IAB Research Technology

Mobile ad spend is now bigger than desktop, and here’s some things to think about


By The Drum, Editorial

October 12, 2016 | 6 min read

The IAB UK has today (12 October) released its latest ad spend study revealing that media budget invested on mobile outstripped those on desktop for the first time in the first half of the year, as total spend hit the £4.8bn mark, with video also proving a strong area of growth.

IAB reports growth in ad blocking

IAB research shows mobile display ad spend has overtaken desktop

On the opening day of the trade body’s IAB Engage event (the first to be held over two days) it released the figures with Tim Elkington, IAB chief strategy officer, declaring shift in spend a landmark moment, as advertisers’ spending habits finally tallied with consumers’ media consumption habits.

“It’s a significant moment, as mobile now overtakes desktop,” he said, pointing out that people now spend more time on their phones (which are now more akin to computers).

“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,” he added.

The study, commissioned by the IAB and conducted by PwC, shows the amount spent on mobile display ads (£802m) overtook that of PC and tablet display (£762m) for the first time during the first six months of 2016.

However, despite the total spend on desktop still exceeds that spent on mobile devices, with total spend equating to £4.7bn £3bn of that allocated to desktop (as well as tablet devices) and £1.7bn on mobile.

Paid-for search is still the dominant medium, with total ad spend on such ads amounting to £2.49bn, amounting to 53 per cent of total digital spend, with mobile accounting for much of this growth, according to Elkington.

Meanwhile, the study goes on to show that video, social and native are the fastest-growing ad formats. Spend on video ads overall grew 67 per cent to hit £474m during the surveyed period, with video now accounting for 30 per cent of all display ad spend and 37 per cent of all mobile display (see chart below).

IAB ad spend figures for 1H 2016

Elkington went on to say that the shifting dynamics were the result of media owners crafting products that reflect consumer habits, and media buyers’ willingness to invest where engagement is.

Ad spend on social media sites grew 43 per cent to £745m, 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, according to the study.

Speaking with The Drum, Jeff Parish, creative strategist at adtech outfit TubeMogul, said the shift to mobile was challenging a lot of the industry’s creative agencies.

He added: “They largely split into two buckets; you have those that are proactively coming to tech companies acknowledging that they need to change, and then you have brands that work with tech companies that then introduce you to their agency of record [which sometimes begrudgingly work with the tech company].”

For Martin Kelly, chief executive of independent media agency Infectious Media, it would be interesting to get a more granular view between how much of the £802m spent on mobile display ads is divided between mobile web, and in-app inventory.

Given the dominance of mobile display ad spend in Facebook’s earnings – 85 per cent during its last quarterly earnings call – adding that the inclusion of Facebook and Google’s earnings could skew the market average.

He added: “If you break out mobile and search, how much would that influence the figures?

“We’re beginning to see both of them dominate the market already, and if you look at these figures it does raise the issue of walled gardens … when you aggregate data at a market level it can skew what’s happening,” he pointed out.

Meanwhile, Paul Gubbins, a long-time mobile expert and UK managing director of PubMatic, said the lag between consumer media consumption (on mobile), and advertisers’ spending habits had been driven by a “perception that you cannot track conversions in mobile, which is absolutely not the case.”

He added: “You can track post-click conversions in both app and mobile web environments. Tracking post impression can still be a challenge when multiple identifiers such as cookies and device IDs are assigned to the same user, but vendors that specialize in cross-device identification have empowered advertisers to start to buy in a screen agonistic way and put audience at the heart of their plans.”

He went on to say that for these reasons, mobile ad spend will only continue to rise next year, adding that The last major hurdle to increased investment in mobile still revolves around the general lack of understanding of this device and the best ways to engage audiences on it.

“The industry has come a long way in its understanding of the challenges faced by both buyers and sellers,” he said.

“Over the past several years when it comes to segmenting and targeting audiences that in today’s digital media industry are able to move between browsers that support third-party cookies and those that don’t, not to mention sandboxed app environments that pass completely different forms of persistent identification in the device ID.”

Referencing the rise in video spend Kelly agreed with the findings of the report, adding that video spend is growing at 67 per cent year-on-year (amounting to £474m during the period). “Video is growing massively,” he said.

“You see a lot of the FMCGs investing in it,” added Kelly, pointing out that one of the driving forces behind this increase was that it gives marketers “a degree of comparability to TV … as many aren’t investing in online display.”

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