Online ad revenues in the US grew by 22.6% year-over-year during the first half of 2017 to total $40.1 billion, per the latest revenue report from the IAB and PwC. Revenues for the second quarter were up by 23.1% year-over-year, and have increased by a compound annual rate of 15.4% over the past decade. Here are 5 trends to take note of from the report.
1. Mobile Continues to Gain Share
Mobile’s share of online ad revenues – which first reached a majority last year – is now up to 54%, per the report.
The shift to mobile seems to have slowed a little in comparison to prior years: during the first half of 2016, mobile devices captured 47% of online ad spend, which had been up from 30% the year prior.
Nonetheless, since 2012, mobile advertising’s compound annual growth rate during the second quarter is an impressive 77%.
2. Mobile’s Growth Leads to Display’s Gains at Search’s Expense
In comparing ad formats across mobile and desktop platforms, the report shows that search accounts for a larger share of ad spend on desktops (50%) than on mobile devices (46%).
Banner ads, though, are a far more influential format on mobile than desktop devices, occupying 37% of ad spending on the former versus 23% on the latter.
As a result, the shifting spend from desktop to mobile means that overall online ad spending is trending slightly more towards banner ads than paid search. During the first half of the year, paid search accounted for 47% of total online ad revenues, down from 49% a year earlier.
Making up that deficit were banner ads (up a point to 31% share of revenues) and video (up an point to 13% share).
3. Mobile Matches Desktops in Video Ad Spend
Marketers allocated a greater share of their online ad budgets to video during the first half of this year than last across both desktops (up 1% point to 14%) and mobile devices (up 2% points to 12%).
While video occupies a slightly larger share of spend on desktops than mobiles, the larger volume of overall spending on mobile means that digital video ad spend on mobile devices is now equal to that on desktops ($2.6 billion each).
This puts the US on track to meet a global forecast from Zenith, which called for mobile to overtake desktops in video ad spending this year.
4. Social Media & Digital Audio Ad Spend Growth Remain Above-Average
Not surprisingly, two newer online advertising formats are enjoying faster-than-average growth rates.
Social media ad spend totaled $9.5 billion during the first half of the year, representing a 37% increase (compared to the overall 22.6% gain).
As a result, social media represented almost one-quarter (23.7%) of all online ad spending during the first half of the year.
Meanwhile, digital audio ad spending is a much lesser force, but is growing quickly from a small base. Revenues in this area jumped by 42% year-over-year to $603 million, distributed much more heavily to mobile (74% share) than desktop (26% share).
5. The Online Advertising Market Is Still Highly Concentrated
The online ad market in the US has always been densely concentrated among the top ad-selling companies. That’s not surprising when the duopoly (Google and Facebook) together are estimated to account for 61% of global online advertising revenues and one-quarter of all global media advertising revenues.
Nonetheless, this latest revenue report indicates that the top 10 ad-selling companies in the US hogged 75% of total revenues during the second quarter. What’s notable about that is that it’s on the high end of the spectrum: over the past 10 years, the top 10 ad-sellers have ranged between 69 and 75% of online ad revenues.
While this isn’t the first time that the top companies have reached 75% of the market, it does suggest that market concentration isn’t going anywhere for the time being…
The full report, containing much more data, can be accessed here [pdf].