Video ad spend in the UK grew 9 percent in 2022, outpacing display at 6 percent, according to IAB UK’s latest Digital Ad Spend report.
Conducted alongside PwC, the study found digital spend reached £26.1 billion, an 11 percent increase on 2021. The findings show the market continuing to grow since the pandemic-fuelled ad spend boom, rising 56 percent since the start of 2020.
IAB noted that macroeconomic pressures, the cost-of-living crisis and the market impact of Apple’s App Tracking Transparency policy created a challenging year for advertisers, who embraced emerging technology and connected devices to keep pace with changing consumer habits.
Going not-mobile
While search accounted for more than half of digital spend (£13.1 billion), video budgets were up 9 percent on 2021, largely thanks to investment in outstream formats. Display spend also grew by 6 percent, hitting £10.4 billion, mostly driven by standard display ads.
But compared with pre-pandemic results, when digital spend was dominated by mobile advertising, 2022 saw desktop spend (+14 percent) outstripping mobile (+8 percent) “for the first time since records began.” This shift coincides with Apple’s ATT changes, reflecting harsher conditions for mobile advertising. Nevertheless, mobile retained the lion’s share of the market at 58 percent.
Alongside those structural changes, evolving media consumption boosted investment in areas such as wearable devices, in-car advertising and especially podcasts, which grew 32 percent to reach £76.3 million.
Retail therapy
The report also tracked retail media spend for the first time, acknowledging the prevalence of a channel set to surge in 2o23, as further privacy restrictions force advertisers to lean more heavily on first-party data. Retail media investment totalled £176.4 million in 2022, and is forecast to climb this year, as more brands and agencies realise the value of retailer data.
“It’s hugely significant that digital retail media is in the IAB’s 2022 Digital Adspend report for the first time,” said Simon Lonsdale, Strategy Director at Tesco and dunnhumby’s Media and Insight Platform. “While various forecasts and estimates have been published over the past few months, this is the first official cross-market spend figure for the UK-based market, which reflects the growing importance of retail media to advertisers.”
The UK figures fall broadly in line with the US market, where video and retail media are also driving double-digit growth. But the US additionally saw ad budgets migrating from search, whereas search spend in the UK grew by 13 percent.
Resilience and opportunity
IAB said the results highlighted the “resilience and opportunity” of an advertising industry undergoing a period of economic and structural change, as well as tough comparisons to the past few years.
“Not only was 2022 challenging for our industry, as it was for the entire UK economy, it also followed a year of stratospheric, pandemic-induced growth in 2021,” said IAB UK CEO Jon Mew. “In this context, it’s testament to the resilience of digital advertising that the market has maintained double digit growth in 2022 – and astounding that it has grown by 56 percent since the pandemic began.”
“Today’s results also reflect the growing opportunities for advertisers to resonate with audiences in new ways,” he added. “Of course, search and display spend still underpin the digital ecosystem, but the UK’s flourishing retail media market – officially sized for the first time in this report – alongside the continued growth of podcasting, show how digital is diversifying to offer advertisers more choice and more immersive routes to connect with consumers.”
