U.S. online advertising continues to show strong growth, despite global economic uncertainty and declines in traditional media spending, according to several reports released last month.
Internet ad revenue in the U.S. reached a record $17.0 billion in the first half of this year, up 14.1% over the same period last year, according to the Interactive Advertising Bureau's Internet Advertising Revenue Report conducted by PricewaterhouseCoopers. In the second quarter, Internet ad revenue hit $8.7 billion, up 12.9% over the same period last year.
The growth reflects the “innovation and ingenuity that keeps our industry growing despite our stagnant economy and difficult times for the world economy,” said Sherrill Mane, senior VP-research, analytics and measurement at the IAB, during a webcast Oct. 11 to discuss the report. “One of the striking findings in our revenue report is the amazing growth of mobile, which nearly doubled since the first half of 2011.”
Mobile advertising revenue totaled $1.2 billion in the first half of this year, up 95% over the same period last year, according the IAB report.
“Our biggest investment for b-to-b will be in mobile,” said Rishi Dave, executive director-digital marketing at Dell Inc., in an interview. “We have increasingly found that our customers want to consume content, which is at the center of b-to-b marketing, in multiple formats beyond just the computer—whether it's tablets, or phones or some other way—and they want to get that content streaming. So we will be investing a lot in how we get that content to our customers in whatever format they want it.”
Other marketers said they continue to invest in digital marketing as their customers and prospects spend more time online and with mobile devices.
“We continue to shift our media mix toward the way our audience consumes information, which is more mobile, more digital and more social,” said John Kennedy, VP-corporate marketing at IBM Corp. “Every year, we're migrating more of our activity to those types of techniques, which are all built around engaging people at an individual level.”
According to the IAB report, search advertising made up the bulk of total Internet ad revenue, reaching $8.1 billion in the first half, up 19.0% over the same period last year. Display advertising totaled $5.6 billion, up 4.0%, and digital video ad revenue climbed 10.0%, to $1.0 billion.
A separate report from Forrester Research found U.S. online display advertising is projected to grow at a compound annual growth rate (CAGR) of 17.0% over the next five years, hitting $28.0 billion by 2017, up from $12.7 billion this year. However, Forrester said it lowered its projection by about 13.0% over the next five years from an earlier forecast, citing a shift to lower-cost channels such as social media.
Forrester said video will become an increasingly popular online format, increasing from $2.9 billion this year to $9.2 billion in 2017, a CAGR of 26.0%. Rich-media ads, excluding video, will grow from $5.2 billion this year to $11.0 billion in 2017, a CAGR of 16.3%.
Text ads on mobile devices will also grow over the next five years, Forrester projected, from $3.5 billion this year to $7.7 billion in 2017, a CAGR of 16.9%. Static-image display ads will show steep declines, dropping from $1.1 billion this year to $59.0 million in 2017, a CAGR of -44.7%.
Also last month, Magna Global downgraded its U.S. ad spending forecast to $154.4 billion next year, up 0.8% over this year. In its July forecast, Magna had projected growth of 0.9% next year.
The revised forecast was due to better-than-expected political and Olympic advertising this year, which will help boost total U.S. ad spending 4.6% over last year, Magna said in the report.
The ad category experiencing the most growth this year will be digital media, including search, display, mobile and video (up 12.8%), followed by television (9.0%) and out-of-home advertising (4.2%).
Print advertising has continued to suffer this year. Magna projected ad spending in newspapers will be down 8.6%, while magazines will see a 7.5% decline.
Next year, digital media will be up 11.7% over this year, Magna forecast.
“Driven by video (up 23.0%, at $2.9 billion) and mobile advertising (up 40.0%, at $3.6 billion), total digital advertising will reach a market share of 26.0% (out of total core media) that remains at some distance from television leadership (41.0%), but nearly equivalent to the combined market shares of print and radio,” Magna said in the forecast.