Advertisers are seeking out digital ad formats that capitalise on the engagement offered by the array of entertainment online, according to IAB’s Digital Adspend report for 2023, conducted with PwC.

Spend on podcast ads grew by 23 per cent year-on-year, while connected TV (CTV) was up 21 per cent and social video continued to perform strongly with annual growth of 20 per cent. 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 IAB’s Digital Dividend research underscoring the value of entertainment focused digital media to people. In fact, 28 per cent 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 per cent to £29.6 billion in 2023, far outperforming the UK’s GDP which rose by 0.1 per cent in the same period. Other highlights from the report include:

• Digital out-of-home has been included within the report for the first time, showing that the market grew 12 per cent in 2023 to £841 million
• Digital retail media spend was also up 12 per cent to £283 million 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 vs 2022, when it slowed in the wake of Apple’s IDFA changes. In 2023, investment picked up, growing 15 per cent to £16.7 billion
• Search continues to underpin the industry, accounting for 50 per cent of the market at £14.7 billion. Display grew 12 per cent to £11.3 billion fuelled by video, which accounted for over 60 per cent of total display spend for the first time.

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 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.”

Responding to the report, Tom Curry, Head of Investment at Yahoo, said: “With the slow yet inevitable death of third-party cookies, advertisers have had to look elsewhere to increase their exposure, but it seems they’ve found a nice home in digital TV advertising. The wide array of premium content as well as the increase in ad-tiered subscriptions has been extremely valuable for advertisers looking to tap into both dedicated and diverse audiences. CTV has become one of the standout performers for advertisers over the past few years, so it’s no wonder that more are looking to witness the benefits for themselves. However, it’s a highly saturated and fragmented market, especially the CTV landscape, and those advertisers looking to get their ads noticed will be those that prioritise data – and tech-driven strategies – specifically AI. AI is quickly maturing and becoming much more sophisticated, and we’re now starting to see the real benefits of the technology in terms of measurement. Not only is it able to maximise investments made in areas of CTV and DOOH through optimised ad placement, but it can also create highly personalised ads which, combined, help advertisers stand out from the rest of the crowd.”

“It’s interesting to see an increase in digital-out-of-home (DOOH) advertising too – a reflection of consumers once again craving large-scale events and outdoor experiences. This will only increase this Summer as a whole host of sporting events – such as the Olympics and Paralympics, Euro 2024, and Wimbledon – will see advertisers actively looking to engage with fans as the excitement builds,” concluded Curry.