Digital advertising revenues in the U.S. reached a record $49.5 billion in the first half of the year, fueled by the continued growth in mobile advertising and the rise of in popularity of consumer brands that sell products directly to consumers online.
Spending on digital advertising is up a dramatic 23% from a year ago’s reported figure of $40.3 billion, according to the Interactive Advertising Bureau’s Internet Advertising Revenue Report.
“This landmark figure cements digital advertising — whether display, search or mobile video — as one of the most powerful mechanisms of all time for brands to build relationships with consumers,” said IAB CEO Randall Rothenberg in a statement. “It’s a truth upon which direct-to-consumer brands have built their businesses, and from which all businesses can benefit.”
Pivotal Research senior analyst Brian Wieser said U.S. advertising is on pace to reach $100 billion this year, and Europe is on track to reach about $60 billion according to data reported yesterday. Though this can’t be sustained forever, he notes.
“Growth rates are remarkable, but highlight risks around digital media owners – and Facebook and Google in particular – saturating digital media budgets in years ahead,” Wieser wrote.
Mobile now accounts for nearly two-thirds (63%) of all digital ad revenue. Advertisers spent $30.9 billion on mobile media in the first half of the year, up 42% from $21.8 billion over the same period last year.
Social media revenue was $13.1 billion in the first half, up 38% year-over-year.
Digital video advertising revenue reached $7 billion in the first half of the year, up 35% from a year ago. The bulk of this spending — 60% — comes from mobile video.
“Video is front and center, experiencing a surge – especially on mobile devices,”said IAB Executive Vice President Anna Bager. “Other formats, like digital audio and social media are seeing spikes and are ripe for further growth.”
Wieser estimates that Google and Facebook continue to dominate the digital ad market, accounting for around 75% of all growth. If that’s accurate, advertising sold elsewhere grew by a healthy 18% (or about $1.5 billion) in the first half of the year.
It’s likely that another tech giant, Amazon, sucked up the bulk of this growth, adding $1 billion in domestic ad revenue, Wieser writes.
But that kind of torrid growth is bound to hit a ceiling.
“Digital media owners are gradually approaching the point of saturating available digital budgets,” Wieser writes. “This helps explain why digital media owners have become more aggressive in finding ways to capture television advertising budgets in recent periods.