UK to become first country to spend half of ad budget on digital- report

Dec 2, 2014 | Online advertising, UK

The UK set to be first country spending over half of ad budget on digital as Brits ditch traditional media for gadgets, social networks and online shopping, according to new research. The study, from Group M forecasted digital ad spend in 2015, finding that advertisers will be spending £1 in every £2 online next year. […]

The UK set to be first country spending over half of ad budget on digital as Brits ditch traditional media for gadgets, social networks and online shopping, according to new research.


The study, from Group M forecasted digital ad spend in 2015, finding that advertisers will be spending £1 in every £2 online next year.
In addition, the report forecasts:
• Total UK ad spend will reach £15.7 bn
• £1 in every £2 spend by advertisers will be online
• Online display advertising to reach £2.7bn
• Search spend to reach £4.2bn
In its annual report, This Year, Next Year: UK Media and Marketing Forecasts, Group M reports measured ad spend in the UK is on track to reach £14.9 billion ($23.3 billion) in 2014, up from £14.0 billion ($21.9 billion) in 2013.
It makes the UK the world’s fastest-growing developed market, with stronger growth than the 6 per cent lift Group M expected this time last year. It follows the UK’s adspend increasing 7.8 per cent in 2013, according to Group M.
Adam Smith, author of the global report and future director at Group M, said linear TV continues to hold steady, commanding 26 per cent of spend, despite notable drops in audiences (commercial impacts).
Smith said: “TV is putting up quite a good fight, despite inflation [cost per thousand] reaching highs of 15 per cent in April.
He added: “Linear TV still looks ok value-wise, but if we have another year of falls in impacts then we will have more concerns about reach.”
Smith predicts that next year adspend will continue to increase by 5.7 per cent to reach £15.7 billion ($24.5 billion).
According to the report, digital spending will reach £7.1 billion ($11.2 billion) in 2014 and is expected to reach £8.1 billion ($12.6 billion) in 2015, indicating a 13 percent increase.
Smith said: “The familiar drivers are video, social and mobile, but the underlying reason is more practical and attractive formats for brands – richer, more trackable, more targeted and more clickable.
“The longer-term question is whether online will wrest investment from TV with the ease it did from press media. This is a fairer fight, which will unleash creativity and force scrutiny of simple broadcast versus ‘addressability at scale’.”
Looking ahead, Smith said: “Advertising and the wider UK economy are growing well, but are vulnerable to private debt and public austerity at home, and external problems of weak demand, especially in the Eurozone.
“Low UK wage growth remains a constraint, ameliorated for now by cheaper oil and price competition.”
Analysis- pressure to keep ads relevant
Pierre Naggar, Managing Director EMEA at Turn, added: “With Brits spending more money online than ever, it’s no surprise that brands are investing more in digital advertising. However, it’s how brands use digital that will separate the winners from the losers. Today the pressure is on to deliver a more personalised and innovative brand experience. Gadget obsessed consumers mean that they are constantly connected, and customers expect the same brand experience no matter what device they are engaging with at that moment.
“When millions of advertisers, both big and small, contending for the attention of increasingly distracted consumers in this evolving advertising market, success will hinge on building digital advertising campaigns which deliver quality and relevant ads to target audiences as they move across screens.
“Digital advertising does not only respond to the growing online habits of consumers, but it can also offer a more innovative and efficient method for showcasing ROI and to cut through the noise of other brands. Programmatic, real-time systems and algorithms allow marketers to target the right consumer, at the right time, to deliver a personalised, relevant message using data-driven insights, which in turns drives a more enjoyable brand experience for the always-on consumer, encouraging them along the path to purchase.”

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