Insight: Mobile ad spend overtakes desktop for the first time – a sign of things to come?

The PwC / Internet Advertising Bureau UK Digital Adspend report also shows the amount spent on mobile display ads (£802 million) overtook that of PC and tablet display (£762 million) for the first time.

The study found that advertisers increased spend 16.4 per cent in the first half of 2016 to £4.78 billion – the highest first half growth rate for two years.

Unsurprisingly the study also reported that women and youngsters aged 16-24s now spend more internet time on their mobiles than on PCs.
This significant development reflects the rapid growth of time spent on smartphones: UKOM, the official body that measures online behaviour, shows that in June, UK adults spent 46 per cent of their internet time on a mobile compared to 41 per cent on a desktop or laptop – rising to 52 per cent on mobiles among women and 61 per cent among 18-24s.

Total mobile ad spend, including search and classifieds, increased by 56.1 per cent in the first half of 2016. Consequently, 36p in every £1 spent on digital advertising now goes to mobile, up from 4p just five years ago.

“Mobile use today is more akin to a computer than merely a phone, as people increasingly rely on them as their information, entertainment and communications hub,” said the IAB UK’s Chief Strategy Officer, Tim Elkington. “People now spend more time online on their mobile than they do on a computer. Consequently, marketers devote more ad spend to mobile as they increasingly cotton on to the fact that people essentially carry an ad platform with them wherever they are.”

Accompanying online YouGov consumer data shows that 82 per cent of smartphone owners check their phone within an hour of waking up, while 86 per cent of 18-34s do so within half an hour. For 1 in 5 of those looking at their phone soon after waking up, checking social media is the first thing they do, rising to 29 per cent of 18-34s. The smartphone is now the primary source of news for 30 per cent of owners, rising to 42 per cent among 25-34s.

Video, social and native are fastest-growing formats.

Spend on video ads overall grew 67 per cent to hit £474 million during the front half of 2016. Driven by rising video, TV and film viewing on smartphones, mobile video spend alone grew 129 per cent. Consequently, video accounts for 30 per cent of all display advertising but 37 per cent of mobile display.

Outstream and in-read video ads (those appearing anywhere on the page, not before video content) saw a massive 440 per cent rise and now account for 40 per cent of video spend, whilst ‘traditional’ video ads (which play before, during or after an online video) grew 17 per cent.

Annual growth of key digital ad formats

Ad spend on social media sites grew 43 per cent to £745 million, meaning nearly half (48 per cent) of display spend now goes on social. Social media spend on mobile alone grew 64 per cent, so mobile now accounts for 80 per cent of spend allocated to social.

Content and native advertising spend – which includes ‘advertorials’ and ads in social media news feeds – increased 29 per cent to £451 million.

Consumer goods are biggest display advertisers

Consumer goods brands – such as food, toiletries and clothing – spent the most on display ads (e.g. banners and video), responsible for 18.3 per cent of spend, followed by travel & transport (16.4 per cent) and automotive (11.7 per cent).

Driven by mobile, which grew 61 per cent, paid-for search overall grew 18.1 per cent to £2.49bn – a 52 per cent share of digital ad spend. Classifieds, including recruitment, property and automotive listings, grew 3.6 per cent to £699 million (15 per cent share).

“The phenomenal rise of mobile search reinforces the idea of mobile as the ever-present ad medium,” says Dan Bunyan, Senior Manager at PwC. “It means advertisers no longer have to wait to target people at specific ‘touchpoints’ during the day. Instead they can deliver highly relevant, localised ads with unprecedented immediacy, such as reacting to people reaching a specific place, looking for a particular product or even the weather changing.”

The IAB has measured the size of the digital advertising market in the UK in conjunction with PricewaterhouseCoopers (PwC) since 1997