Mobile video now fastest growing online ad format

Britons’ increasing appetite for watching video content on computers, tablets and mobile phones helped drive digital advertising spend up 16.6% to a record £3.5 billion in the first half of 2014, according to the latest IAB UK Digital Adspend report, conducted by PwC.

Video advertising on the internet and mobile phones grew by 59% year-on-year to £202 million in the first half of 2014, with mobile video advertising alone growing 196% to £63.9 million to become the fastest growing digital ad format.

Accompanying data from YouGov reveals that 73% of Britons who own an internet-enabled device watched TV programmes online in the last six months, 72% watched short online video clips and 59% watched films online. Those watching TV online do so for an average of 2 hours 35 minutes a week, compared to 1 hour 50 minutes for online film viewers and 51 minutes for video clip viewers.

Total digital, native, social and tablet

Overall, advertising on the internet and mobile phones overall increased like-for-like by 16.6% to reach £3.46 billion in the first half of 2014, up from £3 billion in the first half of 2013.

Content and native advertising spend – which includes paid-for sponsorships, advertisement features and in-feed distribution – hit £216 million to account for 21% of digital display advertising.

Social media ad spend grew 73% to £396 million, with 53% (£209.7 million) allocated to mobile.

Among media owners who submitted revenue figures to the IAB/PwC, tablet-dedicated advertising grew 160% to reach £29 million, up from £10.5 million.

Mobile

With smartphones accounting for 76% of all mobile handsets, mobile advertising grew 68% from £429.2 million to £707.1 million in the first half of 2014. Mobile now accounts for 20% of all digital advertising spend – up from 14% in the first half of 2013.

Consumer goods and entertainment

Consumer goods advertisers spent the most on digital display advertising, accounting for a 16% share in the first half of 2014, followed by travel & transport (15%) and finance advertisers (13%).

The sector was also the biggest spender on mobile display ads, accounting for a 23% share, followed by entertainment & media (21%) and technology (12%).

Digital advertising formats

Boosted by video and social media, display advertising across the internet and mobile grew almost twice the overall digital rate (16.6%) at 30.1% to £1.02 billion in the first half of 2014. With mobile display growing by 116% to £315.7 million, mobile now accounts for 31% of total digital display advertising.

Paid-for search marketing increased 11.3% to £1.92 billion in the first half of 2014, while classifieds – including recruitment, property and automotive listings – grew 14.4% to £493.5 million to make up 14% of digital ad spend.

“Mobile’s share of the digital ad pie has tripled in two years, accounting for a fifth of total spend – rising to nearly a third of display and over half of social media ads,” said Dan Bunyan, manager at PwC.

“As 4G becomes more prevalent and phone screens become larger, it will play an even bigger role in driving digital ad spend – particularly video.”

ISBA, the voice of British advertisers, has welcomed the report, with its director of media and advertising, Bob Wootton, saying: “IAB’s digital ad spend report shows encouraging trends in digital advertising.

“As the economy shows positive signs of growth, digital goes from strength to strength. Advertisers are keen to include formats such as native advertising and mobile video in their media spend, which definitely is reflected in IAB’s figures.

“It also highlights what dangers need to be addressed given the unprecedented digital growth. Calls for an increased activity and reassurance in brand safety, viewability, improved attribution models and action against click fraud are essential matters for the industry to tackle.”

Nigel Gilbert, VP at AppNexus, said: “At a time when notable voices in the industry are questioning the sustainability of the ad funded content model, it’s interesting to see the sustained growth in digital advertising.

“As an industry we need to do more to address concerns around viewability, fraud and the effectiveness of digital advertising, but as the switch to programmatic accelerates this in the UK this year, the tools are emerging to better manage the scale and complexity of this cross screen world; bringing us one step closer to realising the true potential of digital advertising.”