Behind the numbers: why digital ad spend growth tells a bigger story

When the IAB’s leadership and research teams sat down last month to examine the H1 2021 Adpsend figures it’s fair to say we weren’t shocked at the news that digital spend was up year on year. After all, the figures pertain to a period in which the whole country was in lockdown more than they weren’t, when digital ad spend was one of the few remaining guaranteed ways for marketers to reach their audience en masse. 

But in that meeting in mid-September, when the data from PwC was presented back to us, we were surprised to discover that investment in digital had grown by a huge 49% year on year – and 42% since 2019 – the last comparable period before the pandemic hit. In fact, that £10.5bn half-year growth is greater than we saw for the whole of 2016 when the market grew £10.2 billion. So what stories do the most recent numbers tell us? 

Video wins the day in the first half of 2021

The first is that video was a prominent performer within display advertising throughout the first half of the year, overtaking the majority of display spend for the first time in an H1 period. Ad spend in video rose 70% year on year to £2.3bn, and 79% compared to 2019, demonstrating the rapidly growing role of video in the communications strategy of brands across the board. This suggests the explosion in short-form video content has been harnessed by marketers and is now increasingly used as a form of brand building. 

The rise of apps such as TikTok has allowed marketers to reach and engage with hard to reach audiences in content-rich ways. This form of content is not only highly engaging – with research showing that consumers are almost twice as likely to watch a six-second ad until the end as they are a traditional 30-second ad – but brands have the ability to work with creators to bring their brand to life in native, entertaining ways that deliver value back to the viewer. 

Mobile… in name only

In H1 2021 ad spend on mobile rose 75% year on year, in a time when no one was, well, mobile. For someone that worked in mobile for many years, I can remember that the mobile was so named because it allowed you to make phone calls on the move (and that it was a major leap up from the car phone – remember those?), yet that name is now as redundant as the antennae, battery pack and primary landline alternative. The smartphone has solidified its position as a screen first and communication tool second and it has earned itself a leading position on many marketers’ media plans. Our mobiles have become a media centre in themselves. Perhaps more than ever, the pandemic has seen our mobiles become a means of staying entertained, of shopping, of sharing – and no doubt fuelling the surge in spend outlined above as vertical video allows brands to make a high-definition impact on the small screen. 

A like-for-like comparison is still good news

While it is easy to credit the pandemic with the rise in digital ad spend – and I am acutely aware that growth is not evenly shared across the industry – ad spend figures from H1 2021 show an adaptability and agility that our advertising industry should be proud of. When the first lockdown was announced, in March 2020, everyone was thrown into a degree of chaos. Every single business – no matter their scale or experience – found themselves in uncharted waters, and what followed was several months of uncertainty, nervousness and experimentation. 

However, by the time the Prime Minister sent us back into full lockdown again at the start of January 2021, businesses were prepared. Anyone who could move their sales online had done so, and had managed to get a handle on the production and logistics that this entailed. And crucially, consumers were on board with their lives having moved online. Everything from grocery shopping to socialising was taking place via a screen and consumer confidence continued to grow among people of all ages. According to UKOM-endorsed data from Ipsos, the online population in the UK has increased 6% since the start of the pandemic – with the over-75s providing the biggest increases at 43%.

So while the rise in digital adspend makes perfect sense in the context of the pandemic, it is also indicative of a more wholesale shift among businesses and consumers. It shows a willingness to adapt and shift online that I don’t believe will be widely reversed, even as society moves closer to a post-pandemic future. 

The surge in video spend also shows that they are discovering that digital is about far more than just clickable banners and short-term metrics. Don’t get me wrong, both of these things form a part of digital advertising, but they are far from all of it. From video to audio, our industry is continuing to evolve and offer a plethora of ways for brands to tell stories, push creative boundaries, engage huge audiences and, ultimately, deliver results.