad spend rose by 14.3 per cent to £11.55bn in 2017

The digital ad industry is not without its problems right now, but it still managed growth of 14.3 per cent in 2017 as advertisers spent a total of £11.55bn on digital ads, according to the latest Digital Adspend report by the Internet Advertising Bureau (IAB) UK and PwC. 45 per cent of this figure (£5.2bn) was spent on mobile.

The fastest-growing online ad format in 2017 was video advertising on smartphones, which clocked up £1.17bn, a 69 per cent increase on the previous year. Video advertising across smartphones, tablets and PCs came in at £5.2bn. Outstream video (up 94 per cent to £900m) overtook pre/post-roll (up 11 per cent to £671m) as the largest video format.

Paid search rose 16 per cent to £5.82bn, while advertisers spent £3.84bn on display advertising. 80 per cent of this was traded programmatically, 63 per cent through direct systems, such as private marketplaces, with only 17 per cent on open exchanges.

Social media spend rose 38 per cent to £2.39bn, with 83 per cent of social media budgets going to mobile. In-feed advertising rose 9 per cent to £950m. Classified was the only sector to fall, by 1 per cent, to £1.47bn.

Accompanying online YouGov data produced specifically for the report reveals that in terms of online smartphone activities, listening to a podcast has seen the biggest rise amongst smartphone users, with a ‘net’ rise in popularity of 30 per cent 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).

“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,” said Tom Tryon, strategy manager at PwC. “What stands out to us is the number of success stories weve 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.”

For the IAB, chief digital officer Tim Elkington noted: “People are spending more time online – specifically on smartphones. Digital has led to a change in consumer behaviour as people use their smartphone for a wider variety of things, be it listening to podcasts, learning a new skill or following stories on the likes of Snapchat and Instagram. The ad community has responded to this change – particularly the growth of mobile and video – by developing dynamic ad products that fit seamlessly into their environment.”