In 2018, online advertising contributed 57 percent of the U.K.’s total advertising spend of £23.6 billion ($30 billion) and is predicted to account for 62 percent by 2020, according to a new Enders Analysis report.
Only the U.S. and China spent more than the U.K. on online advertising in 2018. In terms of spending, the U.K. is well ahead of Japan and Germany. Relative to the size of the economy, though, U.K. online advertising expenditure is the highest in the world, at 0.63 percent of GDP.
Claire Enders, founder of Enders Analysis, said: “As a U.K.-based research company, we have a front-row seat to observe a pioneering market for online advertising and advertising technology. The innovation, skills and vitality of the sector should be celebrated as world-leading cornerstones of Britain’s creative economy, which our contribution to this report demonstrates.
“Across the technology, media and telecoms sectors we cover, online advertising has become a key part of what companies do—bringing in customers, generating revenue, or both. In just a few years, the online toolkit for advertisers has gone from niche to mainstream, from clunky to sophisticated, from experimental to essential.
“With its unique data-based capabilities, online advertising attracts budgets which were previously not spent on advertising and businesses which did not previously advertise. Because of these green shoots, the industry’s growth has been far from a zero-sum game. Since the 2008-2009 recession, annual online advertising spend in the U.K. has grown by £10 billion, with only 20 percent of this growth explained by the decline of other advertising media.
“But, only a fraction of U.K. online ad spend reaches British content media: in 2018, news brands received 4 percent of the total, and broadcasters only 3 percent. The advertising technology industry has developed impressive technology for identifying the right audiences wherever they may be, but the consequence has been that the value of quality media contexts and deep audience attention is not fully priced in online.
“As observers of digital ecosystems, we are concerned that five out of the six largest online advertising companies do not disclose the amount of money spent advertising to U.K. audiences—a glaring omission as the industry strives to become more transparent. As consumers, we would welcome yet more information and control over how our data is collected and processed by the services we use, and better protections for children and other vulnerable groups. We, therefore, welcome the recent step-change in initiatives to better self-regulate the sector, whether by industry bodies or the companies themselves.
“In terms of rules and governance, it is still far from a level playing field between online and offline advertising, or even between different types of online. Delivering a U.K. online advertising ecosystem that fairly balances the needs of consumers, companies of all sizes, media owners and society, in general, will require self-regulation to be supported by informed legal and regulatory interventions. With this in mind, it is more important than ever that policymakers understand the scale, depth and diversity of online advertising with the same enthusiasm with which British companies have embraced it.”