The Interactive Advertising Bureau (IAB), in partnership with auditors PricewaterhouseCoopers, released the latest United Kingdom mobile ad spend figures last week, and they make for pretty pleasant reading.
Between 2014 and 2015, spending on mobile advertising in the UK rose by a cool 62% (£1.01 billion in actual terms) from £1.62 billion to £2.63 billion.
That’s an impressive rate of growth, even more so when you consider that the figure for 2012 was just £526 million. So it’s risen by a factor of five in just three years.
And all of this at a time when the digital ad industry, including mobile, is facing threats on a number of fronts.
These include viewability (what percentage of ads sold are ever actually seen), ad fraud (the number that are or can be seen by humans as opposed to bots), and adblocking (the incidence of Internet users deploying software that filters out the ads so they only see the content).
So what’s going on?
Looking at the negatives first, of the issues noted above, the most obvious threat to digital ad revenues is adblocking. The more people who deploy adblockers, the less a publisher’s inventory is worth, since fewer people will see it.
The key point to remember here is that adblocking is largely — and I use that word advisedly — a desktop Web, rather than a mobile, problem.
The majority of adblocking solutions do their work on Web sites as opposed to apps. Since around 90% of mobile time is spent in app, as opposed to the Web (according to Flurry), adblocking on mobile is currently not a big deal.
It will be, however, when in-app adblockers become more prevalent, and when adblocking at the network-operator level becomes more prevalent.
UK operator Three has signed a deal with Israeli adblocking firm Shine to block ads at the network level, which will give its users the ability to screen out ads both on mobile Web and in-app. This would be the case as long as the user is using cellular, as opposed to a wi-fi, connection to get online.
Also, let’s not forget that, as regular Web browsing moves from desktop to mobile (many retailers now see more than half of their Web traffic coming from mobile devices), even Web-only adblockers will have a greater impact on Web-based mobile ad inventory.
Looking at the positive side of this news, that 63% increase in revenues might also come as a surprise when there’s so much talk of “banner blindness” and the lack of creativity in mobile advertising. But when you look at the figures more closely, there are some obvious star formats that are helping to give the figures such a rosy glow.
The first is video. Spend on mobile video ads increased 98% to £353 million, representing just over half of the overall digital video ad spend total of £711 million.
Second is native, the poster child of the mobile advertising business over the past couple of years. In 2015, ad spend on social media sites — where most native ads are seen — grew 45% to £1.25 billion, with more than 71% of social media ad spend going on mobile.
As for spend on native itself, the IAB melds it with content advertising (including advertorials). In 2015, spend on these rose by 49.9% to reach £776 million.
Native is an odd one, if you think about. In an industry where advertisers try to make their ads so beautiful, so engaging, so entertaining that you forget they are trying to sell you something, native ads — the best-performing mobile ad format for some time now — come with a legally required note to remind you they are “sponsored” or “promoted.”
In some respects, then, this is hard to fathom. You could argue that advertisers are being rewarded for their honesty. And that consumers have no issues engaging with advertising, and are actually more inclined to engage with an ad that says it’s an ad than one that tries to pretend it’s something else.
You could argue, also, that you’re not making that much of a commitment when you click on a native ad, since many of them are encouraging you to download an app, which you can use or ignore once on the phone.
But then, the same is true of most digital ads you click on. They take you to a place — an online store maybe. They don’t commit you to spending any money there.
In any event, native ads played a huge part in delivering those very healthy mobile ad spend numbers for 2015. Just don’t forget, though, how much of that money went to Facebook.