IAB Sees Strongest Digital Ad Growth In Four Years

IAB Ad RevenueDespite the triple threat of ad blocking, fraud and viewability that have laid siege to digital media this year, spending on the channel is growing faster than at any time since 2011.

Revenue for January through June topped $27.5 billion, a 19% increase, according to IAB’s ad revenue report. That’s the best growth rate since 2011.

However, within the different digital categories the IAB tracks, growth varied dramatically. Desktop display advertising continued its five-year decline, dropping 4% to $3.9 billion. Sponsorships also declined 4% to $366 million.

Mobile’s insane growth rate is slowing down for the second year in a row. The category grew 54% to $8.2 billion for the first half of the year, when last year it grew 75% during the same time period. After growing from $600 million to $8.2 billion in just five short years, the early years of doubling revenue every year are likely over.

The real stars from a growth standpoint are digital video and social advertising.

Video has grown steadily for about five years, at rates just under 20% for the last two years, but the channel spiked 35% to $2 billion in 2015's first half.

Social media advertising has been growing more than 50% a year since 2011, and this year has been no exception. It grew 51% to $4.4 billion.

For the third year in a row, the average CPM among fifty IAB-selected sites was in the $11 range, coming in at $11.67. Auto and financial advertisers pay the highest CPMs, with other categories like family, entertainment and news clustered below those two outliers.

While the digital advertising market is huge, not all advertisers play equally in the space. Retail contributes the most digital ad revenue (22%), followed by high CPM-paying financial services (13%) and auto (13%) advertisers. Telecom and travel were next at 9% each.

Peter Stabler, senior analyst at Wells Fargo Securities, expects a gradual shift in the digital advertiser mix to favor some new categories.

He noted CPG brands have begun to invest more in digital because it increasingly allows them to activate their reams of first-party data and data from loyalty partners. They accounted for 6% of digital advertising revenue in the first half of this year, but may command more next year.

Improvements in measurement may also accelerate their investment.

“The evolution of web advertising to include rating points and viewability metrics is really important,” Stabler said. Unlike other mediums, digital hasn’t had an “opportunity to see” metrics for advertisers, so “steps toward standardization and improved currency will drive additional spending online.”

 

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