UK Digital Ad Spend Hits £40.5 Billion as Social Surges

The UK digital advertising market reached £40.5 billion in 2025, crossing the £40 billion threshold for the first time and growing 10% year-on-year, according to IAB UK's annual Digital Adspend study conducted with Oliver Wyman. That growth rate significantly outpaced UK GDP growth of 1.4%, reinforcing that digital advertising continues to expand faster than the broader economy.

Social and video outpace search

Social media and video were the standout channels. Social grew 21% to £11.5 billion, now accounting for 28% of total digital spend. Video surged 20% to £9.3 billion. Within social, video now represents 59% of all social investment, a shift that mirrors global trends as short-form and in-feed video formats capture more advertiser budgets.

Search remained the largest single channel at £17.9 billion, holding 44% of the total market. But its 6% growth rate was roughly a third of social's pace. Retail media grew 18% to £3.8 billion, digital out-of-home reached £1.1 billion (up 3%), and gaming hit £1.3 billion (up 11%).

Platforms capture two-thirds of spend

Closed platform ecosystems captured 68% of all UK digital ad spend in 2025, totalling £27.6 billion, up 14% year-on-year. That concentration means roughly two-thirds of every digital advertising pound flows through platform environments rather than the open web.

The IAB UK study also found that 57% of advertisers expect their digital budgets to increase in 2026. The market is forecast to reach £44.7 billion this year (10.3% growth) and £49.1 billion by 2027.

What this means for digital marketers

For context, eMarketer estimated U.S. digital ad spend at approximately $360 billion in 2025. The UK market at £40.5 billion (roughly $51 billion) makes it the third-largest digital advertising market globally behind the U.S. and China.

The channel dynamics in the UK reflect broader global patterns. Meta reported ad revenue up 24% in Q4 2025, driven by Instagram Reels and Threads, while Google Search ad revenue grew approximately 8.5% in Q1 2025. The UK data confirms that social and video are growing 3-4x faster than search across markets, not just in the US.

One notable finding: 48% of industry leaders cite AI and automation as a defining force for the sector over the next decade, but 56% also cite AI as a top three challenge, not just an opportunity. That tension between AI's potential and its practical complexity is worth watching as it plays out in campaign planning and measurement.