Mobile is now the dominant vehicle for digital ad spend.
Mobile ad revenues jumped 77 percent year over year in 2016 to account for more than half (51 percent) of all digital ad revenues for the first time, according to the IAB Internet Advertising Revenue Report for Q4 and FY 2016. In Q4, mobile ad revenues drove 53 percent of all digital revenue.
For the year, total US digital ad revenues rose to $72.5 billion in 2016, up 22 percent from $59.6 billion. Mobile was the key growth driver across all digital formats, including search, banner, video, social, and even digital audio, which the report broke out for the first time. Digital’s compound annual growth rate has been rising more dramatically, also thanks to mobile. Mobile CAGR is up 87 percent since 2011, while desktop has increased 8 percent.
In Q4, digital ad revenues rose 24 percent to $21.6 billion, up from $17.4 in Q4 2015. The QoQ growth seen from the third quarter of 2016 to the fourth quarter was the biggest percentage increase seen since 2003. The IAB also noted that, with the exception of the typical dip from Q4 to Q1 coming off the holidays, digital revenues have increased every quarter since 2009. The Q4 growth spurt has also been getting more pronounced.
No surprise, a particular highlight last year was the growth of mobile video. On mobile, video ad revenue rose 145 percent year over year to reach nearly $4.2 billion. Overall, digital video topped $9.1 billion in 2016, an increase of 53 percent over 2015.
Display banners, which include rich media ads, accounted for one in three digital ad dollars spent in 2016, with revenues rising 21 percent year over year to $22.8 billion.
Search ad revenue jumped up 19 percent to nearly $35 billion for the year, making up 48 percent of the digital pie in 2016. Mobile search rose up 91 percent to $17.2 billion; desktop search revenues were off by 13 percent.
Social media ad revenue increased 50 percent over 2015 to hit $16.3 billion in 2016. Social accounted for 22 percent of annual digital ad revenue.
Digital audio (i.e., podcasts) made its debut in the report by topping $1.1 billion in ad revenue in 2016.
“Mobile, social, video, and programmatic trends combine to redefine the digital landscape, providing unprecedented access for advertisers to reach consumers,” said David Silverman, partner, PwC US. “Digital audio, generating $1.1 billion in 2016, speaks to the continued evolution of new formats that enable marketers to find audiences at home, behind their desks, or wherever they are.”