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

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

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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.

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