Smartphones Push UK Online Ad Revenue Past £5bn

(c) Sky News 2013

Advertising revenue from UK smartphones grew at 10 times the rate of other online platforms in 2012, according to a new report.

Although still relatively new, the sub-sector now accounts for just under a tenth of the total advertising spend, which has broken the £5bn barrier for the first time.

The Internet Advertising Bureau (IAB) said a study conducted by PwC showed spending on online advertising reached £5.42bn in 2012.

Overall advertising spending on the internet jumped 12.5% last year, defying a flagging economy as companies battled to reach consumers spending more time on smartphones and tablet computers.

The study, which used data from companies that had provided information the previous year, said internet advertising spending rose £607m on 2011, with some £323m due to an increase in mobile advertising.

Britain has led the way in moving advertising from traditional areas like newspapers and radio to the internet.

A high take-up of broadband and the rise of smartphones and tablet computers which allow users to access the internet on the go have helped the shift.

"Advertisers are increasingly buying integrated campaigns across online and mobile rather than regarding mobile as an afterthought," director of research and strategy at the IAB Tim Elkington said.

With around two-thirds of adult Britons owning a smartphone as of December 2012, mobile advertising now accounts for almost 10% of all digital ad spending compared with about 1% in 2009.

Video advertising grew 46% to £160m, accounting for 12% of online and mobile display in 2012.

Demand for mobile adverts is likely to increase after auctions for next-generation 4G airwaves earlier this year, which are set to deliver speeds more than five times faster than 3G services.

These services will make downloading high-resolution video easier and enable better multi-tasking on the latest smartphones and tablets.

EE, Britain's biggest mobile operator, said it was now on track to sign up one million customers for its 4G service by the end of the year.

The consumer goods sector overtook the finance sector as the biggest spender on digital display advertising - accounting for almost 16% of display ad spend in 2012.

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