Growth in mobile ad spend marks end of screen hierarchy: IAB
Rising smartphone usage saw growth in mobile ad spend reach its highest point in over two years in H1 2016, prompting the IAB to warn brands that there is "no longer a hierarchy of screens" and that content should be tailored to where their audience is rather than assuming either desktop or mobile is more effective. A report by PwC showed that mobile ad budgets rose 56% to £1.7bn ($2.1bn) in H1 2016, with 36p in every pound spent on internet advertising going on smartphones – up 4p in the past five years.
With mobile ad spend rising 56% in the first half of 2016, the IAB says marketers must be aware there is no “hierarchy of screens anymore” and that next year’s growth is all dependent on the outcome of Brexit negotiations

Customer obsession with their smartphones saw mobile ad spend growth hit its highest level in more than two years in the first half of 2016, leading the IAB to warn brands that there is “no longer a hierarchy of screens” and they should tailor content to where their audience is, rather than assuming that desktop or mobile are generally more effective.

The report, compiled by PwC, found that mobile ad budgets were up 56% to £1.7bn in the first six months of the year. This means that 36p in every pound spent on internet advertising now goes on smartphones, an increase of 4p in the last five years.

Across the digital ad market, display was the format that produced the highest like-for-like growth, accounting for 31% of digital spend, while social media display has grown 43% year-on-year to £745m.

The growth is put down to consumer’s increasing dependence on smartphones with 82% of owners now checking their phones within an hour of waking up and 42% of owners aged 25-34 using their phone as their primary news source.

But it was video that grew the fastest, with ad spend up 129% to £298m.

Tim Elkington, IAB UK’s chief strategy officer, puts the increase in video ad spend down to the fact that video content can now be viewed on multiple devices, something he says marketers must consider when they are delivering content.

“There is no hierarchy of screens anymore. It’s about which device has the right content for consumers.” Tim Elkington, chief strategy officer, IAB

The shift to native advertising

The report found that content and native were the fastest growing online ad formats and that ads designed to look like content, including advertorials and ads in social media news feeds, growing by 29% to £451m.

Elkington believes that content and native’s growth is down to connecting with people in the right way, depending on device and channel. He says that the news feed structure of social media, including Facebook and Twitter, has allowed marketers to do this and to engage with consumers in a “less interruptive” way, allowing them to “establish a better form of mobile advertising.”

The power of search

Elkington highlights that despite display success, paid-for search still shows increase in its share of mobile spend, which came in at 53% for the first half of the year, compared to 51% the same time in 2015.

“It is interesting that search continues to grow at such a rate. Usually when something is so big for so long you expect it tailor but the power of search keeps going,” he says.

His thoughts back up comments made by Sir Martin Sorrell, the boss of WPP, at the Festival of Marketing last week. He said WPP will spend £6bn with Google and £1.7bn with Facebook this year because “search is more powerful than social”.

Despite the report’s positive findings, Elkington believes that digital growth will slow next year, as he references Group M’s forecast that digital ad spend growth will be 14% in 2016, compared to 11% in 2017. He says this could also be impacted by Brexit.

“These results are January to June, we will have to wait until the second half of the year to see the impact of Brexit. The whole advertising industry will be dependent on what happens with Brexit,” he said.