Would you believe us if we said that the digital ad revenue jumped 35% in the US in 2021? And it was the biggest gain since 2006? Well… You should believe us because it is true.
As reported by Wall Street Journal on April 12th, 2022 by Megan Graham.
Digital Ad Revenue Jumped 35% in the U.S. Last Year, Biggest Gain Since 2006
Digital ad revenue in the U.S. jumped 35% to $189 billion last year as marketers chased consumers spending ever more time on online media and shopping, according to a new report from the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.
The rise was well above the 12% growth rate of 2020, which was briefly hobbled by an early-pandemic dip. The year-over-year growth in 2021 was the highest the digital ad market had seen since 2006, when it rose at the same rate, the online-ad trade group said.
A flood of new businesses across the economy contributed to the growth in digital ads, said IAB Chief Executive David Cohen. A record 5.4 million new business applications were filed last year, up from 4.4 million the previous year, according to U.S. Census Bureau data.
“They use digital for finding new consumers, delivering products and services,” Mr. Cohen said.
Advertising on digital audio—podcasts and streamed music and radio—grew faster than any other category, up 58% to reach $4.9 billion.
But audio was just a speck of all digital advertising, at 2.6% of the total. Though marketers are interested in podcasts and other audio formats, measuring results can be difficult compared with other types of digital marketing.
In 2021, 10 digital publishers and platforms took the lion’s share—78.6%—of total digital ad revenue, up from 78.1% in 2020, according to the IAB, which doesn’t identify the companies. But last year, research firm Insider Intelligence forecast media behemoths Google, Facebook and Amazon would siphon up 64% of digital ad budgets in the U.S. in 2021.
E-commerce, now a cornerstone of the economy, will continue to drive ad investment to digital channels, the report said. A growing part of that investment will go to so-called retail media networks. Consumer-facing businesses, among them DoorDash Inc., Walmart Inc. and CVS Health Corp. , are increasingly offering advertisers more ways to reach consumers using retailer data, often by letting brands buy ads on retailers’ own websites or apps.
“Advertisers want to be where these transactions are happening,” said Chris Bruderle, the IAB’s vice president of research and insights. “You’re going to see that come to life across all forms of digital media.”
But digital advertising is at the mercy of larger economic factors. In an equity note last week, Morgan Stanley analysts said advertising is highly cyclical and linked to economic growth. Digital advertising has also benefited from marketers spending more on performance advertising, in which budgets go toward campaigns that directly generate consumer action.
But the economy’s strength is crucial. “Because of these dynamics, if the number of consumer dollars being spent slows down or declines … we would expect digital ad dollar growth to also be impacted,” the analysts wrote.
The geopolitical fallout of Russia’s invasion of Ukraine, plus inflation, pandemic variants and supply-chain snarls in the first part of the year are creating headwinds for ad spend, but those may begin to stabilize in the latter half, RBC Capital Markets Equity Analyst Matt Swanson said in an interview.
U.S. midterm elections in November are also likely to lift advertising on streaming TV platforms, he added.
Since the pandemic, shopping online increased, but that was not the only thing that increased during the pandemic. Digital ads have jumped 35%, and we have not seen this jump since 2006. Are you currently using digital ads? If not, will you begin too?
Additional Digital Ads Revenue
Online Advertising: Everything You Need to Know in 2021 (HubSpot)
What is digital advertising? (Amazon Ads)
The Future Of Advertising: Tips for Modernizing Your Advertising in 2022
