Digital ad revenue defied economic challenges to grow 7.3% in 2023, per IAB

Dive Brief:

Digital ad revenue hit $225 billion in 2023, up 7.3% from the year prior, defying many negative economic indicators, according to a new Interactive Advertising Bureau (IAB) report.
Q4 saw the largest jump in spending, up 12.3% from the year prior. Revenue for the quarter totaled $64.5 billion, likely a result of increased holiday spending.
Audio advertising revenue grew 18.9% from the year prior while retail media grew 16.3% and video saw 10.6% YoY growth, with CTV/OTT delivering 42% of the revenue. Channels with “privacy by design solutions” are expected to outpace the market going forward, per the IAB.

Dive Insight:

Despite fears of a recession and the challenges presented by ongoing inflation, revenue spent on digital advertising grew at a healthy pace in 2023, both overall and in many key areas, such as video and retail media, according to the IAB’s annual Internet Advertising Revenue Report.

The report also looks at what 2024 may hold for marketers, including the impact of generative artificial intelligence (AI), which is being quickly utilized to help replace lost signals like third-party cookies that have historically been used for personalization and measurement. Another takeaway is the need to view privacy-focused advertising practices as a permanent change.

“With significant industry transformation unfolding right before our eyes, we believe that those channels with a portfolio of privacy by design solutions will continue to outpace the market,” said David Cohen, CEO, IAB in a press statement. “For 2023, the winners were retail media, CTV, and audio which saw the highest growth.”

The research is conducted by PwC Advisory Services LLC on an ongoing basis. The report was produced through compiling historical data, online databases and a web-based survey.

After a slow 2022, social media advertising jumped 8.7% YoY in 2023, reaching $64.9 billion, driven in part by strength in the creator economy. The second half of 2023 was significantly stronger than the first, with second half revenue accounting for $4.1 billion of the $5.1 billion YoY increase. Retail media saw an increase of 16.3% in advertising revenue for a total of $43.7 billion in 2023.

Social media platforms are expected to continue to pursue the merging of social commerce and influencer marketing to drive engagement and conversions.