UK Digital Advertising and Marketing:
Spending and Trends
Copyright ©2011 eMarketer, Inc. All rights reserved.
The eMarketer View
The UK’s digital credentials are well established.eMarketer estimates that over 45 million UK residentsare online in 2011, representing nearly 73% o thepopulation. UK web users spend more time online andview more pages, on average, than those in most otherEuropean nations. The penetration o ecommerce isamong the highest in the world, at 78.2% o internetusers, and online buyers will spend an average o over$3,100 in 2011—more than in any other country.
In digital advertising too, the UK has played a pioneeringrole. Ater all, this is the only market where online adspending already exceeds spending on television ads by asignicant margin.In 2011, several trends in UK digital ad spending and consumerresponses to advertising are evident.
The revival o display is gaining momentum, thankschiey to video.
Online video advertising is on a steepupward trajectory, as brands take advantage o what is, inessence, TV advertising viewed on smaller screens. In somecases, advertisers that have struggled to understand and reaprewards rom other orms o digital ads eel comortable withvideo because it seems a amiliar currency.Consumers also nd video more engaging than manyother types o marketing. The science o online videoadvertising is still at an early stage: Witness the long-runningdiscussions about the ideal length or online video ads andthe comparative virtues o pre-roll, mid-roll and post-rollplacements. But greater expertise will inevitably conrm videoas a key option in the marketer’s arsenal.
The way online display spending is distributed acrosstop industries says a lot about the changing moodso advertisers—and their audiences.
The InteractiveAdvertising Bureau UK (IAB UK) has cited larger digital budgetsrom consumer packaged goods (CPG) brands as a key actorin rising ad spending during the rst hal o this year. MostCPG rms seem more committed to digital platorms thanever beore. Interestingly, though, this development comes ata time when several industries—technology and telecoms,or example—have actually trimmed online display spending,according to IAB UK. Advertisers in several other sectors,such as entertainment and media, have kept display budgetincreases to a minimum.Both upward and downward shits in online budgets clearlyrefect the current economic squeeze. They also signalmarketers’ awareness that most consumers are ocused onessential purchases, not nice-to-haves.
Social media is well established as an advertisingplatorm, but its evolution is ar rom complete.
UK advertisers are divided into two camps:
The rst group sees social media as absolutely essential to brandvalues, consumer dialogue, lead generation and ulllment.
The second group considers social media useul and evennecessary, but not crucial to business success.Brands such as Domino’s Pizza, Nike sportswear, Smirno vodka and Skittles candies have had resounding successappealing to UK consumers via Facebook or other social sites,and are driving up ad spending in social networks.Yet a signicant minority o UK companies are not ullycommitted to social media in 2011. In act, recent researchindicates some brands are paying less attention to onlineconversations than they did in 2010, suggesting many seniorexecutives are not yet real believers in the utility and value o an active social media presence.
Email deserves more headlines than it gets.
Email remainsa key ingredient in the marketing plans o most UK advertisers,and rightly so. Costs or email campaigns are typically lower thanor many other ormats. Eciency is rising as delivery technologyimproves and marketers hone their content strategies, writingand segmentation skills. Email open and clickthrough rateshave risen in the UK this year, according to the Direct MarketingAssociation (DMA). Web users also welcome email messagesthey have opted to receive rom known brands.
Mobile is a powerul, highly targeted channel oraddressing individual consumers, but mobile marketinghas a long way to go.
In the UK, mobile and smartphoneusage, mobile web access and exposure to mobile ads all showsubstantial growth in 2011. But mobile advertising is proving atricky proposition or many brands. Mobile display ads and SMSmarketing messages irritate most consumers, partly because themobile phone is so personal. A ew well-known retailers—amongthem Amazon, Asos, Tesco and Waitrose—have blazed themobile trail with user-riendly apps and other mobile services. Thisshould be a sign to advertisers to review their mobile strategiesand concentrate on the basics: delivering relevant, helpulinormation and unctionality or customers on the go.
eMarketer’s UK Digital Ad Spending Forecasts:Scope and Defnitions
eMarketer estimates o UK online ad spending includebanners, classifed ads, email (embedded ads only), leadgeneration, rich media, search, sponsorship and video. Theyalso include mobile ad spending within these ormats asdefned by the IAB UK. UK mobile ad spending is thereore asubset o online ad spending and does not include spendingon mobile-specifc ormats such as SMS, MMS or in-appads. As a result, the UK mobile ad spending orecast is notdirectly comparable to eMarketer’s US mobile ad spendingorecast, which does include these ormats.