As digital media consumption continues to grow, online advertising dollars are following fast. According to the newly released “IAB Internet Advertising Revenue Report: Full Year 2021,” conducted by PwC, all major channels increased significantly compared with a year ago. Particularly across digital video (including CTV/OTT), digital audio, social media, and search.
Libby Morgan, IAB’s SVP, Chief Strategy Officer says, “We fully expected 2021 to be an exceptional year for digital ad. But even we were surprised at the degree of acceleration of growth. Not only was every single digital channel up, but some were up more than 50% year on year. This year’s increase is 3x what it was last year.”
The growth is consistent with a recent study from Harvard Business School, commissioned by IAB. The study showed the internet economy has grown seven times faster than the US economy over the past four years. It now accounts for 12% of the US GDP.
According to David Cohen, Chief Executive Officer, IAB, “What’s underneath these numbers is a very clear narrative. We are witnessing the total and complete democratisation of access afforded by ad-supported digital channels.”
“Increased consumer usage coupled with extraordinary growth of small and mid-sized businesses during pandemic has fuelled growth across all digital. This was especially digital audio and video. We expect digital migration to drive a growing, healthy and competitive digital marketplace supported by innovation and entrepreneurship.”
Streaming media outpacing the overall industry in growth
There are a number of challenges that the industry continues to face including privacy regulation. The deprecation of third-party cookies and identifiers, measurement challenges and supply-chain transparency. Brands have spoken and digital is where they are putting their dollars:
- Digital video continues to be one of the fastest-growing channels. Up 50.8% compared to last year, with total revenues of $39.5B.
- Digital audio captured the highest YoY growth, up 57.9% to $4.9B.
- Social media advertising was up 39.3% to $57.7 billion. The research suggests Consumers continue to engage with Meta platforms, Snapchat, TikTok, and Twitter.
- While search revenue grew substantially (32.8%) in 2021, it did not grow as strongly as in other areas. This led to a slight decrease in total revenue share (a reduction of 0.8 percentage points).
“The 2021 Census Bureau, saw the greatest business growth in history with 5.4 million new businesses created,” said Cohen. “Those businesses rely upon the ad-supported internet to attract new customers and provide products and services to the American public. We believe this small business engine will be a key contributor to fuelling ongoing digital media and marketing ecosystem growth.”
What’s next for digital advertising?
Looking ahead to the remainder of 2022, IAB and PwC forecast continued digital ad growth. They expect this will be driven by significant innovation in retail media, CTV/OTT, gaming, and digital audio. The continued rise of AR/VR, the metaverse, and Web3 technologies is expected to spark innovation. These trends are expected to continue to drive ad revenue in the years ahead.
Methodology
Commissioned by the IAB and conducted by PwC Advisory Services LLC on an ongoing basis, the results are released quarterly. The report uses data and information reported directly to PwC from companies selling advertising on the internet. In addition to publicly available corporate data. The results reported are considered to be a reasonable measurement of internet/ online/mobile advertising revenues because much of the data is compiled directly from information supplied by companies selling advertising online. The report includes data reflecting desktop and mobile online advertising revenues from websites, commercial online services, ad networks and exchanges, mobile devices, and email providers, as well as other companies selling online advertising.
Enterprise Times: What this means for business
The implication of this report is the continued decline in traditional advertising used to support traditional marketing channels. Covid-19 produced a systematic shift in consumer behaviour, as society rapidly embraced digital channels to work, rest and play. So, it’s not too surprising to see growth in online advertising across all digital channels. The key challenge for agencies, media buyers and brands will be to ensure the creative digital adverts are at a high level. That is they remain sufficiently high-quality level to engage interests and sustain relationships with their key target audiences. Especially, when compared to adverts developed by the traditional creative agency route. Creative agencies must continue to innovate and find new formats and tools to communicate with audiences. And not simply sit back and rely on just throw digital adverts on TikTok.
