A record £5.42 billion was spent on digital advertising in the UK in 2012, with mobile accounting for 10 per cent of all digital revenue, according to a report from the Internet Advertising Bureau (IAB).
In 2002 less than £200 million was spent on UK internet advertising – 10 years later, digital advertising spending crossed the £5-billion mark.
In 2012 digital advertising increased by 12.5 per cent over 2011 to a record annual high of £5.42 billion – up by £607 million from £4.81 billion according to the digital adspend report conducted by PwC.
Fuelled by smartphone ownership hitting almost two-thirds or 64 per cent of the UK population, mobile advertising grew like-for-like by 148 per cent to £526 million in 2012 from £203.2 million in 2011, the report said.
The actual increase of £322.7 million in mobile ad spend over 2011 represents 53 per cent of the £607.3 million increase in total digital ad spend.
Mobile now accounts for 9.7 per cent of all digital advertising spend compared to 1.1 per cent in 2009 – a huge increase in share in just three years.
''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, director of Research & Strategy at the IAB.
"There's simply so much buzz around mobile. In the last 6 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 with tablets predicted to outsell PCs in 2013. This will help maintain mobile's significant momentum in attracting both consumer attention and advertising pounds,'' he added.
Video and social media advertising has also undergone a huge shift in marketing value over the last three years.
Even without a 4G network, mobile video advertising grew 1,601 per cent from £0.8 million in 2011 to £13.0 million in 2012. Total mobile display advertising (including video) increased like-for-like by 121 per cent to £150 million in 2012.
Mobile search grew like-for-like by 164 per cent to £365 million – accounting for 69 per cent of mobile ad spend. The remaining £11million of mobile ad revenue is primarily accounted for by classifieds, SMS/MMS and other smaller advertising formats.
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 on a like-for-like basis to £1.30 billion from £1.14 billion in 2011, representing a 24 per cent share of digital ad spend in 2012.
Video advertising grew 46 per cent to £160 million from £109 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 to 471 per cent.
Social media advertising grew 24 per cent to £328.4 million from £265 million. In the last three years social media spend has increased almost four-fold to 383 per cent.
Online and mobile sponsorship advertising grew 34 per cent to £65.7 million from £49 million, 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 £23.4 million from £18 million in 2011.
Paid search marketing increased 14.5 per cent on a like-for-like basis to £3.17 billion from £2.77 billion – representing a 58 per cent share of digital advertising.
Classifieds grew 6.3 per cent like-for-like to £853.8 million from £788 million – accounting for 16 per cent of digital ad spend in 2012. Recruitment classifieds showed strong growth of 7.6 per cent from £276.6 million in 2011 to £297.7 million in 2012.
FMCG overtakes finance as top advertiser category
The consumer goods sector (FMCG) overtook the finance sector as the biggest spender on digital display advertising – accounting for almost 16 per cent of display ad spend in 2012, the report said.
According to Anna Bartz, senior manager at PwC, ''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.''
The top five display advertising sectors in 2012 are completed by finance (15 per cent), entertainment & media (13 per cent), retail (12 per cent) and technology (9 per cent).
In comparison, across mobile display only, entertainment & media are the top spenders, accounting for 16 per cent of mobile display, followed by consumer goods with13 per cent, retail with 12 per cent, finance -12 per cent and technology 11 per cent.