Mobile Gains Primacy in US Digital Advertising: 3 Takeaways

May 3, 2017

By now you’ve probably heard the news: in their latest internet advertising revenue report [pdf] – covering 2016 – the IAB and PwC have revealed that mobile (finally) captured a majority share of advertising revenues. Here are 3 takeaways from the report’s findings.

1. It’s been a rapid rise to the top for mobile devices.

How quick? Just 5 years earlier, when the IAB and PwC began tracking mobile’s share of revenues, it stood at a paltry 5%. In other words, mobile’s share of internet ad revenues has grown tenfold in just 5 years. (You can see the ascent in the above chart.)

Even with this fast increase, mobile’s share of ad spend has lagged its share of consumers’ digital media time – and continues to do so. (Mobile took majority share of digital time in the US a few years ago.) It’s a crude comparison to make, though: conversion rates on mobile devices tend to lag those on desktops, which has likely been partly behind advertisers’ relatively cautious move to these devices.

2. Mobile ad spend shifting to search, video formats

The latest report shows how mobile advertising spending is broken out by format, with almost half (47%) going to search as opposed to 38% to banners and 11% to video. Compared to last year, this represents a move towards search and video and a fairly sizable one away from banners.

The upshot?

  • Mobile search spend ($17.2B) now rival desktop search spending ($17.8B)
  • By virtue of enormous growth last year, mobile video ad spending ($4.2B) is likewise now almost on par with desktop video ad spending ($4.9B); while
  • Mobiles continue to be the primary devices for overall display-related advertising ($18.1B), far exceeding the comparable figure for desktops ($13.6B).

Meanwhile, in its first look at digital audio, the report also notes that 81% of the $1.1B in digital audio ad spending goes to mobile devices.

3. Mobile drives overall online ad market growth

Not surprisingly, the growing amount of advertiser spending on mobile devices has fueled the online advertising industry yet again. In 2016, advertisers poured $12.9B more of their dollars into digital advertising than they did in the prior year. All of that additional spending went to mobile, which also cannibalized desktop in the process: mobile got a huge $15.9B uptick in ad spend, while desktop lost $3B.

That was the first annual drop-off in desktop ad spending since 2009.

Other Findings:

In other highlights from the report:

  • The 21.8% year-over-year increase in digital ad spending was the largest since 2011 (21.9%), while the 24% year-over-year increase in Q4 ad spend marked the 27th consecutive quarter of double-digit growth and the 29th consecutive quarter of any growth;
  • The retail (21% share), financial services (13%) and auto (12%) categories continued to be the largest spenders, unchanged from 2015;
  • While digital ad spending is continuing to climb, it’s still going to the hands of just a few companies: the top 10 ad-sellers accounted for almost three-quarters (73%) of digital ad spend in Q4 2016, with these figures disputed by analysts who see a much bigger share going to just Facebook and Google;
  • Social media ad spend grew by 49% year-over-year to $16.3B, with the second half of the year seeing an even greater jump; and
  • CPM-based pricing grew slightly from 33% of spending in 2015 to 35%, its highest share since 2009.

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