During the pandemic, ad spend growth slowed in many markets. In the UK, it only grew 5% in 2020 (to reach £16.5bn) vs 15% growth before. Digital audio is one of the key drivers, with podcast spend up more than 40% and strong programmatic trading. Hear how audio is getting bigger and easier.
The report, produced with PwC, found that the increase is fuelled by a strong second half to the year after spend fell in the first six months of 2020.
Key findings:
- Despite the pandemic, UK digital ad spend increased by 5% year-on-year to reach a total of £16.5bn in 2020.
- This was boosted by the addition of the UK digital audio market, which grew by 17% year-on-year to a total of £103.7m. Podcast spend was up 43%. These mediums are increasingly traded programmatically.
- Social display was the fastest-growing ad format, up 19%. Advertisers followed the eyes of locked-down audiences, and UKOM data says that time spent with social media grew by 12%.
- Video display also was up 19%, meanwhile non-social display – including standard display banners – fell by 2%.
- Search accounted for 51% of digital ad spend, up 7%, buoyed by retail’s newfound dependency on e-commerce. Affiliate marketing grew by 10% to £627m.
- Spend on smartphone ads grew by 10%.
- Classified spend fell by 30% to a total of £976m – showing a managed decline and a steep fall in 2020.
In a quarterly comparison, PwC estimates that Q1 2020 saw investment in digital ads grow by 10%, before dropping sharply by 20% in Q2, and then bouncing back by 10% in Q3 and 18% in Q4.
Rise of audio
Significantly, this year’s Digital Adspend report includes digital audio and podcasting data for the first time, a move that reflects the growth of audio within the digital landscape.
Overall, the digital audio market grew by 17% year-on-year to a total of £103.7 million, including podcast spend, which rocketed by 43%.
For the first time this year, #IABAdspend includes digital audio & podcasting data 🎙️▶️
Overall, the digital audio market grew by 17% year-on-year to a total of £103.7 million, including podcast spend which rocketed by 43%.
View the full report ➡️https://t.co/E5kwZLT9Br pic.twitter.com/wyX5uyO5FB
— IAB UK (@IABUK) April 21, 2021
Results show that Display is the fastest-growing digital ad format, up 11%, fuelled by video and social spend – both up by 19%.
Meanwhile, Search continues to attract the largest share of spend across formats, up 7% year-on-year to account for 51% of all digital adspend – growth that coincides with the explosion of the e-commerce market. Spend on smartphone ads grew by a further 10%.
Commenting on the report, Stephanie Claxton, senior manager, Digital & Programmatic at PwC, said: “In this year’s Digital Adspend report, we are seeing new areas of spend gaining ground in line with changing consumer habits and behaviour.”
“In particular, the staggering growth of podcast spend indicates the growing opportunities for brands in the audio space. Just as when we first started measuring mobile advertising back in 2008, it will be fascinating to see how this area evolves.”
Jon Mew, chief executive of IAB UK, said: “It’s brilliant news that the digital ad market has rallied and is back in growth – buoyed by spending in areas such as video, social and podcasts – but it’s important to recognise that this growth won’t be felt by all areas of the digital ad industry and that recovery is still under way. Today’s results are very encouraging and show that we’re moving in the right direction.”
Industry comment
Faye Daffarn, Managing Director, UK, Tug, said: “The IAB’s latest report reflects what we saw last year, with search and audio at the forefront of many digital advertising campaigns. With content consumption habits changing rapidly, it’s becoming increasingly clear that digital hasn’t just prevailed because UK citizens have been stuck inside – instead, consumers have enjoyed the unique interactive experiences provided during lockdown.
“Looking ahead, the winners will be the value-adding brands that can adapt to offer ‘phygtail’ experiences by utilising first-party data to connect both in-person and online experiences. Programmatic can give advertisers this flexibility, allowing them to optimise campaigns based on this first-party data and therefore keep up with constantly changing market conditions. Not only will this provide brands with much needed value for money through measurable results backed by data, but will also become even more important with the sun setting on third-party cookies later this year.”
Bill Swanson, EMEA Strategy Lead, IRIS.TV, said: “With connected TV (CTV) environments gaining popularity thanks to shifted consumer habits throughout the past year, it’s unsurprising the growth experienced in the digital ad market for 2020 was largely fuelled by video. However, despite ad spend rallying in this area in H2 2020, there are still reservations about the CTV ecosystem – namely transparency and safety concerns, which are hindering wider adoption into the marketer’s media mix.”
“To alleviate this concern, the ability to utilise video-level data at scale will be key. This means ensuring that the necessary data can be securely onboarded and connected with the programmatic advertising ecosystem in a neutral, privacy-first way. Only then will marketers be able to move beyond the silos of the past and optimise programmatic CTV ad investments.”
Philip Acton, Country Manager, UK & BeNeFrance, Adform, said: “While still in its recovery phase, the digital ad market remains buoyant, spurred on by a rise in spending across video and audio. Podcast spend alone received a boost of 43% while display, the fastest growing format, experienced an 11% increase as a result of an injection of video and social investment. These findings show that not only is digital consumption continuing to see encouraging upward shifts, but that it’s occurring across devices. Additional research from Cisco reports that by 2025, the number of networked devices per person is expected to climb to 9.27, seeing increased opportunity for integrated, omni-channel marketing strategies.”
“Moving further into 2021, advertisers must learn how to forge powerful and personal connections between brands and people through multiple devices at a given time. There will need to be a tighter focus on ensuring users don’t get ad fatigue, and the ability to build sequential narratives that tell a cohesive story across formats. Furthermore, bridging the gap between devices with respective tracking information will be imperative to success, where historically this has been one of the main challenges with cross-device advertising.”
Ross Nicol, VP EMEA, Zefr, said: “Despite the challenges of the global pandemic throughout 2020, digital advertising managed to not only bounce back by the end of the year, but actually record further growth. It’s no surprise that strong spending on video and social was a prominent factor in this overall growth – up by 19% year-on-year – and both are on track to remain at the forefront of media campaigns in 2021.
“While the industry is moving in the right direction, one consequence of Covid-19 was that it highlighted major shortcomings in blanket legacy contextual targeting techniques, such as broad keyword labelling, which meant advertisers missed out on associated revenue opportunities.
“After turning to digital during the pandemic, consumers are now demanding a better, more relevant ad experience. For advertisers to reach and truly engage with this new digitally-savvy audience, they need to go beyond keyword associations, and work with brand suitability data partners to banish waste inventory on video platforms.”
Lucy Hinton, Head of Client Operations, Flashtalking, said: “The IAB’s latest report shows that digital advertising was resilient enough to weather the initial Covid-19 storm, and has even made gains during a difficult 2020 – with investment rising by 18% in the last quarter of the year. But the challenges of the past few months have further highlighted the importance of making the most of ad budgets. And changing consumer behaviour means it’s also vital to be able to reach evolving audiences with relevant campaigns.”
“The strong growth of video during 2020 – up 19% year-on-year – is a good indication that marketers recognise the value of engaging, visual ads. Premium ad formats and data-driven creative will be key to the continued growth in the sector, along with a willingness to recognise and tackle fraud, and improve measurability across an ever-expanding range of content and platforms. A transparent and fair ecosystem will ensure consumers get the ad experience they deserve, and marketers get the maximum performance from their budgets, encouraging them to invest more in the future.”
Zack Sullivan, UK CRO, Future, said: “It’s great to see that despite the unprecedented challenges the digital advertising industry faced in the past year, reports are still showing growth for the sector. With the world forced to make the shift to online, the pandemic brought a huge e-commerce opportunity, which has inevitably contributed to these positive figures – and will continue to do so.”
“We recently conducted a study that found 86% of the nation will continue to spend online post-pandemic, with just 11% claiming to not enjoy online shopping at all. In response, advertisers must prioritise online engagement to win in the increasingly competitive e-commerce space.”
“Our research also found that articles on trusted sites (43%) and professional reviews (36%) beat the opinion of family and friends (34%) when it comes to informing purchasing decisions – even more so when looking specifically at Future’s audience (47%, 43% and 36% respectively) – making these trusted environments a key battleground for advertisers in 2021. Established media brands that deliver a combination of high-intent audiences, quality content, and customer loyalty will become vital partners for advertisers to drive increased sales and impressive ROI’s this year.”
Nick Morley, EMEA Managing Director at Integral Ad Science (IAS), said: “The IAB’s reported growth in digital ad spend is a positive outcome from a year full of transformative global events and increased digital content consumption. In 2021, the UK recovery will be expected to accelerate and benefit from ad spend that migrated from other channels and strength in e-commerce.
“Yet, this uptick in digital content consumption was coupled with increased brand risk levels across H2 2020, according to IAS’s latest Media Quality Report. In fact, brand risk hit the same levels as 2017 – a year defined by tragic domestic events and brand safety scandals. Looking ahead, brands looking to effectively spend increased digital advertising budgets and navigate the ever-evolving digital landscape, must consider not only the environment, but also the context and sentiment of the content in which their ads appear. For example, the pandemic was the leading news story throughout 2020, however, not all pandemic-related content poses a negative or harmful risk to a brand. Advertisers should avoid inadvertently blocking high-quality, contextually suitable inventory, that provides them with an opportunity to engage with audiences.”
Artur Semionov, Head of Product & Innovation EMEA, Xaxis, said: “The growth of digital advertising spend in the UK, despite ongoing challenges and uncertainties, is a testament to the innovative work being done to ensure ads reach and resonate with consumers, where they’re choosing to spend time.
“Video display stands out in the findings, with spend up 19% in 2020. Much of this increased investment will be due to the creative new ways marketers can measure video advertising and ensure efforts work towards business outcomes, from omnichannel solutions to QR codes within Connected TV ads. As video becomes more integrated across formats, channels and platforms we will see even more capabilities open up for marketers in 2021.”
Pablo Dopico, Head of Gaming & EMEA Agencies, VidMob, said: “For consumers in 2020, social platforms provided the perfect place for engaging, uplifting and immersive content; but it went beyond that, with platforms also making great strides with zero-friction, in-ad shopping opportunities while physical shops remained closed. Brand advertisers really seized this chance to connect with current and new consumer segments through creative campaigns.
“Creative will soon become the most important driver of digital campaign performance. As the industry continues to shift towards more data privacy awareness and regulations, the challenges this poses in the handling of consumer signals will affect digital advertisers across every platform; creative can help mitigate signal loss with a new type of first-party data that helps brands pinpoint the details in ads – such as audio or visual details – that drive purchase, clicks or views.
“The digital advertisers that continue to rely on delivery optimisation algorithms while overlooking creative data will be in for a difficult time in 2021, despite recovering digital adspend. We are entering an era of intelligent creative and digital marketers should be paying more attention to its role in the anatomy of ad impact.”
Filippo Gramigna, CEO, Audiencerate, said: “The resilience of the digital ad market is reflected in this report, highlighting that it is on track to overcome the impacts of the pandemic. But with major changes continuing to challenge the industry, in particular how it can use third party cookies and other identifiers, this isn’t a time to sit back and relax. Digital marketers need to be thinking about their first party data strategies; how to secure consented data to then enrich it and activate it. They have the opportunity now to evolve for the better and use the innovative tools available – such as predictive audience modelling, identity resolution and analytics – to access the granular data needed to boost efficiency in their advertising campaigns and provide strong ROI. As 2020 has shown us all, the ability to be agile and adapt to market needs is essential for successful advertising strategies, and utilising the technology that allows this is key to demonstrating adspend value in 2021.”
