Modern advertising as we know it, has flourished in the UK for well over a century, thanks to the innovative strategies of its marketers, robust regulatory framework, and diverse market opportunities. From iconic campaigns like "Keep Calm and Carry On" to cutting-edge digital marketing techniques, UK advertisers have continually pushed the boundaries of creativity and effectiveness.
As the digital advertising landscape changes at breakneck speed, businesses must be proactive in adapting to new trends and technologies to stay ahead of the curve. Those who fail to keep up risk falling behind their competitors.
With that in mind, we look at the latest statistics and insights that are influencing the future of the advertising industry in the UK, with a focus on key trends such as programmatic advertising and the rise of mobile platforms.
Table of contents:
Advertising in the UK: An Overview
The UK advertising industry is one of the most lucrative and competitive markets in the world. In 2022, it is estimated that the UK spent a total of 39.4 billion pounds on advertising, making it one of the highest-spending countries in Europe. The digital ad market has been growing rapidly over the past few years, with £12.5 billion spent on digital ads in H1 2022 according to Interactive Advertising Bureau (IAB) UK. This is a 15% year-on-year increase and is expected to continue to grow as more businesses move online.
A survey by the Incorporated Society of British Advertisers (ISBA) and Ebiquity, a media investment analyst, found that 40% of advertisers are cutting spending on offline media formats. Instead, a third of advertisers will focus on digital formats, while another 30% plan to prioritize brand-building campaigns. Over 50% of respondents will increase their spending on services such as ITVX, All 4, and Samsung connect TVs. Marketing strategies will take a short-term approach with quick bursts of brand marketing as needed.
Even so, the overall value of the UK's advertising market is still set to grow by 9.2% this year, reaching £35 billion, according to The Advertising Association/WARC Expenditure Report.
The UK Ad Market: Growth and Trends
According to recent studies, the market value of advertising in UK is estimated to be $27.74 billion in 2027, with a projected Compound Annual Growth Rate (CAGR) of 10.45% from 2023-2027.
From 2018 to 2023, digital advertising and marketing agencies in the UK have experienced an average annual growth rate of 10.5%, thanks to the rise of eCommerce and mobile device usage for shopping and information access.
This is in line with similar growth experienced by top advertising agencies worldwide, with a projected compound annual growth rate (CAGR) of 5.1% from 2022 to 2023, and estimated revenue reaching $391.6 billion by 2023. Additionally, online advertising is forecasted to have a CAGR of 14.3% over the next five years (2022-2027).
Popular Ad Media in the UK
Despite the rise of online media channels, traditional media like TV and radio still remain popular ad formats in the UK. This indicates that businesses should not overlook traditional advertising platforms as strong tools to build credibility and trust. Many consumers, especially aged 30 or above may trust traditional media more than social media advertising.
That said, digital media, including online video and social media advertising, are expected to account for more than three quarters of all media spending by 2025, and businesses should plan to recalibrate their marketing spend accordingly.
Online video advertising in the UK has grown rapidly in recent years and has become one of the most popular advertising formats. In 2021, digital video ad spend reached 5.5 billion pounds, making up nearly a fourth of the total digital ad spend of 23.5 billion pounds in the UK that year.
Traditional Advertising in the UK
Traditional advertising in the UK has certainly seen a gradual decline in recent years as digital media and online advertising has become more popular. This is due to the convenience and cost-effectiveness of digital media, as well as its ability to reach a wider audience. Despite this, it would be a folly to presume that traditional advertising is completely dead.
According to Statista, television remains the most popular form of traditional advertising in the UK with a share of 33%, followed by radio (17%), out-of-home (14%), newspapers (11%), and magazines (5%). In terms of spending, television accounts for 40% of total ad spend, followed by out-of-home (15%), radio (13%), newspapers (12%), and magazines (10%).
Recent studies have shown that traditional advertising is still effective when used strategically. For example, according to a study by Thinkbox, TV ads are twice as effective at driving sales than online display ads. Additionally, new research has found that outdoor or out-of-home (OOH) advertising is more effective when combined with other channels such as TV or radio.
Digital Ad Market in the UK
The digital advertising market in the United Kingdom is growing rapidly. This can be attributed to the increasing popularity of digital media platforms such as social media, mobile apps, and streaming services.
Mobile in-app advertising has experienced a remarkable growth in recent years. In 2021, mobile advertising spending in the UK reached 14.13 billion pounds, which represents 60% of the total digital ad spend in the country. According to Statista's research, the UK had the highest per capita digital ad spend in Europe in the same year. With more people using their mobile phones for entertainment and information, this trend is likely to persist in the future.
Key Digital Ad Market Drivers in the UK
Thanks to technology, big and small businesses alike can now reach their target audiences more effectively online. As a result, there's a growing need for digital advertising and marketing services as companies seek to take advantage of these new opportunities.
Furthermore, rising disposable incomes have enabled consumers to spend more on digital products and services, leading to an increase in spending on digital advertising services. This trend is expected to continue into the future as more people gain access to the internet and become comfortable with using it for their daily activities.
On the supply side of things, there has been a growing trend towards programmatic buying of online ads in the digital advertising industry. This approach to purchasing ad inventory uses automated software to place ads in real-time, allowing for a more targeted and efficient advertising process. This trend is expected to continue in the foreseeable future, making it an opportune time for businesses to invest in contextual advertising.
Digital Advertising Trends in the UK
More brands in the UK are joining the digital advertising bandwagon each year. Here are some of the key trends that are driving this growth:
- Mobile Advertising: Mobile advertising is a highly effective way to reach customers as mobile devices become more popular for online browsing. The mobile advertising market in the UK was valued at $18.8 billion in early 2021 and is projected to reach $29.3 billion by 2025.
- Video Advertising: Video ads are now a crucial aspect of digital marketing strategies as they provide an engaging approach to connecting with potential customers. The Video advertising sector in the United Kingdom is expected to expand by 6.27% (2023-2027) with a market volume of $14.36 billion anticipated in 2027, based on a report from Statista.
- Social Media Advertising: Businesses can effectively target their audiences through social media platforms such as Facebook and Instagram, which offer powerful advertising capabilities. According to projections, ad spending on social media advertising is expected to reach $13.45 billion in 2023 and is predicted to have an annual growth rate of 6.03% (CAGR 2023-2027), resulting in a projected market volume of $17 billion by 2027.
- Programmatic Advertising: Programmatic advertising is becoming increasingly popular among advertisers due to its efficiency in targeting specific audiences with tailored messages. According to Insider Intelligence, programmatic ad spending in the UK has reached £7.90 billion ($10.09 billion) in 2021 alone.
Digital Ad Market Challenges in the UK
Although digital marketing has seen widespread adoption, it is crucial to acknowledge that it is not immune to the pitfalls that often plague advertising. One of the key challenges faced by advertisers in the digital landscape is navigating the demands of data privacy regulations while still creating engaging content that avoids the common fallacies of advertising, such as hasty generalization, scare tactics, and emotional appeals.
Furthermore, the pandemic introduced new challenges for marketers, including reduced spending by businesses and the need to adapt to the ever-changing market for digital-first consumers. Several businesses continue to grapple with these challenges even though the immediate effects of the pandemic have subsided.
Digital marketing relies heavily on tracking consumer behavior online, and changes to data privacy laws have certainly impacted the industry in a big way. For instance Google’s big move towards third-party cookie deprecation is seen as a major challenge to digital advertising.
In 2021, the UK digital advertising industry’s big focus was on creating a more accountable ecosystem by developing addressable solutions to replace cookies. However, challenges lie ahead, such as evolving GDPR laws and the Online Safety Bill, which could impact the industry.
Digital ad publishers must be agile and proactive in adapting to changes and guiding customers through the evolving privacy landscape. By committing to efficiency and building tech that can pivot rapidly, the industry can overcome these challenges and prioritize consumer trust as the key measure of success.
The complexity of digital communication tools is another challenge for many marketers, as they need to continually upskill themselves in order to stay ahead of their competition. New tools and technologies are constantly being introduced to make the most of the rapidly evolving digital landscape, and digital marketers need to be adept at gaining expertise over them in order to hit the ground running.
Digital Advertising Market Scope in the UK
The UK's advertising industry is highly competitive, with digital media gaining ground over traditional media. To stay ahead of the curve, businesses should keep up with the latest trends and statistics. Advertisers should take note of the increasing demand for digital advertising services, including online video and social media marketing, while recognizing that traditional media platforms such as television and radio still play an important role.
For digital publishers looking to maximize their ad revenue, Publift offers cutting-edge programmatic advertising technology paired with impartial and ethical guidance. Contact Publift today to learn you can get the most out of the ads on your website or mobile apps.
Frequently Asked Questions
What Is the Digital Advertising Market Size in the UK?
The digital ad market in the UK is projected to reach a market volume of $55.60 billion in 2027, according to Statista Market Forecast. This represents an 8.33% growth rate between 2023 and 2027.
Who Are the Major Digital Advertising Market Vendors in the UK?
Major vendors in the UK digital advertising market include Meta, which places ads on its Facebook and Instagram social media platforms, as well as Google Ads, Microsoft Advertising, Verizon Media Group, Oath (now Verizon Media Group), Amazon Advertising, Twitter Ads, LinkedIn Ads, and Snapchat Ads.
What Is the Future of Advertising in the UK?
The future of advertising in the UK is set to be mainly digital, with emphasis on automation and personalization. Statista reports that digital search ad spending in the UK is predicted to rise from $11.7 billion in 2021 to $17.9 billion in 2026. Despite COVID-19's impact on the industry, this growth forecast indicates the potential for sustained industry expansion.