The UK’s digital ad market grew by 11% in 2023, reaching a total value of £29.6 billion far outpacing GDP growth of 0.1% as the nation battles a fresh recession.
The favourable figures come in direct contrast to the rest of the economy, signalling promising times ahead for the sector and spearheaded by robust growth across online entertainment.
Revealed in the Interactive Advertising Bureau’s (IAB) Digital Adspend Report with PwC, the growth has been primarily driven by podcasting (up 23%), connected TV (21%) and social video (20%).
The unrivalled engagement that online entertainment offers brands has proved too tempting to resist for advertisers, especially as the ongoing cost-of-living crisis drives more consumers to cheaper, ad-supported streaming tiers.
The continued phasing out of third-party cookies has also helped drive online entertainment growth, with channels such as podcasts and connected TV set to be less affected by the transition than others digital advertising mediums.
“As well as providing us with invaluable insight on the health of the digital ad market as a whole, the latest Digital Adspend results show how advertisers are embracing the diverse array of digital channels on offer,” said IAB UK chief marketing officer, James Chandler.
“Media that are often referred to as ‘emerging’ are taking their place as increasingly established ways to resonate with engaged audiences – whether that’s via the immersive nature of podcasts or high-impact fame factor of CTV.
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“With the impending deprecation of third-party cookies, digital advertising is undergoing a shift and we know that the year ahead will reshape the industry in new ways. In that context, it’s encouraging to see advertisers seeking out engaged environments and increasingly investing in a broad array of online solutions.”
For the first time digital out-of-home was included in the industry body’s report. The sector experienced 12% growth in 2023, taking it to a total value of £841 million – helped in large part by video which accounted for 60% of the sector’s overall spend.
Unsurprisingly given the major moves made by Tesco, Sainsbury’s and Asda over the past 12 months, retail media has grown by 12% up to a value of £283 million, as advertisers look to capitalise on the vast amounts of first-party data held by large retailers.
Mobile advertising spend also accelerated across 2023, growing by a significant 15% to £16.7 billion, in direct contrast to a 4% contraction in 2022 driven by Apple’s advertiser identifier changes.
Despite the promising growth experienced by these channels, the report found that search continues to underpin the sector accounting for 50% of the market at £14.7 billion.
PwC senior manager, Stephanie Claxton added: “Digital media continues to evolve, showcasing its adaptability and resilience.
“Growth was not only seen from emerging channels including digital out-of-home, which was included in the report for the first time, and retail media, which weathered the economic headwinds to deliver double-digit growth online; but also established channels including mobile where ad spend increased and search, which maintained its dominant market share.”
