Digital advertising growth against the odds

For the past 23 years, IAB UK and PwC have been measuring and reporting on the size of the digital advertising market. From the early days of dial-up to the rise of mobile and beyond, charting digital adspend across the years has been (no spoilers here) a story of gravity-defying growth. From 1997 to 2019, the market grew by 193,271%, a figure that feels impossible to get your head around until you consider how digital has simultaneously transformed pretty much every area of our daily lives. Each year we’ve charted new milestones and heralded the seemingly unstoppable rise of spend, while always staying attuned to signs of the inevitable slowdown that would no doubt come.

Well, it finally has.

Today, we publish 2020’s Digital Adspend report. It shows that, for the first time since the financial crisis of 2009, the digital ad market saw single-digit growth last year - up by 5% in total. That’s a 10 point year-on-year fall on 2019 and, pre-pandemic, would have sent shock waves through the industry, ushering in headlines about the demise of digital. However, in the context of the past year, I see these results as anything but shocking. Given the seismic change we have been through and the battering that all parts of the media industry have taken, 5% growth isn’t a sign of a weakening sector - it’s a sign of a resilient one.

This time last year, we published 2019’s Adspend report with no fanfare at all. The data showed 15% growth, a strong story that was outstandingly out of kilter with the reality we had all just been plunged into. Not shouting about it seemed the only course of action as advertisers pulled spend and we collectively, nervously waited to see the impact that the pandemic would have on advertising. Today’s results show that while digital hasn’t escaped that impact, spend is starting to recover. Looking beyond the market total for 2020, we get a better insight into what’s fuelling this recovery.

Unsurprisingly, social display spend has surged - up 19% in 2020 - while video investment also outstrips overall growth with a 19% increase. For the first time, we’ve included digital audio in this year’s report, reflecting its increasing significance to advertisers, with the sector seeing a 17% year-on-year growth rate, largely driven by podcasting which is up by a massive 43%. Yes, the total value of the digital audio ad market is currently relatively small - £103.7 million - but that’s a hell of a lot bigger than where mobile ad spend stood when we first started measuring it in 2008, and just look where that is now. 

I am well aware however, that growth is not even and many within the digital ad ecosystem will not have weathered the storm as well as these market-wide figures would suggest. Recognising this fact is an essential first step to maintaining our diverse and competitive industry that breeds both creativity and innovation. It’s this industry that is sustainable in the long-term and it’s this that we must keep in mind as we build back. What is clear from this latest report is that digital advertising has embarked on a new chapter. Astronomical spend has been switched for tentative but strengthening recovery.

PwC’s analysis of AA/WARC Expenditure data shows that Q2 2020 saw digital spend plummet by 20%, before bouncing back by 10% in Q3 and 18% in Q4. From smartphones to Search, there is much to feel positive about when looking at 2020’s Adspend report - digital is moving in the right direction and, if you’d told me a year ago that would be the case, I’d have struggled to believe you. For now, this is no longer a story of across-the-board, double-digit spend. It’s growth against the odds and, in my view, these results should give great cause for optimism.