Digital advertising delivers £129bn to UK economy & supercharges SMEs

A recent report from IAB UK, conducted with Public First, found that digital advertising isn’t just contributing to the UK’s economy, it’s also having a huge impact on the lives of people right across the country on a daily basis

Ibet I’m not alone in still having an A-Z stuffed behind the passenger seat of my car. Of course, it’s been surplus to requirements for at least a decade or more − a relic of a time before Google Maps not only told me how to get where I was going, but factored in traffic, road closures and scenic routes to boot.

This is just one example of an adfunded digital service that has become an ingrained part of our everyday lives. The reality is that digital advertising not only powers many of the free-to-use services that are essential to people across the country − from news sites to messaging apps − it’s also a bedrock for the small businesses that make our local communities diverse and unique.

At IAB UK − the industry body for digital advertising − we wanted to understand and interrogate this value. Why? Because you can only protect the vast and varied benefits that digital advertising delivers if you truly understand them.

The result is The Digital Dividend, a first-of-its kind study that we have conducted with Public First to quantify the contribution of the digital ad industry to the UK’s economy, its people and businesses.

It shows that the digital ad industry contributed a total of £129bn in gross value added (GVA) to the UK economy in 2022 and supported 2 million jobs. For every £1 invested in digital marketing, £4.80 was delivered back to the economy. In fact, the UK is Europe’s leading country for digital advertising, with a market larger than Germany, France and Spain combined.

It’s hard to put such big numbers into context, but it helps if you consider that the direct contribution of the industry to the UK economy is twice as large as the impact of the agricultural sector, while the employment footprint is 50 per cent bigger than that of the automotive industry.

In short, digital advertising is crucial to the economic health of the country and is vital to helping businesses of all sizes to succeed and grow. UK companies investing in digital advertising saw a combined sales uplift of £73bn in 2022, with £26bn of that among SMEs. Indeed, our research among UK SMEs shows that 81 per cent regard digital advertising as important to the success of their businesses.

Meanwhile, people are also relying on the services digital ads fund every day. The extent to which they value them is demonstrated by the fact that the average adult in the UK would pay £7,400 a year to keep access to essentials like email, online search, maps, messaging apps, news and social media. That works out at £14,600 on average per household. Significantly, 7 in 10 people say it’s important that digital services are provided for free. The value that consumers gain from digital services varies throughout the UK and we have some really interesting regional findings to share with anyone who is interested.

Having a multi-layered understanding of the economic contribution of digital advertising matters because maintaining the benefits it brings isn’t a given. As a society, we have come to expect that digital content and services will, by and large, be available for free.

But what if they aren’t? The very real impact of an overly or bluntly regulated digital advertising sector is that advertising as a means of supporting free services will make less and less business sense. To be clear, I’m not suggesting that further regulation of any form is unnecessary. What I am saying is that it needs to be targeted to address specific harms, such as tackling bad actors and criminal activity. It must also be proportionate and informed by sound evidence.

For the sake of our digital democracy and thriving SME economy, it’s essential that we work together in partnership.