Digital ad giants increased share in 2020 as market grew despite pandemic

Spend is even more concentrated in largest companies, while proportion going through media agencies has declined.

Digital ad giants increased share in 2020 as market grew despite pandemic

Digital adspend in the UK grew by 5% across 2020, despite taking a major hit in the second quarter as a result of the initial impact of the Covid pandemic.

According to IAB UK’s Digital Adspend Report, produced with PwC, total spend throughout the year hit £16.5bn.

PwC estimated spend grew 10% in the first quarter before dropping 20% from April to June. It then bounced back with 10% growth in Q3 – making the first nine months of the year roughly flat, compared with the same period in 2019 – followed by faster growth of 18% in Q4.

But while the five largest companies, including Google, Facebook and Amazon, grew 10%, the rest of the market actually declined by 9% in 2020. The five companies now account for 79% of the market.

Smartphone spend amounted to £9.75bn, up 10% on 2019. This now makes up 59% of the total market, up from 57% the previous year.

By format, spend on social display was up 19% to £4.28bn. This category made up 26% of the total market, up from 23% last year. Social display has significantly increased its share of the market each year since 2016.

Spend on video also grew 19% to £3.43bn, while smartphone video was up 20% to £2.75bn.

While search grew more slowly, it was still up 7% to £8.37bn, a faster rate of growth than digital advertising as a whole.

This year’s Digital Adspend report includes digital audio and podcasting data for the first time, reflecting the growth of audio within the digital landscape.

The digital audio market grew 17% to a total of £104m. This included a £33m spend on podcast ads, which was up 43% on the previous year.

There was a decline in spend billed through agencies, which now makes up 33% of the total, down from 36% last year.

Jon Mew, chief executive of IAB UK, said: “When the pandemic hit, all of our predictions for 2020 went out the window. We knew it was going to be a tough year for the entire media industry, digital advertising included, and the impact continues to be felt.

“It’s brilliant news that the digital ad market has rallied and is back in growth – buoyed by spending in areas such as video and social – but it’s important to recognise that this growth won’t be felt by all areas of the digital ad industry and that recovery is still under way. Today’s results are very encouraging and show that we’re moving in the right direction.”

Stephanie Claxton, senior manager, digital and programmatic at PwC, added: “In this year’s Digital Adspend report, we are seeing new areas of spend gaining ground in line with changing consumer habits and behaviour.

"In particular, the staggering growth of podcast spend indicates the growing opportunities for brands in the audio space. Just as when we first started measuring mobile advertising back in 2008, it will be fascinating to see how this area evolves.”