Digital Adspend 2023: Digital ad market grows 11% to £29.6bn

Advertisers are seeking out digital ad formats that capitalise on the engagement offered by the rich array of entertainment online, according to the results of the IAB’s Digital Adspend report for 2023, conducted with PwC.  

Spend on podcast ads grew by 23% year-on-year, while connected TV (CTV) was up 21% and social video continued to perform strongly with annual growth of 20%. Growth rates in all three categories outperformed the digital ad market as a whole - underscoring the appeal of these channels, which stand to be more immune to upcoming cookie changes than other forms of digital advertising. 

The latest Digital Adspend data shows that advertisers’ spend is following consumer behaviour, with our Digital Dividend research underscoring the value of entertainment focused digital media to people. In fact, 28% of the population say that they have used ad-supported online entertainment more during the cost-of-living crisis. 

Overall, the UK digital ad market experienced solid growth of 11% to £29.6bn last year, far outperforming the UK’s GDP which rose by 0.1% in the same period. Other key takeouts from the report include:  

• Digital out-of-home has been included within the report for the first time, showing that the market grew 12% in 2023 to £841m 
• Digital retail media spend was also up 12% to £283m1 as the sector continues to prove a popular route for advertisers looking to tap into retailers’ wealth of first-party data 
• Spend on mobile advertising has accelerated vs 2022, when it slowed in the wake of Apple’s IDFA changes. In 2023, investment picked up, growing 15% to £16.7bn
   

Search continues to underpin the industry, accounting for 50% of the market at £14.7bn. Display grew 12% to £11.3bn fuelled by video, which accounted for over 60% of total display spend for the first time.  

Commenting on the report, James Chandler, CMO at IAB UK, said: “As well as providing us with invaluable insight on the health of the digital ad market as a whole, the latest Adspend results show how advertisers are embracing the diverse array of digital channels on offer. Media that are often referred to as ‘emerging’ are taking their place as increasingly established ways to resonate with engaged audiences - whether that’s via the immersive nature of podcasts or high-impact fame factor of CTV. 

“With the impending deprecation of third-party cookies, digital advertising is undergoing a shift and we know that the year ahead will reshape the industry in new ways. In that context, it’s encouraging to see advertisers seeking out engaged environments and increasingly investing in a broad array of online solutions.”