Where Marketers Are Investing in a £40bn+ Digital Market

By Cheryl Jackson

The UK’s digital advertising market reached £40.5bn within the last year, based on the latest IAB UK Digital Adspend study. This marks a 10% year-on-year increase, which is much faster than the UK’s 1.4% GDP growth. This growth shows more than just a bigger market; it points to a clear change in how businesses of all sizes are focusing on digital channels.

Based on predictions that the market will reach £44.7bn in 2026, marketing managers and small business owners are rethinking how they spend their budgets. Now, the main question isn’t whether to invest in digital, but where to invest for the best results. As marketing strategies change, the focus is on which channels offer the most value.

Retail media and TV take centre stage

The data shows that retail media and digital TV are growing quickly. Retail media refers to advertising within retailer platforms. This area is driving much of the growth as brands try to reach consumers right before they make a purchase.

Supermarkets and online retailers in the UK are expanding their media networks, enabling brands to target shoppers with first-party data. This is especially useful given that third-party cookies are being phased out and privacy remains a top concern.

Major UK grocery brands are spending more on platforms run by retailers like Tesco and Sainsbury’s. These platforms help advertisers reach shoppers who are ready to buy, thereby boosting conversion rates. For small businesses, retail media offers a way to compete with bigger brands if they use their budgets wisely.

At the same time, digital TV, including connected TV (CTV) and broadcaster video-on-demand (BVOD), is growing rapidly as viewers move away from traditional TV. Advertisers are following this trend because these platforms deliver high-quality, safe environments and advanced targeting options.

UK brands such as DFS are using TV streaming channels to maintain reach. They also gain better audience insights. For SMEs, this space is becoming more accessible as entry costs decrease and self-serve options emerge.

Search is a performance powerhouse

Even with all the excitement about new channels, search advertising still accounts for a large share of digital spending. Its main advantage is intent—when people search for products or services, they are usually close to making a decision.

This is why search is especially useful for small businesses. For example, a local plumber in Manchester or an independent retailer in Ireland can use search ads to reach customers who are ready to buy. While search is a key part of marketing, it continues as a performance metric. Businesses keep investing in search because it brings steady, measurable results.

Social and video drive engagement

Social media and online video are taking up a bigger share of marketing budgets. People’s media habits are changing, especially among younger audiences, and this shift is driving the trend.

Short-form video is now a major way to grab people’s attention. Platforms such as TikTok, Instagram Stories, and YouTube Shorts are changing how brands talk to their audiences. Because of this, marketers are moving toward more creative and flexible content strategies.

UK fashion retailer Boohoo is a good example of this change. The company has invested heavily in social-first campaigns, leveraging influencers and video content to connect with its audience and drive traffic. This fits with what’s happening in the industry: social platforms are now full-funnel marketing tools, not just for building brand awareness.

For smaller brands, social and video are cost-effective ways to quickly amplify visibility and test different messages. However, success depends on consistency and modification to each platform’s trends.

Display develops with data and automation

Display advertising is changing. Programmatic technology now enables more targeted targeting, better measurement, and real-time optimisation.

Rather than running broad, untargeted campaigns, advertisers are now using data to send personalised messages to specific groups. This makes campaigns more efficient and helps avoid wasting money, which is especially important for businesses with limited budgets.

The shift to omnichannel thinking

One major trend in the data is the shift to cross-channel strategies. Marketers are now combining multiple channels to create seamless journeys that increase engagement and customer loyalty. A typical customer journey might begin when someone finds a brand on social media. Then they look up the brand on a search engine and later make a purchase after seeing a targeted display ad or a retail media ad. This shows how each channel—social, search, display, and retail media—plays a role in the decision-making process and guides budget allocation.

What it means for marketers and SMEs

For marketing managers and small business owners, the £40bn+ market offers both new opportunities and more complexity. There are more channels to choose from than ever before, but the competition is also tougher.

The main thing is to set priorities. Businesses should focus on the channels that best fit their audience and goals. Some might invest more in search, while others could try retail media or put money into video content.

The data also highlights the importance of measuring results. With budgets under close scrutiny, demonstrating a clear return on investment is essential.

Looking ahead

As the UK digital ad market heads toward £44.7bn in 2026, growth is likely to continue, alongside rapid change. Retail media and digital TV will become even more important, while social, video, and search will still be key parts of the mix.

For marketers, the message is clear: allocating resources to digital is now a must. Making smart choices about where to spend is essential. Those who know where and why to invest will do well in this more competitive market.

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