Digital ad growth slowed significantly in 2022

Digital ad sales slowed significantly in 2022, dragged down by economic tightening and social media’s smallest increase in the past decade, according to the Interactive Advertising Bureau’s latest annual study conducted by PwC. Digital ad sales grew 10.8% last year compared to 35.4% the year prior. Still, total revenue hit $209.7 billion, surpassing $200 billion for the first time and up $20.4 billion from 2021. The next largest advertising sectors by revenue were TV, which grew 2% year over year, and video games/esports, which rose 16.4%. Check out the latest Ad Age events and award programs The IAB views the relative slowdown as both a return to normal from the unusually large, post-pandemic growth of 2021, and a result of economic uncertainty experienced in the latter half of 2022. The fight to bring down inflation has sparked a tightening in the economy, which has compelled various industries to pull back their marketing spend. The first quarter of 2022 was actually quite successful for internet advertising, seeing growth of 21.1%. By the second quarter, however, growth had slowed to 11.8%. It was during this time that the Federal Reserve first began to increase interest rates, thus slowing down economic expansion. Growth continued to decline through the rest of the year, totaling 8.4% in the third quarter and 4.4% in the fourth quarter. Also read: Ad business suffers biggest job drop in two years Despite a larger slowdown, mobile-based advertising showed strong growth, with revenue increasing 14.1% year over year. The sector also extended its market share to account for 73.5% of total internet ad revenue. Meanwhile, programmatic advertising grew 10.5% and search advertising was up 7.5%. Social media advertising achieved its smallest level of growth—just 3.6%—in the last 10 years. There are various explanations for the slowdown. Firstly, 2022 was the first full year in which Apple’s ATT policy was in effect. ATT has been criticized by much of the ad tech industry, including the IAB, for hampering targeted advertising. Secondly, the larger downturn in the tech sector in the latter half of 2022 led to a pullback in marketing spend, which particularly affected social media ad revenue projections. At the state level, five digital privacy laws were introduced in 2022, further limiting advertisers’ behavior. Read more: Apple's privacy policy under fire from ad tech industry In contrast to social media advertising, retail media networks saw significant growth in 2022, according to the IAB report. Although percentages were not detailed, revenues were estimated to total $37.5 billion, with two unnamed retail media networks accounting for 45% of this revenue. The largest two retail media networks in the U.S. are Amazon Advertising and Walmart Connect. The rise of retail media networks reflects the ad industry’s increasing dependence on first-party data to target consumers. Looking forward, the IAB predicts media networks to continue to play a heightened role as advertisers have fewer audience identifiers at their disposal.

Digital ad growth slowed significantly in 2022

Featured Stories