Digital Advertising Spends Are Rising

February 7, 2019
Samantha Brachat

The digital advertising market is poised to hit a record-breaking number as spending continues to soar.

 

Onward and Upward

There’s simply no stopping digital’s growth, as once again the online advertising market has experienced significant year-over-year growth. A new report produced by the Interactive Advertising Bureau and PwC has acknowledged that US digital ad spends increased by 23% to $49.5 billion in the first two quarters of 2018.

 


Image Source: IAB

 

As advertising revenue continued to climb, and with holiday spending expected to contribute to an even higher margin in the last two quarters, it was looking very likely that total spend by the end of the year could reach $100 billion, which would be the first time that number has ever been reached.

 


Image Source: IAB

 

The Mobile Impact

A large portion of this surge in growth can be attributed to mobile, which accounted for over $30 billion in the first six months of 2018, advancing to 62.5% of total online advertising revenue (compared to the 54% that was recorded in the same period in 2017).

 


Image Source: IAB

 

Thanks to mobile commerce gaining more momentum last year, consumers are more comfortable now than they’ve ever been with browsing and purchasing from their handheld devices. Combining that with the fact that mobile devices provide marketers with even more intimate detail on user behaviors, it’s making mobile ad placement a much more lucrative concept to explore.

It’s interesting to note how dramatic the shift from desktop to mobile has been over the past few years. Consisting of only 7% of the market in the first half of 2012, it has now completely dwarfed desktop only six years later in the same period.

 


Image Source: IAB

 

Advertising Formats

Additionally, the report provided some interesting findings in regards to specific types of ad formats. In short, essentially all formats experienced growth in some capacity – perhaps unsurprisingly – yet the areas in which that growth occurred will be valuable knowledge for marketers to be aware of when it comes to mapping out their strategy for 2019.

Search, while losing 1.4% of its share in the overall market last year, had its spending revenue increase by 19.3%, totaling $22.8 billion in the first half of the year.

Display ads like banners, rich media and sponsorship placements had a tally of $15.7 billion in Q1 & Q2 last year, which surmounted close to 30% of an increase year-over-year.

Video was another major contributor in the first six months, generating $1.8 billion more in advertising revenue, reaching $7 billion (a 34.8% increase year-over-year).

 


Image Source: IAB

 

Budgeting and Targeting

There’s much to glean from the above findings, but there are two key things in particular to take with you above all else as we move into the new year.

Firstly, when it comes to budgeting for your digital spends this year, you’ll want to be mindful of the fact that there are parallels to be drawn between the growth of total advertising spend and competition in the space. Whether it’s the same companies spending more or new players entering the fray, if you go into this year with the same (or less) of a digital budget that you had previously, you run the risk of falling behind and missing out on the market.

Another sizable element to factor in is mobile. While it’s no surprise that mobile is on the rise, the rate in which it’s eclipsing its desktop counterpart seems to be moving faster than most companies are giving it credit for. There’s a very strong case to be made for running mobile only campaigns moving forward, or – at the very least - allocating separate budgets entirely for mobile and desktop campaigns, and with increased spending going towards mobile.

Having said that, these findings are broad, and each business may have different types of users than others. B2B business for example may not need to ramp up their mobile campaigns due to most of their customers doing their searches during office hours on their desktops, whereas a digital retailer may need to be deploying an aggressive mobile campaign.

At the end of the day, whether its device preferences or advertising formats, we’re seeing an interesting blend of consistent patterns that can help with forecasting, and behavioral changes that can give us a better idea on where our ads should be placed.

With more options available than ever before for advertisers, 2019 is shaping up to be a very interesting year!

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