IAB: Digital ad spend on pace to hit $100B for first time in 2018

Dive Brief:

Spending on U.S. digital advertising jumped 23% to $49.5 billion in the first half of 2018 compared to last year, setting the category on pace to hit $100 billion annually for the first time, the Interactive Advertising Bureau revealed Tuesday in its semi-annual report done with PwC.
Much of that spending went toward mobile ads. Accounting for $30.9 billion in the first half of 2018, mobile's share of the market climbed to 63% of total digital ad spend, compared to 54% during the same period last year. While nearly two-thirds of people use both mobile and desktop, 71% of time spent online each month occurs on a smartphone or tablet, the report detailed. Of the $7 billion that digital video snagged in the first half — a 35% jump year-over-year — 60.5% came from mobile.
Younger audiences' adoption of newer platforms such as mobile video, audio and social media is a key driver of the digital ad world's continued growth, PwC Partner David Silverman said during a call with reporters. Social media now represents 23% of the total, while spending on digital audio jumped 31% to $935 million in the first half — on pace to surpass the format's $1.8 billion for all of 2017.

Dive Insight:

Marketers are spending more on digital advertising this year than ever before, driven by emerging trends and technology in mobile devices, e-commerce, video streaming and swelling audiences for music and podcasts. According to Silverman, the growth in every format — search, banner, video and audio — illustrates how marketers are playing catch-up in response to how consumers access content.

On-the-go content viewing and emerging formats like Instagram Stories, smart speakers and streaming platforms are transforming how people consume content online, and, as a result, shifting how and where marketers allocate ad dollars. Digital audio was first included in IAB's reports last year, when the format captured revenue of $1 billion. Now, around 25% of U.S. homes contain a smart speaker, and about a quarter of those people reported making a purchase via the device. Voice commerce is forecast to grow even more prominent, surging 1,900% to $40 billion in 2022 from $2 billion today, pointing to a lucrative opportunity for marketers. While smartphones have reached saturation in the U.S., smart speakers are still in an early, high-growth stage. As high-tech speakers and voice tech continue to evolve, audio will likely play a larger role in the broader digital ad space.

Silverman also suggested that the rise of direct-to-consumer brands and mobile commerce are helping to fuel growth in the digital ad space, with new tech and developments in programmatic giving marketers more agility to run efficient ads at lower prices, driving down the cost of customer acquisition.

"What we are seeing is these direct-to-consumer companies tend to rely on digital advertising because they can target consumers efficiently and pay for performance," Silverman said.

The IAB's report has shown record-breaking growth in digital advertising for 23 consecutive years, excluding 2009. But while the U.S. currently appears to be in healthy shape, digital advertising typically experiences a dip during economic downturns, Silverman said.