The Interactive Bureau of Advertising UK (IAB) has said UK digital ad spend growth slowed to 5% in 2020 to reach a total of £16.5bn. The report, produced with PwC, looks to define spend in a year like no other.
After years of consecutive growth, with year-on-year digital ad spend growing 15% in 2019, according to the IAB's report from last year, the pandemic-inspired ad spend slump has cut growth to 5%.
IAB UK’s addition of burgeoning digital audio and podcasting to the takings also helps paint a fuller picture. But there’s disruption ahead too, with the dissolution of third-party cookie disrupting the mechanics of online advertising. And what of the grand reopening, where spend could return to OOH, cinema and more?
James Chandler, chief marketing officer of IAB UK, has already written in The Drum that adtech will never return to pre-pandemic ways.
Here are the key points of the report.
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.
What they mean
- Jon Mew, chief executive of IAB UK, said the pandemic knocked predictions out of the window and hit the entire industry. “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 recognize 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.”
- Geisla De Souza, executive vice-president of paid media at Jellyfish, said marketers were forced to “completely overhaul” their campaigns and “opt for a digital-first approach”. This put the onus on collecting the necessary data to act online while offline interactions dwindled, and on optimizing creative for these digital environments, as above the line work took a backseat.
- Geoff de Burca, chief strategy officer at MediaCom, anticipates spends to surge up as public health becomes secure and consumer confidence returns. “One of the more significant changes will be the rebalancing of OOH and digital advertising budgets as brands plan for eyeballs away from just their phones, TVs and laptops.” Some of that digital spend will be returning home. Conversely, some may not.
- He concludes: “It’s highly likely marketers will look to take advantage of the summer sun, consumer desire to get out and about and ‘digital fatigue’.”