The Truth in Digital Advertising

Don’t believe every headline that you read.

There has been a long-standing statement that, “people hate advertising.” For years, I (and many others in this industry) have said that this is not true. In actuality, “people hate bad advertising.” Nobody likes to be annoyed and interrupted. Everybody loves to be entertained and informed. There are nuances. Digital advertising brings with it many sets of bigger and scarier issues: tracking, fraud, viewability, ad blocking, programmatic, retargeting, and more. When it comes to key topics that advertisers debate, 2016 has been the year of ad blocking. What happens when consumers use technology to block ads? How big of a growing market is ad blocking? If the browsers and platforms build ad blocking into their operating systems, what chance do brands, agencies and publishers have to make money in a world, where advertising is the main revenue source?

 

The true state of digital advertising.

If you’re wondering just how healthy the state of digital advertising is, the Interactive Advertising Bureau released their 2015 Internet Advertising Revenue report today, and the numbers are impressive. U.S. digital advertising revenue hit $60 billion last year. As expected, mobile was a beast, growing 66%, from $13 billion in 2014 to $21 billion in 2015. So, as people complain about the size and quality of digital advertising, the market just continues to soar.

 

Who’s getting what out of this $60 billion?

When it comes to the mobile revenue total ($11 billion), the vast amount of the spend comes from display-related mobile formats such as video, according to this IAB report (meaning: not search). Still, with all of this money spent, mobile mostly gets its spend from other media, digital media and through experimental budgets, if you dig into the report (meaning: it’s not mainstream and being allocated the same way that media agencies work with TV, print, etc…).

 

Video, video, video and more video.

In what-was a Google digital advertising world (search, search and more search), the emerging ad format online is video (Google still wins here because of YouTube). Think about that: non-interactive, passive, just sit there and watch video ads are the fastest growing (and most important) segment in digital advertising (how depressing). Non-mobile digital video advertising reached $4 billion last year, up 30% over 2014. To put that into perspective, social ads reached $11 billion last year, up 55% over 2014, while non-mobile search advertising reached $21 billion, up 8% from 2014. There is no doubt that the landscape is dominated by Google and Facebook. For digital advertising dollars spent, it is – without a doubt – their world, and the rest of us are just living in it.

 

Who spends the most in digital advertising?

The retail advertisers spend the most, and they are responsible for 22% of dollars spent. This, in and of itself, is fascinating if you think about the dollars that the CPGs spend in traditional channels. After the retailers, auto and financial services come in, and each accounts for 13% of 2015 revenue. Overall, the IAB’s Internet ad revenue report from Q4 and full-year 2014 found online ad spending grew by 16% year-over-year in 2014, from $43 billion to almost $50 billion, so 2015 brought in an additional $10 billion in revenue.

 

A $60 billion digital advertising industry, in the US alone, with no sign of slowing down. You can read the full report here: IAB Internet Advertising Revenue Report Conducted by PricewaterhouseCoopers (PWC)