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UK digital ad spend hits £10bn mark thanks to the rise of mobile, says IAB study

48% of UK internet time is spent on smartphones according to the IAB

Digital ad spend in the UK increased by 17% in 2016 to reach £10.3bn, marking the fastest growth rate for the industry in nine years.

A report from PwC and the IAB UK has found that investments in the space are rising at a superheated pace, driven by advertisers’ need to tap into the rising trend of mobile video and the fact that close to half of all of UK internet time is now spent on smartphones.

The industry has never crossed the £10bn threshold before, and the last time annual growth was higher was in 2007 (38%).

In total, spend on mobile campaigns rose by just over 50% to reach £3.9bn. Overall mobile investments now account for 38% of all digital ad spend in Britain, and throughout 2016, spend on mobile video ads specifically doubled to £693m.

“The rise in people consuming mobile and video content has accelerated digital’s growth rate to its highest level for nearly a decade,” said the IAB UK’s chief marketing officer, James Chandler.

He added that reaching the £10bn threshold has been made possible by “brands breaking the mould, trying innovative formats and making the most of video to reach and amaze people.”

The figures come in the aftermath of an ongoing debate around the transparency and brand safety of platforms like YouTube – which gets more than half of its views from mobile devices according to Google.

“It’s impossible to ignore the issues the industry is facing at the moment, but digital never stands still and these figures are testament to the long-term strength and power of digital,” asserted Chandler.

James Hilton, global chief executive at M&C Saatchi Mobile believes the increase in mobile budgets, and therefore attention and commentary, naturally brings greater focus on transparency and accountability.

"There are lots of moving parts to this; advertisers, agencies and consumers all play a role in a safe, open and most importantly free, internet. All the data and tools available mean advertising should be better and safer, and this is a key area of focus for us," he said. "However, although mobile now dominates time spent online, this is by no means a mobile problem. One of the main issues is the industry still thinks desktop first when it comes to brand safety and fraud, therefore platforms and standard must evolve to mirror the mobile-first consumer."

The IAB's figures are from 2016, meaning they won't have been impacted complaints around Google's commitment to transparency but Gareth Owen managing director at Roast thinks it has has never been a more crucial time to be "demanding complete visibility of spend."

"Whether that be via placement reports, using anti-fraud partners or by reporting margins transparently," he said, "partners, suppliers and agencies should be more accountable than ever before, to ensure any fraudulent activity is as minimised as possible."

A rise mobile video ad budgets coincides with YouGov data which shows that in the last six months, 54% of British smartphone users watched video clips on their phone, with two-in-five of these saying they do more of this than they did a year ago. This behaviour is much more prevalent among 18 to 24 year olds, with 75% using their devices to watch short clips versus 44% watching TV.

The statistics from the IAB also come hot on the heels of comments from WPP boss Sir Martin Sorrell who less than one month ago shared his belief that mobile was an “untapped” multi-billion dollar opportunity which was being held back because of inadequate technology.

“People are spending about a quarter of their time on mobile, and yet it only accounts for around 12% of spending,” he said. “That’s out of kilter and it has to change."

He continued: “Technology, bandwidth, the devices, the screens are not big enough, not good enough yet. There’s a lot of technological development to come."

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Rebecca Stewart

Rebecca Stewart is The Drum's breaking news and social media reporter, covering how brands and media companies are using platforms like Snapchat, Facebook, Twitter and beyond.

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