Study: Digital Ad Revenues Grow As Mobile Accelerates

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iab-logo-digital-interactivThe pie just keeps getting bigger for the digital media industry. Internet advertising revenues surged in the first half of 2013, reaching $20.1 billion on continued growth in the mobile sector, according to new study commissioned by the IAB, and conducted by PricewaterhouseCoopers (PwC). Mobile revenues, which include both smartphones and tablet media, more than doubled in Q1 and Q2, growing from $1.2 billion in 2012 to over $3 billion this year.

Search advertising still accounts for the lions share of internet ad revenues, but mobile continues to take a large slice of the pie. Revenues from mobile advertising accounted for 15% of total revenues during first half of this year, more than double its market share during the same period in 2012. During a webcast Wednesday, Michael Altschul, manager of advisory services at PwC, points to incremental improvements in devices, and fast connectivity speed as driving investment in mobile spending.

“Mobile is becoming the first screen for many, with users spending more time on tablets and smartphones than on laptop computers. These devices have larger screens at higher resolution, and as providers duke it out this translates into a better ability for brands to engage with consumers,” said Altshul. “Publishers are also beginning to create ad units that translated better to the mobile platform.”

Overall growth in digital revenues appears to be driven by new entrants and an increase in brand spend on digital. Revenue from CPM, or impression-based campaigns, grew 27%. Sherrill Mane, SVP of research, analytics and measurement at the IAB, attributed this largely to brand deals. While together the retail, financial services, and automotive sectors account for almost half of digital marketing revenues, new verticals are on the rise. Spending from consumer packaged goods (CPG) marketers grew to $1.4 billion in the first half of 2013 with market share increase 40% from earlier.

The IAB study did not include data on the local segment, but data from Advertising Perceptions, a research firm which presented during the webcast, suggests that marketers plan to increase spending on location advertising next year. According to the July 2013 study, 55% of respondents said that they currently use location-based ad formats, and 45% identified location-based ad products as the most important format for the smartphone a year from now.

As more brands spend enters the digital market, particular flowing to tablets, we will likely see local ad tech companies continue to invest more money in helping brands identify audience on mobile. While attribution is increasingly important for performance-based campaign, the growing brand spend, and corollary rise in tablet-revenues should help support the rash of products released by companies last year, which use location data to create audience segments.

Steven Jacobs is Street Fight’s deputy editor.

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