Digital Ads Are Raking In More Cash Than Ever

IAB report says 2018 was the first year that annual ad revenue broke $100 billion

2018 was another record-breaking year for American ad mavens. Getty Images

2018 was yet another record-breaking year for digital marketers in the U.S. The most recent estimates—which come courtesy of the latest IAB Internet Advertising Revenue Report released today—put last year’s earnings at $107.5 billion. The report, released by the IAB and prepared by the consulting firm PwC US, represents a 2% year-over-year increase from $88.3 billion in 2017.

According to Sue Hogan, IAB’s head of research, the market’s rocketing growth is led by two things: mobile and video. While the market hasn’t seen connected usership grow that much over the past two years—Hogan estimated a 1% jump from roughly 253 million users to 257 million in 2018—the “time spent” has jumped remarkably, and with it, the ad impressions that advertisers are seeing.

“This is absolutely because of mobile and video,” she said, adding that growth in these areas was hardly a surprise, thanks to their “ease of use.”

“When we look at digital video and do research around mobile, we certainly see a lot of shift on the time spent,” she explained. “If you look at time spent online, on mobile from 2017 to 2018, you see this sizable spike.”

And the ad dollars are following those eyeballs. 2018 saw mobile revenue peak at a shiny $69.9 billion—accounting for nearly two-thirds of the year’s internet ad revenue, and up 40% (and more than $10 billion) from 2017.

While mentioning mobile, it’s impossible to ignore the impact of social media platforms, which are expected to reach a more than 2.7 billion users worldwide this year, according to Statista. The IAB found that social media revenue grew by 30.6% from 2017 to 2018, reaching a whopping $28.9 billion. Hogan added that while time spent online overall saw a jump, the trend repeated across social—users spent 22% more screen time on social media in 2018 than the year before, she said.

“Social media sites tend to foster consumer interaction and during a time when capturing the attention of the consumer is so critical,” the report states. “It is no coincidence we are seeing social media drive revenue.”

Meanwhile, while most desktop formats experienced gains that were small at best, digital video saw the largest uptick in all formats; 37%, from $11.9 billion in 2017 to $16.2 billion in 2018. Digital videos on smartphones and tablets—which comprise nearly 63% of all digital video ad earnings, according to the report—reached $10.2 billion by the year’s end, rising more than 65% from the previous year.

“I think what’s really fantastic is that this isn’t just full year growth, we’re also seeing quarter over quarter, and half year over half year growth,” Hogan said, pointing out that growth in the internet space hasn’t broke its steady climb since 1996.

“I can’t vouch that this will happen forever,” she said. “But it’s still an impressive figure.”

@swodinsky Shoshana Wodinsky is Adweek's platforms reporter, where she covers the financial and societal impacts of major social networks. She was previously a tech reporter for The Verge and NBC News.
Publish date: May 7, 2019 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT