U.K. Mobile Ad Spend Continues Strong Growth in 2009

Despite challenges that plagued the digital ad market last year as a result of a struggling world economy, spending on mobile advertising in the U.K. grew by 32 percent, year-over-year, according to the IAB U.K. and PricewaterhouseCoopers.

The IAB’s second annual report dedicated solely to the mobile channel found a total of £37.6 million ($57.7 million) was spent in 2009, up from £28.6 million ($43.8 million) in 2008. Despite showing considerable growth, however, those numbers point to a slowdown in spending growth compared with 2008, when mobile advertising grew 99 percent, the organization reported.

Commenting on the results, Eva Berg-Winters of PricewaterhouseCoopers said, “There were two distinct approaches from advertisers and publishers. They either cut spend or continued to invest and develop their use of mobile – with a view to come out on top following the downturn.” She added that Recent investment in mobile “has significantly outweighed” overall budget cuts in the online ad space. As with traditional online ad spend, search advertising accounted for the majority of spend at 54 percent. That represents growth of four percentage points from the 50 percent share it achieved in 2008.

Display advertising – which includes banner advertisements and text links – accounted for a total of 41 percent of spend during the course of the year, up slightly from 39 percent in 2008. The formats that lost out were pre- and post-roll ads and in-game ads and mobile tenancies (define). The report did not include spending on SMS or MMS marketing.

In terms of advertiser verticals, the entertainment and media category – which includes mobile content such as games – accounted for the lion’s share of display spend, at 61.5 percent.

The telecom and finance verticals came in second and third, with 14.7 percent and 8.1 percent of spend, respectively. Meanwhile, the consumer goods category in the fourth spot lagged behind those three considerably, accounting for just 3.2 percent of spend. The automotive vertical – typically a big spender on mobile advertising – accounted for just 2.5 percent of spend during the year, and retail also performed poorly with just a 1.6 percent share.

The IAB attributed growth of the channel to continued increases in mobile internet use among U.K. users, coupled with the proliferation of smartphone devices.

Citing numbers from research agency FirstPartner, the IAB also predicts continued growth for the mobile channel over the next five years, suggesting it could reach £50 million ($77 million) in 2010, and an ambitious £285 million ($437 million) in 2014 in the U.K. alone.

It’s important to note the survey accounts for media spend only, and does not include figures such as creative and application production costs, or SMS and MMS delivery costs.