The report, produced with PwC, finds that overall spend grew by 5% across the course of the year to reach a total of £16.5 billion.
The increase is fuelled by a strong second half to the year after spend fell in the first six months of 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.
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%.
Results show that Display is the fastest-growing digital ad format, up 11%, fuelled by video and social spend - both up by 19%. This reflects wider shifts in consumer behaviour during the pandemic, with UKOM data showing that time spent with social media grew by 12% in 2020.
Meanwhile, Search continues to attract the largest share of spend across formats, up 7% year-on-year to account for 51% of all digital ad spend - growth that coincides with the explosion of the ecommerce market. Spend on smartphone ads grew by a further 10%.
Commenting on the report, Jon Mew, CEO of IAB UK, said: “When the pandemic hit, all of our predictions for 2020 went out the window. We knew it was going to be a tough year for the entire media industry, digital advertising included, and the impact continues to be felt.
“It’s brilliant news that the digital ad market has rallied and is back in growth - buoyed by spending in areas such as video and social - 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 underway. Today’s results are very encouraging and show that we’re moving in the right direction.”
Stephanie Claxton, Senior Manager, Digital & Programmatic at PwC, added: “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.”
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