Digital adspend hits record £7.2 billion
Advertisers spent a record £7.2 billion on digital advertising in 2014, up 14% year on year, according to the latest Internet Advertising Bureau UK digital adspend report, conducted by PwC.
The record-breaking UK figures come as it is revealed that the average British household now owns 7.4 internet-connected devices, with smartphones (1.7 per household) leading the charge, followed by laptops (1.3) and tablets (1.2).
With 40% of households now owning one tablet and a fifth owning two, tablet-dedicated adspend alone grew 118% in 2014 to reach £87.4 million, while mobile adspend was up 63% to £1.62 billion to account for almost one quarter of total digital advertising.
Boosted by video and social media, display advertising across the internet and mobile grew almost twice the overall digital rate (14%) at 26.4% to £2.27 billion in 2014, with display now accounting for 32% of digital adspend – its largest ever share.
The biggest spending sector on display ads in 2014 was consumer goods, which had a 19% share, followed by travel & transport (14%) and finance (13%). Consumer goods was also the biggest spender on mobile display ads, accounting for a 19% share, followed by entertainment & media (18%) and retail (14%).
Elsewhere, social media ad spend grew 65% to £922 million, with 56% (£517 million) accounted for by mobile, while content and native advertising spend hit £509 million to account for 22% of digital display advertising.
Video advertising grew 43% year-on-year to £442 million in 2014 – compared to just £53 million five years ago. Mobile video advertising, alone, grew 142% year-on-year to £164 million.
“Despite digital’s continued stellar performance, there remains significant growth opportunities to be exploited on mobile and tablet devices,” said Dan Bunyan, senior manager at PwC.
“These are the two areas where ownership and usage is extremely high but where advertising investment is disproportionately low. For instance, over half of web pages are viewed via mobile phones but they account for just 23% of digital spend.”
Accompanying YouGov data reveals the average British adult online is willing to pay a maximum of £1.53 a month for their email service, £1.33 to use search engines, £1.10 for video content, 92p for news websites, 88p for social media, 55p for online games and 52p for price comparison sites.
Commenting on the results, Felicity Long, head of digital at Carat, said: “With smartphones being the most commonly owned internet enabled device in household, it is good to see investment starting to reflect consumer behaviour. Increased investment will allow brands to drive forward understanding of what mobile means for their businesses and to get even closer to their consumer.
“Ad revenue is benefiting from increased consumer understanding of the value exchange required for them to access services at low cost. For our clients having a deep understanding of where their digital services sit in their consumers lives will give them a competitive edge, if they continue to challenge themselves to deliver a stronger consumer digital experience.
“On a different note, reflecting on what consumers are willing to pay, it will be interesting to see what the impact of Jay Z’s Tidal will be as the price point is way above current levels of consumer acceptability.”
Long added that both revenue increase and diversification into the brand space indicate that the digital ad space has “come of age”, but as revenue continues to increase, it is vital that agencies focus on understanding the business value of digital for clients.