MM Awards

UK Mobile Ad Spend Rises £1bn in 2015 to £2.63bn

David Murphy

Native ad on Facebook April 2016

Native ads are one of mobile's biggest success stories

Spend on mobile advertising rose by a straight $1bn in 2015 to reach £2.63bn, up from £1.62bn in 2014, according to the latest figures from the IAB and PwC. Overall spend on digital advertising rose by 16.4 per cent to £8.61bn, with mobile accounting for 78 per cent of this growth. In 2015, mobile accounted for 30.5 per cent of all digital advertising.

Not surprisingly, native and video played a strong part in this. The IAB puts native (mainly but not exclusively ads in social media news feeds) and content advertising (including advertorials) in one bucket. In 2015, spend on these rose by 49.9 per cent year-on-year to reach £776m.

Spend on mobile video ads, meanwhile, increased 98 per cent to £353m representing just over half of the overall digital video ad spend total of £711m. Ad spend on social media sites grew 45 per cent to £1.25bn, representing 41 per cent of banner/video display ad spend. Over 71 per cent of social media ad spend goes on mobile.

The 16.4 per cent year-on-year rise in digital ad spend was the highest rate since 2008 (17.1 per cent), as the number of internet-enabled devices per household increased 12 per cent in a year to 8.3 per UK household, according to figures from YouGov. Connected TVs saw the biggest rise in ownership (27 per cent) followed by smartphones (21 per cent), whilst laptops (18 per cent) outgrew tablets (16 per cent). Smartphones are the most popular internet device (2.1 per household) followed by laptops (1.6) and tablets (1.4).

“The increasing array of devices people use to go online has helped digital ad spend hit another gear as advertisers look to reach them and time spent online increases,” said Tim Elkington, chief strategy officer at the IAB UK. “Smartphones are the major driving force behind this, as people increasingly use them for activities they used to do on desktop, from searching and shopping to social and watching video.”

Display ad spend rose 24.5 per cent year-on-year to reach a 35 per cent share (£3.03bn) of digital ad spend. The share traded programmatically rose from 47 per cent in 2014 to 60 per cent (£1.60bn) in 2015. Direct sales – where ads are bought at fixed prices directly from media owners using manual processes – now represent just 37 per cent of display ads (down from 47 per cent in 2014) while ad networks make up the remaining 4 per cent. Paid search grew 15.3 per cent to £4.36bn – a 51 per cent share of digital ad spend. Classified, including recruitment, property and automotive listings, grew 5.2 per cent to £1.11bn (13 per cent share).

“We’re seeing a three-pronged change in media owner strategy when it comes to selling display ads,” said Dan Bunyan, senior manager at PwC. “There’s a shift in sales from networks to Real-time Bidding exchanges; a shift from direct to programmatic direct; and one from open to private market places. It’s almost gone full circle in terms of the desire for a more controlled environment to sell in. We predict programmatic will account for 80-90 per cent of display ad sales by 2019.”

Consumer goods, such as food, toiletries and clothing, companies spent the most on banner and video display ads in 2015, responsible for 18 per cent of spend, followed by travel & transport (13.4 per cent) and retail (13.3 per cent).

Meanwhile, in addition to the £8.61bn going on ad spend in 2015, advertisers spent a further £953m to attract customers via promotions on ‘deal’ websites such as price comparison, voucher, cashback, loyalty and product review sites, aka Online Performance Marketing (OPA).

According to YouGov, 75 per cent of adults online have undertaken at least one of the OPM activities listed in the last six months, with usage of price comparison sites (40 per cent) the most popular activity, followed by entering a competition (35 per cent) or using a voucher code site (26 per cent).

The total spend on OPM of £1.3bn (including media ad spend in this area), generated £17.7bn in sales – a return of £13 for every £1 spent – equivalent to around 10 per cent of all UK eCommerce retail sales (based on figures from Verdict Retail), and 1 per cent of GDP, based on the IMF’s 2015 calculation of the UK’s GDP at £1.85 trillion.

David Murphy writes:
There may be some issues around mobile advertising right now, - ad blocking, fraud and viewability to name a few - but the latest IAB/PwC figures show that they are not holding the industry back. Mobile, it seems, is finally getting the attention it deserves, though it should be noted that Facebook and Google are hoovering up large swathes of the ad spend.
The figures also lay bare our obsession with finding a bargain or a deal, and the amount of money advertisers are pouring into being seen on voucher and cashback sites. Programmatic is also in the ascendancy, both in the wider digital arena, and in the mobile space. While mobile programmatic is not separated out in the figures released by the IAB, data used to prepare the report seen by Mobile Marketing shows close to 60 per cent of mobile video and close to 70 per cent of mobile display inventory being traded programatically in 2015, rising to around 90 per cent each by 2019. Impressive figures all round.