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Mobile ad spend increased 157% in 2011 to a record £203.2m, according to the IAB and PricewaterhouseCooper (PwC).

With smartphone ownership now standing at 53% in the UK, the IAB attributes the growth to the rapid uptake of apps and social media, fuelled in part by cheaper tariffs.

Consumer use of smartphones and strong tablet sales has sparked a surge in interest from brands, particularly in the retail, technology and FMCG sectors.

The report also states that 51% of Britons now use a mobile device while watching TV, causing advertisers to create more engaging and interactive rich media ads.

O2 Media MD Claire Valoti said the study reflects the confidence in the marketplace that brands and media agencies have around mobile.

Choosing to use rich media and messaging on mobile, means that brands have made a conscious choice to engage with the consumer in a way that is relevant to them and their lifestyle.”

According to the IAB and PwC, the entertainment and media industry accounted for the biggest share of display ad spend with 23.2%, though this fell from 32.9% in 2010.

The other top spenders were telecoms with 14.9% (14.3% in 2010), FMCGs 14.4% (11.8% in 2010), retail 12.3% (5.5% in 2010) and finance 10.3% (18.6% in 2010).                 

Looking at where this budget is allocated, 54% of display advertising spend is on apps with 46% on browser inventory.

Overall, display advertising on mobiles more than doubled year on year, increasing by 186% to £68.9m compared to £28.1m in 2010.

In 2008 the total ad spend for mobile was only £14.2m, so it has seen a fivefold increase in three years.

Standard display formats, such as banners and text links, still take the lion’s share of ad spend accounting for £59.4m – an increase of 196% since 2010.

The category including SMS and MMS ads grew by 241% to £7.6m, while mobile video advertising (pre/post-roll) increased from £0.2m to £0.8m.

The use of rich media ads is likely to increase as a separate IAB study in August last year found that people exposed to expandable banner ads are 25% more likely to remember the advertising than those who see static banners.

Mobile search also saw a huge increase to £134.3m, a jump of 145% year-on-year and tenfold increase since 2008.

In 2011 the IAB measured tablet specific advertising for the first time and found that £2.4m was spent on the platform.

These figures clearly demonstrate that mobile advertising is seeing a period of huge growth, and that increase is likely to continue with 90% of agencies in a separate IAB survey stating that mobile will be the fastest growing media for the next five years.

In fact the growth could be slightly larger than these statistics suggest as the figures are like-for-like, meaning that the results only compare companies that submitted figures in 2010 and 2011.

Similarly, it only includes paid-for media so does not include SMS/MMS production and delivery costs or other mobile marketing revenues like app production.

David Moth

Published 20 March, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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