Digital media ad revenue surges to $189 billion—biggest jump in 15 years

As consumers' appetite for digital media grows, advertisers are increasingly looking to get a piece of the pie. The amount of advertising dollars in major digital channels soared 35% from 2020 to 2021 to $189 billion, with big jumps in video, audio and social media, according to a report from the Interactive Advertising Bureau (IAB). That is up from the 12.2% increase the year prior, marking the biggest growth leap in digital channels since 2006, according to the report. Although the gains underscore the growing popularity of digital platforms, there is concern within the industry that the stream of funds could slow as digital media channels continue to face uncertainties surrounding privacy regulation and other industry issues. The study, which was conducted by PricewaterhouseCoopers, shows digital audio captured the highest year-over-year growth with $4.9 billion in advertising revenue, up 57.9% from the previous year. Digital video also continues to be one of the fastest-growing channels, up 50.8% from 2020, with total revenues of $39.5 billion, according to the report. “We fully expected 2021 to be an exceptional year for digital ad growth, but even we were surprised at the degree of acceleration. Not only was every single digital channel up, but some were up more than 50% year on year,” said Libby Morgan, senior VP, chief strategy officer, IAB. A recent study from Harvard Business School, commissioned by IAB, found the internet economy has grown seven times faster than the U.S. economy and now comprises 12% of GDP. While ad revenues in streaming media (digital video and digital audio) are growing, the report cautioned that "consumer migration to these ad-free, subscription-based experiences is threatening the revenues of ad-supported streaming services." In the first half of 2020, Netflix gained 25 million subscribers as consumers who found themselves under stay-at-home orders turned to streaming content for entertainment. Similarly, last year, Amazon announced its streaming service had surpassed 200 million members, an increase of 50 million from the previous year. Global video streaming market size, which was valued at $38.56 billion in 2018, is projected to reach $149.34 billion by 2026, according to a report from Allied Market Research. There are also concerns surrounding the effect of privacy regulations on digital revenue streams. Sign up for Ad Age’s Influencer Marketing newsletter. Apple’s privacy changes to iOS14, which allow consumers to opt out of personalized ads on the Facebook and Snapchat apps, has slowed the growth of ad revenue at both Meta and Snap. Concerns over the privacy regulations may have also slowed the growth of YouTube's ad revenue in the latter half of 2021. Google parent company, Alphabet, which owns YouTube, reported YouTube’s ad revenue rose by only 25% to $8.6 billion the quarter ending in December, a decrease from the 42% ad revenue growth experienced by the company in the third quarter. Despite the challenges, social media advertising still soared to $57.7 billion, up 39.3% from the previous year, as consumers continue to interact with Snapchat, TikTok, and Twitter and Meta platforms. Search revenue also grew by 32.8% but experienced a slight decrease in total revenue share of 0.8 percentage points.

Digital media ad revenue surges to $189 billion—biggest jump in 15 years

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