UK digital ad spend is forecast to grow by around 10% this year and next, to reach £45bn in 2026, according to data from the IAB UK.

In the first half of this year, UK digital ad spend totalled £18.7bn. Over two-fifths (44%) of that spend came from investment in search channels, at £8.3bn. Spend on video channels was the second biggest contributor to the overall figure, with almost a quarter (23%) of digital ad spend being put into video.

The research, authored by the IAB UK and Oliver Wyman, flagged that ‘TV+’ accounted for almost a third of the video category of spend. The IAB defines TV+ as “any digitally enabled TV content delivered via different platforms and screens”.  The category encompasses advertising spend on streaming services like Netflix, but also on the on-demand services of more traditional broadcasters.

Returning to the overall digital ad spend figures, display advertising accounted for £2.9bn, with online retail media continuing its rapid growth, hitting £1.5bn in the first half of 2025. Other formats, namely gaming (£620m), digital out-of-home (£490m), classifieds (£450m) and digital audio (£160m), contributed a combined £3.2bn.

Mobile reaffirmed its dominance as the primary channel for digital advertising, accounting for almost three-quarters (71%) of all spend.

How will media spend shape up in the second half of 2025?

The research also breaks out programmatic trading, with automated buying now making up a landmark 78% of digital display spend.

The impact of generative AI on the digital advertising ecosystem cannot be ignored, with the technology potentially lowering barriers to entry for smaller businesses, boosting personalisation and enabling targeting to be more efficient and privacy compliant; however, the research also shows significant concerns around generative AI. More than half (56%) of industry leaders cited AI and automation as a top three challenge, with concerns over transparency, homogenised creative and over-reliance on algorithms.

Measurement was cited as another topic of concern, with 31% of respondents calling it a top challenge amid ongoing fragmentation and a lack of standardisation.

While AI and measurement difficulties, as well as challenges like incoming LHF rules and ongoing economic uncertainty, pose significant challenges to the digital advertising landscape, there is plenty of reason to be optimistic, says IAB UK CEO Jon Mew.

“This report shows not just where the market is today, but where it’s heading. With programmatic trading now the norm and digital spend set to hit £45bn by 2026, the UK ad industry is entering a new phase of maturity,” he says. “From AI to emerging formats like retail media and audio, innovation is driving growth and ensuring digital continues to deliver for advertisers and audiences alike.”