On the 12th April, the IAB along with PwC published their findings on the growth of digital Adspend within the UK Digital Industry over the last year. You can find the full results here. Below are highlights from the study that we found interesting.
The key findings from the study indicated a 17.3% increase in online adspend within the UK which in turn generated a market worth £10.304 billion in 2016. As almost half of UK internet time is spent on smartphones, it comes as no surprise that mobile adspend rose 50.8% to £3.87 billion and accounts for 38% of all digital ad spend.
Online Performance Marketing (OPM)
The UK OPM 2016 was valued at £1.578, an increase of 12.0% from 2015. The IAB and PwC defined online performance marketing as affiliate marketing, which made up 88% of OPM and lead generation which accounted for the remaining 12%. The study captured total spend including media space “adspend,” commission on sales generated, technology spend, set-up fees, consultancy and data cleansing. The findings reveal that for every £1 spent, £12.30 was generated. This enormous return on investment illustrates how valuable the performance marketing industry is as OPM activity generated £19.4 billion in sales throughout 2016. For reference, in 2015 for every £1 spent, the return was £11.80. The graph below shows the constant growth of online performance marketing, an industry that cannot be ignored.
In the grand picture of digital marketing, OPM delivers significant brand awareness. In 2016 OPM delivered 5.6 billion clicks. The IAB and PwC estimate that OPM makes up 8-10% of UK online ad spend, 8% of UK retail e-commerce and 1% of the UK’s entire GDP. The study concluded that the biggest sectors that are making the most profit from OPM are finance and travel, however, it is interesting to note that retail and gaming are also making an impact in this space with a 14% share respectively.
Overall, the report provided great insights into what is driving the growth in the UK Digital Industry. Mobile, unsurprisingly, is driving this growth as consumers are spending more time on smartphones and therefore making more purchases on these devices.