UK digital advertising could add £242bn by 2035

Artificial intelligence is already widely used across the digital advertising sector. According to the research, 95% of businesses engaged in digital advertising use AI, compared with 16% of businesses across the wider UK economy.

Digital advertising could contribute £242 billion to the UK economy by 2035 and support an additional 1.2 million jobs, according to research commissioned by IAB UK. The report from research consultancy Public First examines how artificial intelligence and other digital technologies could drive further growth in the sector.

The report finds that digital advertising already contributes £175 billion to the UK economy and supports 2.6 million jobs. Between 2022 and 2026, its contribution to UK gross value added increased by £46 billion, or 35%, compared with growth of 3.5% across the wider UK economy.

AI could generate £80bn in additional sales

More than eight in 10 digital advertising businesses surveyed said AI had increased their productivity, while 68% reported improved profitability. Almost two-thirds said the technology was saving at least three hours per employee.

The report estimates that a 10% AI-driven improvement in return on advertising spend could generate £80 billion in additional sales for UK businesses over the next decade, through improvements in targeting, measurement and creative optimisation.

Agentic advertising and creators offer growth

The research also identifies potential growth from emerging advertising technologies and channels. Agentic advertising buying could generate a £13 billion sales uplift by 2035, while the UK creator economy could grow from £800 million in 2025 to £12 billion over the following decade.

The report says the extent to which these opportunities are realised will depend partly on the policy environment covering areas such as AI, data, investment and skills.

Digital advertising supports £53bn in SME sales

The economic contribution of digital advertising extends beyond the advertising industry. Digital advertising spending drives £118 billion in annual sales growth for UK businesses, including £53 billion for small and medium-sized enterprises.

The research puts the total SME economic footprint of digital advertising at £74 billion and says the sector supports 1.3 million SME jobs. For smaller businesses, digital advertising can provide a way to reach customers, test demand and enter new markets without the resources typically available to larger companies.

Regional hubs could gain from investment

The report identifies Manchester, Leeds, Birmingham, Bristol, Edinburgh and Glasgow as cities with potential to benefit from further digital advertising investment and employment.

Under a high-growth scenario, developments in digital advertising technology could generate an additional £1.8 billion in economic value across UK cities and regions over the next decade.

The North West has already increased its share of the UK's advertising and marketing workforce from 8% in 2017 to 12% in 2024, according to the report, making it the largest hub outside London.

IAB UK calls for supportive policy environment

Sinead Coogan Jobes, Head of Policy and Public Affairs, IAB UK: "Digital advertising is already one of Britain’s great growth stories – contributing £175 billion to our economy, supporting 2.6 million jobs and helping businesses of every size find customers and grow. Now AI and emerging technologies are opening up an even bigger opportunity. With the right conditions, the sector could contribute £242 billion to the economy by 2035 and support another 1.2 million jobs. But that economic prize cannot be taken for granted. Britain needs a policy environment that protects consumers while giving businesses the confidence to innovate, invest and build here in the UK."

www.iabuk.com

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