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Online advertising expected to take up 62% of UK advertisers' budgets
online advertising

Online advertising expected to take up 62% of UK advertisers’ budgets

By 2020, it is expected that UK advertisers are expected to spend 62% of their budget online according to The Advertising Pays report by Credos and Enders Analysis. This is an increase from 57% which UK advertisers spent on online advertising last year, which was worth £23.6bn.

IAB UK’s Half Year Ad Spend Update

During the first half of 2019, UK online advertising spend was up 13% year on year and increased to £7.3bn according to the Internet Advertising Bureau (IAB). £3.7bn was spent on Search whilst £2.8bn was spent on Display (both video and non-video). Of the Display format, non-video was the largest, up 8% year on year to £1.45bn. Video isn’t too far behind though, increasing 27% to £1.32bn.

Twenty years ago, online expenditure didn’t register in published statistics. When Google first launched Adwords in 2000, companies spent £153m online of a total ad spend of $14.7bn in 2000.

IPA Bellwether Q3 2019 Report

According to the Institute of Practitioners in Advertising (IPA) Bellwether Q3 2019 report, total marketing budgets are down for the first time since 2012, with a net balance of – 0.5% of UK companies registering downward revisions. However, 64.1% of the Bellwether panel have reported no changes in their total marketing budget in Q3. Although some total marketing budgets may be slightly down, 11.1% of companies report budget increases in their digital marketing budgets.

Increase in SME’s advertising online

The Advertising Pays report found that more UK small and medium-sized businesses (SMEs) now advertise online, increasing from 30% in 2013 to 42% in 2017. With online advertising tools now easily available for everyone, this number should only grow. Tools like Facebook Ads make it much easier for SMEs to advertise to their target market. Before, this would have only been possible for larger companies with bigger budgets.

Benefits of online advertising

Target your audience

As mentioned, online advertising has allowed small and medium-sized businesses the chance to advertise where they weren’t able to with more traditional marketing methods. With traditional marketing methods, it was harder to target your exact target audience. However, online advertising can allow you to target your exact audience so that you can spend your budget more effectively. Depending on the channel you decide to advertise on, you are able to choose to target audiences based on age, gender, location, occupation and a number of interests. They also allow you to create audiences based on the customer data you have to target people who are similar to your current customers as well as remarket to customers who have visited your website or taken an action on there.

Track your campaigns

Online advertising also allows you to track how well your campaigns are performing which isn’t possible with traditional marketing campaigns. However, by using the specific social media analytics tools as well as Google Analytics can allow advertisers to see exactly how an ad is performing. Some of the main metrics that you can track are:

  • Number of impressions show how many times your ad has been displayed.
  • Number of unique views shows how many times your ad has been viewed by different people.

Both of these metrics are important especially if the aim of your online ad is to increase brand awareness.

  • Cost per Click (CPC) shows how much you have paid for each click on your ad
  • Conversion Rate is the percentage of how many conversions you have set have taken place. This could be an app install, a purchase on your website, or signing up to your newsletter.
  • Click-through rate is the percentage of clicks on your ad by the number of impressions.

These metrics are important to allow you to see how well your ad is performing and if it’s on track. It can also tell you if you need to optimise the ad if the ad isn’t performing as well as expected.

Optimise ads

Online ads are also easy to optimise if needed. If you decide you want to change your ad, with traditional marketing methods this isn’t possible without starting again especially if your marketing materials have already been printed. This would mean both time and money will be wasted in order to design and print again. However, online advertising allows you to edit your ads in real-time. If your ad isn’t performing as well as expected or you need to change something, this can be easily done. Your audience can also see your new ads straight away.

Importance of online advertising

With more money being spent on online advertising, it’s important that companies invest well and fully understand its impact. With the ability now to target your audience, companies not taking full advantage of online advertising risk being left behind by their competitors. Whether it’s creating engaging content to increase brand awareness and trust amongst customers or creating highly targeted campaigns to increase conversions, it’s more important than ever to adapt to the digital era.

Written by: Thomas Coughlan
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