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Online ad revenues grew rapidly again this past year, up almost 22% and surpassing a $100 billion milestone to reach $107.5 billion, per the latest revenue report [pdf] from IAB and PwC. Revenues for the 4th quarter grew by about 19.8% year-over-year as the shift to mobile continues steadily. Here are 8 takeaways from the report.

1. The Shift Towards Mobile Continues

Mobile’s share of online ad revenues (revenues generated on mobile devices including smartphones and tablets) grew to 65.1% in 2018 after seeing an increase in revenues of 39.7%.

Mobile ad spending continues to grow at a more rapid rate than the overall market, buoyed by factors including increased social media ad spending.

Due to mobile advertising’s growth in the past few years, its compound annual growth rate stands at 53.8% over the past 5 years.

2. Desktop: Still Hanging On

Desktop advertising revenue declined by almost 2% in 2018 (from $38.2 billion to $37.6 billion), further proof that mobile advertisers are shifting more of their spend over to mobile.

However, advertising revenues are not as low as they were just two years ago, with 2016 revenues being the lowest they had been for several years ($35.9 billion).

3. Search Still Dominates, But Video Is Making Great Strides

Search continues to be the single dominant format in US online advertising, reaching $48.4 billion in 2018, representing a 19.2% year-over-year increase from the 2017 total.

Still, that growth rate was slightly under the average for all formats, leading to a slight drop in search’s share of total online ad revenues. This past year, search captured a 45% share of revenues, slightly down from 46% in 2017. That one percentage point migrated to video, which grew to account for 15% of all online ad revenues, as video ad spend jumped by 37.2% to $16.3 billion.

As a result of video’s growth, display revenues (in this case, a combination of banner, sponsorships, rich media and video) totaled 46% of all online ad spend, putting it just above search’s share (45%).

Once again, the IAB and PwC study lends more weight to “Other” categories in this latest edition, at almost one-tenth (9%) of revenues. Growth in “other” categories beyond search and display totaled 19.2% in 2017, driven by Lead Generation, Audio and Classifieds.

4. Banner Ads Far More Influential on Mobile

A closer look at the distribution of ad spend by format shows that the leading areas differ by device. Search is the leading format on desktops, with a 48% share of all spending.

By contrast, display is the leader on mobile, accounting for more than half (51%) of all revenues. Banner ads, in particular, are a much greater player on mobile than desktop, representing 36% of spend on mobile devices against just 23% on desktops.

5. Video Ad Spend On Mobile Grows By Almost Two-Thirds

In 2017, video ad spend on mobile surpassed that on desktop for the first time. This year, not only is video ad spend larger on mobile, it grew by 62.9% to reach $10.2 billion.

This is despite video still having a slightly larger share of ad revenues on desktop (16%) than on mobile (15%), suggesting that there’s more room for growth. Indeed, the 15% share of mobile ad spend that video captured in 2018 represents a marked increase from 12% the year prior.

6. Social Media Growth Beginning To Slow

Unlike last year, social media ad spend’s growth did not exceed that of digital video ad spend (37.2%).

Social ad spend increased by 30.6% last year, per the report, reaching $28.9 billion.

While social continues to grow, the growth is slowing and, per the report, is below the 46.6% compound annual growth rate from 2012 to 2018.

7. Podcasts Drive Digital Audio Growth

Digital audio advertising, which made up 2.1% of the total internet advertising revenue for 2018, saw a 22.9% increase over last year, with revenue totaling $2.3 billion. Notably, while digital audio had been one of the fastest-growth formats in 2017, its growth rate in 2018 only matched the average, such as its share of total online advertising remained flat.

Audio continues to be a mobile-heavy format, with $1.7 billion of the total digital audio advertising revenues (or around three-quarters) coming from mobile audio.

The IAB also notes that a large percentage (actual percentage not provided) of the overall growth was due to podcast advertising revenue. The good news for digital audio advertisers is that individuals in the US are spending more time listening to podcasts and they are also receptive to having more ads if it means their favorite podcast can continue.

8. Popularity of Performance-Based Ad Model Flattens

Most internet ad dollars are transacted using performance-based pricing. While this model did continue its decline from a high of 66% in 2014, it only saw a minuscule dip in 2018.

In 2018 performance-based pricing comprised 61.8% of internet ad revenues, about on par with the 62% from 2017.

CPM experienced a bit of an increase to 34.9% of spending while hybrid pricing dipped to 3.3% from 3.9% in 2017.

For more details, you can view the pdf here.

About the Data: Spend figures are estimates from IAB and PwC, derived from survey and supplemental publicly disclosed information. Figures are not adjusted for inflation.

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