UK digital ad spend increased by 12.5% to almost £5.42bn in 2012, according to a new report from the Internet Advertising Bureau (IAB).

The figures show that marketers have responded to the fact that smartphone ownership now stands at more than 64% in the UK by investing a massive £526m in mobile advertising.

This represents a rise of 148% on 2011 and the real term increase of £322.7m accounts for more than half (53%) of the £607.3m increase in total digital ad spend.

Overall mobile accounts for 9.7% of digital ad spend compared to just 1.1% in 2009, which underlines the growing importance of this channel.

But despite the massive increase in investment there is some evidence that work still needs to be done to improve the impact of mobile ads. A recent survey by Nielsen found that 53% of smartphone owners claim to have never received adverts while using their device.

Regarding mobile, the IAB also revealed that:

  • Mobile video advertising grew 1,601% from £0.8m in 2011 to £13m in 2012. Total mobile display advertising (including video) increased like-for-like by 121% to £150m in 2012.
  • Mobile search grew like-for-like by 164% to £365m – accounting for 69% of mobile ad spend.
  • The remaining £11m of mobile ad revenue is primarily accounted for by classifieds, SMS/MMS and other smaller advertising formats.

The importance of mobile search is something we covered extensively on the blog, with one report showing that mobile devices achieve higher click-through rates than desktops when it comes to UK paid search ads.

For more information on this topic, check out our new Paid Search Marketing (PPC) Best Practice Guide which has a section dedicated to mobile search.

Other digital channels

The IAB’s report reveals investment in display advertising increased from £1.14bn in 2011 to £1.3bn in 2012, matching the overall market increase of 12.4% on a like-for-like basis.

Video advertising grew 46% to £160m from £109m, accounting for 12% of online and mobile display in 2012. In the last three years video ad spend has increased almost six-fold (471%).

Social media advertising grew by a quarter (24%) to £328.4m from £265m. In the last three years social media spend has increased almost four-fold (383%).

Finally, the report shows that paid search continues to dominate digital ad spend, accounting for a massive 58% of investment.

Marketers spent £3.17bn on paid search in 2012, up from £2.77bn in 2011 which represents a 14.5% increase on a like-for-like basis.