Online display advertising surpasses £1 billion for the first time
Video tops £100m milestone as Consumer Goods and Retail drive display spend
Despite the backdrop of a depressed UK economy, advertising on the internet increased by 14.4%* to a new high of £4,784 million in 2011, up £687 million year on year.
According to the latest Internet Advertising Bureau UK (IAB) advertising expenditure report, conducted by PwC, online advertising continues to grow at an exceptional rate, and last year experienced its biggest increase in five years.
FMCG vying for top spending category as Retail makes largest gain
UK ecommerce shoppers helped Retail surface as the biggest winner in terms of overall growth in the second half** of 2011, as it became the third biggest display advertiser. Consumer Goods (FMCG) moved to second place, while Finance just held on to top spot.
The top five categories, by share of display spend, in 2011 were:
Consumer (FMCG) 15%
Entertainment & the Media 12%
Display grows 13.4% to top £1bn for first time as video passes £100m
The powerhouse of display is banners and other embedded formats, which continue to drive display forward (73% share). Growth of this format was fuelled by bigger, richer and more dynamic ads that spiked display spend by 13.4% to a high of £1,128 million (£945 million in 2010) and a 24% share of online ad spend (23% in 2010).
Video and social media grow eight-fold since 2008
Video advertising continued its incredible growth and now accounts for 10% of all online display advertising. Expenditure on online video doubled year on year to £109 million (£54 million in 2010). The format has grown more than eight-fold since 2008, when video spend was £12 million.
In 2011 banner ads on social media platforms such as Facebook, YouTube and LinkedIn, increased by 75% to £240 million – an eight-fold increase since records began in 2008.
Online is still the preferred direct response tool as search soars by 17.5%
Search marketing proved to be a recession-proof staple for direct response advertisers, recording impressive growth of 17.5% to £2,767 million (£2,346 million in 2010), and a 58% share of online advertising spend (57% in 2010).
Consumer and B2B Classifieds reach half billion for the first time
Despite a difficult market for recruitment, total Classified ads grew 5.2% to £785 million (£751 million in 2010) and a share of 16% (18% in 2010). However, consumer and B2B Classifieds (property, cars, holidays and B2B), reached the half billion milestone for the first time at £509 million (£485 million in 2010).
Mobile spend more than doubles
Advertising on mobile devices rose by 157%* in 2011, to a new high of £203million, as a result of increased smartphone ownership, the proliferation of touchscreen technology, 3G, and soaring tablet sales, which sparked a surge in interest from brands, especially in the Retail and Consumer Goods (FMCG) sectors.
Tim Elkington, director of research and strategy at the IAB, said: “Online and mobile advertising have experienced staggering growth since this study began in 1997. The 2011 results are full of breakthroughs for digital; with online display passing the £1billion barrier for the first time, proving that advertisers increasingly recognise the central role that online plays in their marketing campaigns.”
Anna Bartz, strategy manager at PwC, said: “This year’s results reflect the continued appeal of digital media – on desktop, mobile or tablet – to advertisers for both brand advertising and direct response. All formats grew, with strongest increases in video and social media, and in search. Internet adspend's 14.4% growth is exceptional when compared to an estimated advertising growth of less than 2% across all media in 2011.”
Drivers and Insights
Online audience grows – on average in 2011 there were 39.7 million people online each month – 375,000 more than the monthly average in 2010 (source: UKOM and Nielsen, Dec 2011).
The UK is addicted to social media – social networks account for 27% of all the time spent online in the UK in 2011 (source: UKOM, Jan – Dec, 2011).
Mobile and social behaviour - 38% (18.8 million) of the UK mobile audience accessed social media via a mobile device in the three months up to January 2012, an increase of 35.6% year on year (comScore Jan 2012).
We’re prolific internet users - Throughout 2011 UK internet users visited an average of 2,520 web pages across an average of 83 different web sites each month. (source: UKOM, Jan – Dec, 2011).
Bigger is better for display advertising – the Billboard display format offers nine times better ad awareness levels compared to traditional formats. The Wallpaper format provides seven times the level of message association, compared to traditional formats.(source: Size Matters, IAB, March 2012).
Online video increases brand awareness – 40% of marketer respondents plan to use online video to increase brand awareness in next 12 months (source: IAB B2B Snapshot Survey, Sept 2011).
We’re a nation of video devotees - 27.3 million, of the 38.5 million people who went online in the UK on their PC in Feb 2012, viewed streamed content. (Source: UKOM/Nielsen, Feb 2012)
Touchscreens have revolutionised advertising as 27% of respondents claim they are more likely to interact with ads because they have a touchscreen (Three Device Lives, IAB, Dec 2011).
* Total and by format growth is reported on a like for like basis
**Industry display sector shares only measured on a half yearly basis
To provide the most accurate like for like growth rates, only companies that submitted in 2010 and 2011 are included in the year on year growth calculations
The Internet Advertising Bureau (IAB) is the trade association for digital advertising. With over 700 members, it's run for the leading media owners and agencies in the UK internet industry. Online is an exciting and fast-growing medium and our job at the IAB is to work with members to ensure marketers can identify the best role for online and the emerging mobile market, helping them engage their customers and build their brands. Through the dissemination of research and the organisation of regular events, we aim to put digital on the agenda of every marketer in the UK, acting as an authoritative and objective source for all internet advertising issues whilst promoting industry-wide best practice
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.