While the big story from the Interactive Advertising Bureau’s (IAB) 2016 digital ad revenue report is that mobile accounted for over half of digital ad spend, digital audio spend was finally significant enough to merit its own category.
The biannual report, released Wednesday, shows digital audio spend hit $1.1 billion in 2016, “passing the threshold necessary for PricewaterhouseCoopers to reliably report on the category,” said David Doty, EVP and CMO of the IAB, on a webinar about the report.
“We have reason to believe that audio ad revenue will continue to see an uptick in future reports because of this really strong showing this year,” he said.
Digital audio proves an effective and intimate medium for marketers to connect with consumers, said David Silverman, partner at PricewaterhouseCoopers’ technology practice.
“Digital audio made its debut,” he said. “It’s clear that this is becoming a significant category, one which we believe, with changes in consumer behavior and unlimited data plans, will see significant growth in the future.”
Mobile was the catalyst for digital audio’s growth. Eighty-one percent of digital audio ad revenue came from mobile devices. Meanwhile, spend on traditional radio declined.
Mobile also drove digital ad spend growth overall, capturing 51% of new digital dollars, which grew 22% to $73 billion in 2016. Spend on mobile rose 77% to $37 billion.
Aside from audio, mobile drove growth in other formats: Video grew 145% on mobile to $4.2 billion, display grew 19% on mobile to $35 billion and search grew 91% on mobile to $17 billion. Compound annual growth rate for the overall ad industry was up 18% thanks to mobile.
“Mobile has come of age,” said Peter Stubbs, director at PwC’s media and entertainment practice. “This is kind of old news, but that’s the point. We’ve been slow to adopt mobile. I’ve been standing at conferences for five to six years saying, ‘This is the year of mobile,’ but I think we finally made it.”
The IAB doesn’t break out revenues for individual media companies, but said in Q4 2016, 73% of revenue went to the top 10 media companies, to which 69% of growth can be attributed. In a note to investors, Pivotal analyst Brian Wieser said IAB data combined with his own data shows Facebook and Google captured 77% of digital ad spend in 2016 and accounted for 99% of digital growth.
“In other words, the average growth rate for every other company in the sector was close to zero during 2016,” he wrote.