Internet Ad Revenues Reach $36.6B, Up 15%

Last year marked a dynamic year for digital. U.S. Internet advertising revenues aggregated to approximately $36.6 billion last year, shooting up 15% from $31.7 billion in 2011, according to the “IAB Internet Advertising Revenue Report” by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC).

“Marketers are recognizing that consumers are embracing digital media and they need to be there,” says Sherrill Mane, IAB SVP of research, analytics, and measurement.

Despite economic challenges, Internet advertising has continued to flourish, with 80% of quarters having experienced positive growth compared to their previous quarter since 2003, according to the report. In terms of industry, retail makes up the largest percentage of Internet ad spending and accounts for 20% of the 2012 internet ad revenue – a 2% decrease from 2011. Financial services comes in second, accounting for 13% of Internet ad revenues.

But who were the front runners in this digital jumble? Search accounted for 46.3% of 2012’s digital revenue, bringing in $16.9 billion in 2012 compared to $14.8 billion in 2011. Display and banner ads made up the next biggest piece of the 2012 digital pie (21%) and raked in $7.7 billion. And while mobile (including tablets) only brought in $3.4 billion this year, it jumped 111%, from 1.6 billion in 2011.

“[Mobile] also is a medium that lends itself to different ways to use advertising and different ways to capitalize on a consumer relationship,” Mane says. “It has the local element to it. It can be used for brands. It’s a great vehicle for digital [and] video. No one ever thought about mobile screens being digital video screens, which they have become.”

Email comprised the smallest portion of the digital revenue pie. According to the report, email procured $156 million, only 0.4% of last year’s revenue; thus experiencing a 27% drop from 2011’s earnings of $213 million. Although Mane acknowledges that email “clearly is not growing,” she doesn’t consider email to be a “dying” channel either.

“Given that there are new technologies and new data points, it probably would be a good idea for some marketers who may be spending money in other areas to be looking at how can I reconfigure my mix so that I can capitalize better on what email can do for me?” Mane says.

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