IAB Report: Digital Advertising’s $10 Billion Growth Propelled By Mobile

IAB-Ad-ReportUS online ad revenue hit $59.6 billion in 2015 – $10 billion more than in 2014 (a 20.4% YoY increase), according to the IAB 2015 Internet Advertising Revenue report conducted by PricewaterhouseCoopers (PwC).

Innovation in areas like mobile drove the industry’s consistent high growth, according to David Silverman, a partner at PwC. Nonmobile digital advertising slowed over the past six years to a 9% compound annual growth rate (CAGR), while mobile had a 100% CAGR over the same time period.

Ultimately mobile – which accounted for 35% of 2015 digital ad revenues in the US compared to 25% the year before – drove digital advertising’s decadelong 17% CAGR. (Mobile includes search, social and display advertising and the IAB is considering breaking those figures out.)

PwC also predicted programmatic advertising would increase as a transaction method.

“[It is] a means to reduce friction in the digital advertising sales model, but also as a means to personalize content and advertising for consumer attributes, driving more relevancy and consistency,” said Matt Hobbs, a PwC partner focused on Internet advertising.

The IAB observed a slight increase in average CPMs over the past few quarters, which it attributed to issues like fraud, viewability and measurement – common concerns for programmatic advertisers – being addressed. The average CPM for 2015 was $12.09, up from $11.35 in 2014.

Being among the top 10 companies in Internet advertising continues to be important. Those companies, which presumably include Google and Facebook, earned 75% of all US digital ad revenue in Q4 2015, and over the past 10 years commanded 69% to 75% market share. In Q2 2015, companies in the 11th to 25th slots captured 9% of online advertising revenue, down from 11% the year before.

As digital advertising growth continues to outpace other types of advertising, and as overall ad spend remains flat, next year could mark a watershed moment in the industry.

Combined, broadcast and cable TV grabbed $66.3 billion in advertising in 2015. Using the average growth rate of the past decade, 17%, 2016 will be the year Internet advertising revenue (which does not include OTT or SVOD) exceeds TV revenue.

Not all was rosy for digital. High-priced formats like sponsorships barely even registered in terms of portion of overall digital ad spend, accounting for 1% of revenue ($649 million). Rich media was just 7% of revenue, or $1.3 billion. The IAB, however, did not break out branded content because native formats have too many variations to accurately categorize.

Enjoying this content?

Sign up to be an AdExchanger Member today and get unlimited access to articles like this, plus proprietary data and research, conference discounts, on-demand access to event content, and more!

Join Today!

 

Add a comment

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>