Digital surges 11% to £29.6bn as new channels shine

Digital adspend continues to defy the economic turmoil, witnessing double-digital growth of 11% in 2023 to reach £29.6bn, with spend on connected TV, podcast ads and social video surging, while search maintained its market dominance.

That is the upbeat conclusion of the 2023 IAB/PwC Digital Adspend report, which confirms that advertisers are seeking out digital ad formats that capitalise on the engagement offered by the rich array of entertainment online.

Spend on podcast ads grew by 23% year-on-year, while 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 the IAB’s Digital Dividend research underscoring the value of entertainment focused digital media to people. In fact, 28% of the population say 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, which has been included within the report for the first time, grew 12% in 2023 to £841m, while digital retail media spend was also up 12% to £283m as the sector continues to prove a popular route for advertisers looking to tap into retailers’ wealth of first-party data.

Meanwhile, spend on mobile advertising has accelerated compared to 2022, when it slowed in the wake of Apple’s IDFA changes. In 2023, investment picked up, growing 15% to £16.7bn.

However, 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.

IAB UK chief marketing officer James Chandler 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.”