The value of the UK mobile advertising market rose by 148 per cent from £203.2m in 2011 to £526m, according to the latest Internet Advertising Bureau UK (IAB) digital ad spend report, conducted by PwC.

The £322.8m increase in mobile ad spend accounted for over half (53 per cent) of the £607.3m increase in total digital ad spend between 2011 and 2012, and was fuelled by the rapid rise in smartphone ownership, which hit 64 per cent of the UK population in December 2012. Mobile now accounts for 9.7 per cent of all digital ad spend, compared to 1.1 per cent in 2009.

“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,” said Tim Elkington, the IAB’s director of research & strategy at the Internet Advertising Bureau.  “Theres simply so much buzz around mobile. In the last six months, 20 more of the UK’s top 100 advertisers have produced mobile-optimised websites; 4G mobile ultra-broadband is enabling a new era of richer content consumption; and tablets are being predicted to outsell PCs in 2013. This will help maintain mobile’s significant momentum in attracting both consumer attention and advertising pounds.”

Notwithstanding the fact that 4G is in its infancy in the UK, mobile video advertising grew 1,601 per cent from £0.8m in 2011 to £13m in 2012. Total mobile display advertising (including video) increased like-for-like by 121 per cent to £150m in 2012. Mobile search grew like-for-like by 164 per cent to £365m, accounting for 69 per cent of mobile ad spend. The remaining £11 million of mobile ad revenue is primarily accounted for by classifieds, SMS/MMS and other smaller advertising formats.

The top-spending sector across mobile display in 2012 was Entertainment & Media (16 per cent), followed by consumer goods (13 per cent), retail (12 per cent), finance (12 per cent) and technology (11 per cent).

Digital advertising overall grew by 12.5 per cent on 2011 on a like-for-like basis to a record annual high of £5.42bn. Display advertising across the entire digital landscape, boosted by the increase in video and social media advertising, grew in line with the market at 12.4 per cent to £1.3bn, representing a 24 per cent share of digital ad spend in 2012.

Video advertising grew 46 per cent to £160m from £109.0 million, accounting for 12 per cent of online and mobile display in 2012; up from 10 per cent in 2011. In the last three years video ad spend has increased almost six-fold (471 per cent). Social media advertising grew 24 per cent to £328.4m. In the last three years, social media spend has increased almost four-fold (383 per cent).

Online and mobile sponsorship advertising grew 34 per cent to £65.7m, accounting for 5 per cent of digital display. In the last three years digital sponsorship spend has increased 128 per cent. Online in-game advertising revenue grew 30 per cent to £23.4m from £18m in 2011.

Paid-for search marketing increased 14.5 per cent to £3.17bn, representing a 58 per cent share of digital advertising. Classifieds grew 6.3 per cent to £853.8m, accounting for 16 per cent of digital ad spend in 2012. Recruitment classifieds grew by 7.6 per cent to £297.7m.

The top digital ad spending sectors in 2012 were consumer goods (16 per cent), followed by Finance (15 per cent), Entertainment & Media (13 per cent), Retail (12 per cent), and Technology (9 per cent).

David Murphy writes:

It looks like triples all round for anyone working in mobile advertising, which is now worth more than half a billion pounds in the UK alone. As more of us get smartphones, it seems, so more brands are being swayed by the logic of following the eyeballs and reaching consumers where they spend an increasing amount of their time – on mobile.

It would be a real party-pooper then, to sound a note of caution among the popping of the champagne corks. But as we report in our current print edition, there are some who argue that much of mobile advertising – the interruptive, unengaging stuff that mimics online advertising – is broken. Untargeted, unappealing to consumers and ultimately, if brands can’t get the clicks they demand, or can’t be persuaded of the branding value of mobile advertising, equally unappealing to the advertisers.

The challenge facing everyone in the mobile advertising business is to see through the celebratory fug and accept that there’s a lot of work still be done. If someone can get it right though, balancing the need of advertisers to reach their target audience, with that of consumers to feel entertained and engaged, rather than spammed, by mobile advertising, well I’ll raise a glass to that.

The industry responds:

Richard Sharp, UK MD of mobile advertising network GreyStripe:

“The growth of mobile advertising spend over the last year is encouraging. However, I still feel there is a long way to go before the industry can claim to have done mobile justice. The growth of video and rich media in mobile advertising is incredibly promising as it shows how successful rich and engaging media can be with building relationships with consumers.

“Whilst mobile ad spend hit the half billion pound mark in 2012, I feel there is still a long way to go before we can say that mobile has fulfilled its potential, and the industry needs to ensure that mobile advertising and cross device integration are simple and effective for the advertiser.”

Sam Barnett, founder and CEO of ad personalisation retargeting technology company Struq:

“2010 was going to be the year for mobile, then 2011 – but these results show that in 2012, mobile finally took centre stage. The UK’s digital ad spend hit an all-time high for the industry, up from less than £200m a decade earlier. Nearly £1bn of that spend was generated through mobile: today, we are consuming media on the move more than ever, be it through our smartphones or tablets.

“Almost two-thirds of the UK population now owns a smartphone. Mobile now accounts for 9.7 per cent of all digital advertising spend. That’s a massive increase on the 1.1 per cent in 2009. If these figures keep up their current trajectory, mobile could overtake ‘traditional’ media within a decade, perhaps sooner. With superbrands like Facebook concentrating the bulk of their efforts on leveraging the power of mobile to create new revenue streams, I think it’s fair to say brands who fail to evolve for mobile will soon be left behind.”

Sultan Khan, chief executive and co-founder of integrated mobile advertising platform AdMaxim:

“The latest mobile ad spend figures are very encouraging, especially the fact that mobile now accounts for over half of digital ad spend growth. In order to build on this success, our sector needs to focus on simplifying execution of mobile campaigns and use advanced precision targeting methods and delivery optimisation to ensure mobile ads are highly relevant and engaging for consumers and deliver even better results for brands. Relevancy and engagement are key to driving the performance of mobile ads.

“As an industry we also need to explain how sophisticated mobile ad technology is when dealing with real-time campaign data, the ways in which advanced learning algorithms can be used to optimise campaigns in real time and what this means for ROI.  Additionally we need to work with advertisers to make sure the insights and metrics used to measure mobile ad campaigns are giving them the information they need to justify increasing their investment in mobile even further.”