The popularity of mobile internet has transformed the advertising landscape forever. The first half of 2016 saw digital ad revenues reach $32.7 billion, an increase of 19% compared to 2015, with mobile ad revenues accounting for $15.5 billion. In other words, mobile now represents almost half of digital advertising revenues.
The saturation of mobile is even more remarkable when we consider that overall online advertising is increasing on a yearly basis. The twice-yearly reports courtesy of the Interactive Advertising Bureau (IAB) are a foundation for advertisers to take stock and realign marketing campaigns in sync with online user behaviour.
According to IAB President, Randall Rothenberg, “These half-year revenues are a testament to the role of digital screens – especially mobile screens – in consumers’ increasingly connected lives.”
Highlights of mobile advertising include:
- A 105% increase in mobile search revenues to $7.4 billion
- Mobile video revenues rose by a staggering 178% to $1.6 billion
- Display banner mobile ad revenues rose by more than 60% to $6 billion
While traditional online advertising remains viable and valuable, the double digit increase in mobile use every year since 2012 has dramatically affected advertising strategies across all sectors.
Social media, search and video
Advertisers have always used future projections to fine-tune campaign strategies, but things are moving more rapidly these days. Changes that used to be generational now take place with the emergence of every new technology, and what was cool last year will soon be antiquated and embarrassing. Young and savvy mobile users are driving trends by exploring avenues for social engagement while on the go in real time, and astute advertisers are taking note.
The IAB report discloses social media as the driving force behind mobile video and banner ads, with mobile accounting for almost 100 percent of non-search advertising growth. Social media advertising expansion includes:
- Advertising revenues of more than $7 billion
- A revenue increase of 57% compared to 2015
- Total social media revenues including desktop have increased by more than 50% every six months since 2012
David Silverman, a partner at PwC, commented: “These numbers demonstrate the growing importance of mobile, showing us the increasing demand for digital video and search, available anytime, anywhere, in the palm of your hand.”
The growth story moving forward
Digital advertising is sold both on a performance basis and on a CPM (cost per thousand ad) basis. Advertising revenues are being increasingly corralled by major players, with the top ten companies generating 74% of all revenues from digital advertising. A further fifteen companies generate the next 10% of advertising revenue. Growth has been overwhelmingly stimulated by Google and Facebook, although their influence is not directly revealed in the report.
Of all advertising methods, digital video has been the strongest performer during 2016. Internet use has transformed over time from text to video, so it’s no surprise that digital video is taking the reins and forging a new direction. Video translates easily across devices and is seen by young users as an entertaining social platform and advertising formula all rolled into one. The triple digit 178% rise from 2015 also discloses the viability of video advertising on larger desktop screens, where it can be more dramatic and easily assimilated by older users. Digital video advertising on desktop enjoyed a respectable 13% increase compared to 2015, making it the only desktop advertising format with any meaningful growth.
Social media is a natural counterpart to mobile connectivity, accounting for a significant amount of mobile use. Social media advertising – according to IAB – is delivered on social communication platforms, networking sites, gaming websites and apps across all devices including smartphone, laptop, desktop and tablet.
All industries onboard as digital equals Dollars
Digital advertising expenditure is now shared by all major industries, with retail continuing to lead the way. Here is a breakdown of revenues from the IAB report.
- Retail advertising: 21%
- Financial services: 13%
- Automotive: 12%
- Telcos: 9%
- Leisure and travel: 8%
- Consumer goods: 6%
Other significant investors include electronic and computer industries, pharmaceutical companies, media and entertainment. More than ever, advertising strategies need to cover all digital bases and translate effectively across all devices. Purchasing options available to consumers have forced the hand of businesses to create responsive web sites, and the user trend towards mobile internet is certain to carry on into the foreseeable future.