Surge in CTV & podcast spend as advertisers tap into popularity of online entertainment

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, increasing 15% to £16.7bn. This is a significant uptick vs 2022 when it slowed to a 4% growth rate in the wake of Apple’s IDFA changes 

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 Digital 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.”

Stephanie Claxton, Senior Manager at PwC, added: “Digital media continues to evolve, showcasing its adaptability and resilience. Growth was not only seen from emerging channels including digital out-of-home, which was included in the report for the first time, and retail media, which weathered the economic headwinds to deliver double-digit growth online; but also established channels including mobile where ad spend increased and search, which maintained its dominant market share.”  

Notes to editors 

Digital Adspend 2023 is conducted by IAB UK/PwC and is based on both data submitted to IAB/PwC and modelled spend data for the digital advertising industry between January and December 2023.

Digital retail media: Measures advertisers’ spend directly with UK-based retailers using retailers’ first-party data, for native and in-feed ads on retailers’ own websites and apps.

CTV: In 2023, IAB UK and PwC amended the CTV definition from a channel format to a device, to better reflect how CTV is used by consumers and advertisers. This allows for all video ads as well as non-video CTV to be included in revenue figures. Non-video spend includes standard and other display formats.

Digital out-of-home: Data for 2023 and historical data for previous years has been contributed by Outsmart.  

Video: IAB / PwC has reclassified video measurement to better reflect advertiser and agencies’ definitions. Rather than Instream and Outstream, Adspend now captures BVOD, social video and online video (encompassing outstream, publisher & AVOD). 

About IAB UK

IAB UK is the industry body for digital advertising, committed to bringing the industry together to deliver a better kind of profit, for the planet and its people. We do this by working with our members - including platforms, publishers, ad tech, agencies and advertisers - to tackle and address the big issues, celebrate digital and help businesses prepare for the future. Visit our website. 

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with over 364,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.