New York – April 12, 2023 – After record-breaking growth in 2021, internet advertising revenue has slowed but still delivered double-digit growth in 2022. That’s according to the newly released “IAB Internet Advertising Revenue Report: Full Year 2022,” conducted by PwC.
Between 2021 and 2022, internet advertising revenues grew 10.8% year-over-year (YoY) totaling $209.7 billion and overall revenues increased $20.4 billion YoY. Q1 saw the highest growth of 21.1% followed by Q2 at 11.8%, resulting in ad revenues for the first half of the year surpassing $100 billion for the first time. Revenues slowed in Q3 (8.4%) and Q4 (4.4%).
“After unprecedented growth in 2021, we expected more moderation in 2022. Economic uncertainty, geo-political unrest, a shifting regulatory environment and addressability changes have all contributed to revenue growing at a slower pace,” said David Cohen, CEO, IAB. “Looking ahead, there is definitely still growth to be had, but it will be harder to achieve and likely less than we have become accustomed to.”
Internet Advertising Revenue Growth Has Slowed in 2022, Revenues Still Increased YoY
- Buyers are diversifying their spending; digital video, digital audio, and programmatic are beneficiaries. In 2022, digital video revenues totaled $47.1 billion and 2022 digital audio revenues hit $5.9 billion. Programmatic advertising revenues grew by $10.4 billion, bringing the total number to $109.4 billion, an increase of 10.5% YoY.
- Market share of the top 10 companies has declined. 2022 saw a decrease in the share of ad revenue among the top 10 companies for the first time since 2016, further emphasizing a growing democratization of advertising revenue across the mid-tier and long-tail publishers.
- Social media revenue growth has slowed. While first half revenues of 2022 grew (+$1.8 billion YoY); second half revenues plateaued at $31.4 billion (+$0.3 billion year-over-year).The implementation of Apple’s App Tracking Transparency (ATT) has impacted total revenue.
- Mobile advertising revenues grew 14.1% YoY. Revenues hit a record high of $154.1 billion: the continued increase in consumption of digital audio formats such as podcasts, plus the rollout of 5G and its beneficial impact on VR and AR advertising capabilities, are likely to continue to drive mobile ad revenues in 2023.
- Search revenue grew 7.8%, but overall market share continues to decrease. While search revenue grew 7.8% YoY, its overall market share continues to decrease as buying shifts to digital video and display.
“Advertisers are diversifying their spending to target audiences using fewer identifiable data points,” said Jack Koch, SVP Research and Insights, IAB. “Digital video, digital audio, and the long tail of publishers are benefiting.”
What’s ahead for digital advertising?
Privacy and regulation will change advertising. The importance of privacy by design in the digital industry has never been more clear. Companies need to adjust to the latest state-level privacy regulations enforced this year in California, Virginia, Colorado, Connecticut, and Utah (and, effective January 1, 2025, Iowa), along with consumers’ worries about their data that resulted in privacy legislation and signal loss. This adaptation has become a catalyst for innovation in the industry, leading to the development of novel solutions that balance data-driven advertising with user privacy.
The advertising industry is witnessing a shift towards solutions that can leverage their first-party data. This has resulted in the continued growth in connected TV (CTV) and retail media networks (RMNs), as these channels provide advertisers with a way to reach specific audiences with relevant ads at scale.
E-commerce and media companies are also working hand-in-hand to develop new ways to target and measure the effectiveness of advertising, including shoppable ads, affiliate marketing, and direct-to-consumer advertising.
While “premium” content once meant “Hollywood production” value, it’s now more than ever is in the eyes of the beholder. Viewer attention is shifting to content that can match specific interests – regardless of the production value, format, or screen – and creator content is now viewed as premium by many.
“2023 promises to be a challenging year. But this industry, more than most, is galvanized by change,” added Cohen. “The job now is identifying where the areas of growth are going to be, follow the consumer and develop solutions that meet and exceed their needs.”
IAB Internet Advertising Revenue Report: Full Year 2022 can be downloaded here. And please join us for a special webinar April 12 for more insights on the report findings and trends.
Commissioned by the IAB and conducted by PwC Advisory Services LLC (“PwC”) on an ongoing basis, with results released quarterly, the “IAB Internet Advertising Revenue Report” was initiated by the Interactive Advertising Bureau (IAB) in 1996. This report uses data and information reported directly to PwC from companies selling advertising on the internet as well as publicly available corporate data. The results reported are considered to be a reasonable measurement of internet/online/mobile advertising revenues because much of the data is compiled directly from information supplied by companies selling advertising online. The report includes data reflecting desktop and mobile online advertising revenues from websites, commercial online services, ad networks and exchanges, mobile devices, and email providers, as well as other companies selling online advertising. The report is conducted independently by PwC, including research by their in-house market research team, on behalf of the IAB. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information. Only aggregate results are published and individual company information is held in strict confidence with PwC. Further details regarding scope and methodology are provided in the appendix of this report.
The Interactive Advertising Bureau empowers the media and marketing industries to thrive in the digital economy. Its membership comprises more than 700 leading media companies, brands, agencies, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City.