Mobile advertising jumped 145% to $3 billion in the first half of 2013, generating fresh buzz around the rapidly growing ad medium. There's nothing like a nice round billion-dollar spending figure to lend a sense of legitimacy to an emerging ad platform.
Mobile also accounted for 16% of the $20 billion in digital ad dollars in the first half of 2013 -- putting it under the heading of significant minority, the IAB report shows.
Beyond that, it’s hard to tell much because the IAB, in partnership with PricewaterhouseCoopers, still isn’t breaking out mobile ad dollars after first reporting spending for the category in April 2011. Doing so would provide deeper insight about trends and strategies within mobile advertising, and how higher mobile spending affects the broader digital ad landscape.
In a research note this week, Pivotal Research Group senior analyst Brian Wieser acknowledged that the IAB figures suggest “meaningful acceleration” in mobile spending levels, but said the lack of more detailed data leaves unanswered questions about underlying patterns. He noted that virtually all spending on paid search goes to Google, and search ad buyers make no distinction between whether a campaign is delivered in mobile or the desktop.
A growing number of display marketers also aren’t differentiating between mobile or desktop buys, partly because big publishers like Facebook placing ads wherever they determine they will perform most effectively. That said, Facebook reported last quarter that 41% of its ad sales came from mobile, underscoring its importance
Wieser wrote.
“As little mobile advertising occurs today solely because a marketer wants to reach consumers in mobile environments, fuller assessments of the state of the industry are somewhat limited by the data as the IAB presents it.”
For its part, the IAB said in response to an Online Media Daily query that it plans to break out mobile advertising into different formats “in the near future,” without providing more detail.
Even without that information, Wieser uses the IAB numbers to suggest the surge in mobile advertising may not be driving the overall 18% growth in Internet advertising in the second quarter. He estimates that mobile and desktop search combined grew at a 12% clip in the second quarter, implying that non-search digital media grew 24% year-over-year.
Wieser wrote.
“This would represent the fastest sustained rate of growth the industry has experienced since some time in 2006 or 2007, when the industry was half of its present size.”
But his analysis argues that mobile per se isn’t driving the bulk of growth. Rather, the report points to the rise of programmatic trading as playing a key role.
In addition to Google and Facebook, a new crop of programmatic players, including Mediamath, Turn, Rubicon, Pubmatic and AppNexus, along with next-generation ad networks, such as Criteo and Rocket Fuel. Wieser wrote.
“Programmatic buying may be capturing the bulk of new money advertisers and spending with digital media. While it's guesswork on our part, it seems a more plausible assessment than any notion that goals associated with mobile marketing might be driving the growth that the industry is reporting.”
The IAB also doesn’t break out the share of online ad dollars that programmatic buying accounts for.
COMMENTARY: According to Andy Cocker, COO/Co-Founder, Infectious Media, this is his definition of Programmatic Buying:
"Programmatic Buying describes online display advertising that is aggregated, booked, flighted, analyzed and optimized via demand side software interfaces and algorithms. While it includes RTB it also includes non RTB methods and buy types such as Facebook Ads API and the Google Display Network. Programmatic also implies the use of multi sourced data signals to inform targeting and optimization decisions. An increasing share of online display advertising is moving towards programmatic due to its inherent efficiency (both workflow and performance). The majority of inventory available via programmatic is non-guaranteed, auction traded during the ad call although we expect to see more guaranteed reserved 'premium' inventory available in the future. Although 'Programmatic' suggests little or no human intervention, algorithmic optimisation can only do so much. Smart macro optimization by analytical 'traders' can amplify programmatic performance significantly."
According to the IAB's official press release dated October 9, 2013, internet ad revenues surged to a landmark $20.1 billion by mid-year 2013, per the IAB Internet Advertising Revenue Report released today by the Interactive Advertising Bureau (IAB) and prepared by PwC US. This represents an 18 percent increase over last year’s first-half ad revenues of $17 billion.
Maintaining the trend, second quarter 2013 internet ad revenues also saw an 18 percent year-over-year increase, reaching $10.3 billion, up from $8.7 billion in Q2 2012.
Report highlights include:
- Mobile revenues soared to $3 billion in the first half of 2013, representing triple-digit growth at 145 percent, from $1.2 billion in the same period last year
- Digital video, a component of display-related advertising, took in $1.3 billion in revenue during the first six months of 2013, an uptick of 24 percent over the first half of 2012 at $1.1 billion
- Search revenues in the first half of 2013 totaled $8.7 billion, up 7 percent from $8.1 billion in the first half of 2012
- Display-related advertising revenues in the first half of 2013 totaled $6.1 billion, accounting for 30 percent of revenues in the time period, up 9 percent from $5.6 billion in the first half of 2012
- The top three advertising verticals (retail, financial services and auto) accounted for 46 percent of digital advertising revenue, including Retail at 20 percent, Financial Services at 14 percent and Automotive at 12 percent
Digital Ad Spending By Ad Format - First Half 2012 and 2013 - IAB (Click Image To Enlarge)
Digital Ad Spending By Vertical Market - First Six Months 2012 and 2013 - IAB (Click Image To Enlarge)
Randall Rothenberg, President and CEO, IAB, said.
“Digital has steadily increased its ability to captivate consumers and then capture the marketing dollars that follow. Mobile advertising’s breakneck growth is evidence that marketers are recognizing the tremendous power of smaller screens. Digital video is also on a positive trajectory, delivering avid viewership and strong brand-building opportunities.”
David Silverman, a partner at PwC US, said.
“This report not only confirms that brands are making a greater commitment to interactive, but also points to the fact that mobile and digital video are being identified as integral elements of the marketing mix. Internet advertising’s ability to impact and engage is evident across digital screens, whether big or small.”
Sherrill Mane, Senior Vice President, Research, Analytics and Measurement, IAB, said.
“Consumers are embracing new screens, new content and transforming how they shop, communicate and consume content at an accelerated clip. And, in response, marketers are turning to those same interactive arenas just as quickly.”
Annual Figures
The following chart highlights half-year internet ad revenue since the IAB began measurements in 1996; dollar figures are rounded.
| Year | Revenue | % Growth |
| HY 2013 | $20,066 | 18% |
| HY 2012 | $17,028 | 14% |
| HY 2011 | $14,941 | 23% |
| HY 2010 | $12,127 | 11% |
| HY 2009 | $10,900 | -5% |
| HY 2008 | $11,510 | 15% |
| HY 2007 | $9,993 | 26% |
| HY 2006 | $7,909 | 37% |
| HY 2005 | $5,787 | 26% |
| HY 2004 | $4,599 | 40% |
| HY 2003 | $3,292 | 11% |
| HY 2002 | $2,978 | -20% |
| HY 2001 | $3,720 | -7% |
| HY 2000 | $4,013 | 147% |
| HY 1999 | $1,627 | 110% |
| HY 1998 | $774 | 125% |
| HY 1997 | $344 | 320% |
| HY 1996 | $82 | |
|
|
||
| Total | $111,624 |
Ad Category Breakouts (in millions)
| Half Year 2013 | Half Year 2012 | |||
| $ | % | $ | % | |
| Search | 8,728 | 43% | 8,128 | 48% |
| Display Related | 6,078 | 30% | 5,586 | 33% |
| Banner Ads | 3,780 | 19% | 3,622 | 21% |
| Digital Video Commercials | 1,307 | 7% | 1,053 | 6% |
| Rich Media | 640 | 3% | 495 | 3% |
| Sponsorship | 351 | 2% | 416 | 2% |
| Mobile | 3,038 | 15% | 1,242 | 7% |
| Classifieds and Directories | 1,291 | 6% | 1,160 | 7% |
| Lead Generation | 853 | 4% | 834 | 5% |
| 78 | 0% | 78 | 0% | |
Revenue Pricing Models (in millions)
| Half Year 2013 | Half Year 2012 | |||
| $ | % | $ | % | |
| Performance-Based | 13,110 | 65% | 11,461 | 67% |
| Impression-Based | 6,581 | 33% | 5,199 | 31% |
| Hybrid | 375 | 2% | 368 | 2% |
IAB sponsors the IAB Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertisements on the internet.
The survey includes data concerning online advertising revenues from web sites, commercial online services, free email providers, and all other companies selling online advertising. The full report is issued twice yearly for full and half-year data, and top-line quarterly estimates are issued for the first and third quarters. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.
A copy of the full report is available at: iab.net/AdRevenueReport.
About the IAB
The Interactive Advertising Bureau (IAB) is comprised of more than 500 leading media and technology companies that are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more information, please visit iab.net.
About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day.
Courtesy of an article dated October 11, 2013 appearing in MediaPost Publications Online Media Daily, a press release dated October 9, 2013 issued by the Interactive Advertising Bureau (IAB), an article dated October 9, 2013 appearing in MarketingLand and an article dated November 19, 2012 appearing in Ad Exchanger
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