Growth in Video Is Pushing Digital Ad Spend to Record High

By Alyssa Nejaime  | 

The digital economy is on a tear with digital ad spend for the first six months of 2019 reaching an all-time high of $58 billion, according to a new report from the Interactive Advertising Bureau (IAB) and PwC US. And while marketers have every reason to be optimistic about continued growth of the industry, many are wary of the impact new US privacy laws, the end of the 2020 political campaign and other factors may have on future growth. For now, however, there’s still plenty of good news for advertisers making big investments in digital in order to better reach consumers in a video everywhere world. Here are some of the key findings.

Video’s Prime Time
Video advertising saw the fastest level of year-over-year growth at 36%, totaling $9.5 billion. In an article in The Drum on the Q2 findings, Sue Hogan, senior vice-president of research and analytics at the IAB, attributed the strong performance to the growing popularity of non-traditional forms of video, namely social video stories and connected TV. ER’s Video Benchmarks reports have been charting CTV’s rising prominence over the last two years and our Q2 report shows CTV hitting a significant milestone in accounting for more than half of all the video ad impressions served from our AdBridge™ platform.

Investment in these non-traditional platforms is likely to remain strong amid ongoing media market fragmentation and consumers’ increasing expectations for watching video through every means and on many devices. Video everywhere means advertisers also need to be everywhere.

Other Pistons in the Digital Growth Engine
Mobile, social and audio are all on the rise as well. Mobile advertising increased its revenue share to 69.0% in the first half of 2019, accounting for $40 billion — a 29% increase over first half 2018 and a 47% increase since 2015. The saturation of mobile smartphone devices has been a major factor in this explosive growth. Supporting future mobile growth will be the rollout of 5G and the increased speed at which consumers can watch video on their personal devices.

At $16.5 billion in HY 2019, social media ad spend increased 25.7% over HY 2018.  And the proliferation of smart speakers and the massive popularity of podcasts have combined to fuel growth in audio spend, which totaled $1.2 billion, a 30% increase over last year.

Clouds on the Horizon or Clear Skies Ahead?
The uptick in political advertising ahead of next year’s US presidential election has also contributed significantly to this half-year’s record-high spend. But those revenues will dry up after the election. As reported by The Wall Street Journal, if political ads are excluded, digital ad growth for 2020 is expected to decelerate to 15%.

But while the overall growth rate—nearly 17% from the prior half year—continues to slow (it was 23% the previous year) the digital advertising industry is one of the strongest and most dynamic sectors of the U.S. economy. And in a dynamic industry, when one area slows, others emerge. For example, as smartphone ownership nears saturation and social media matures, the industry is focusing on new channels for growth such as connected TV, augmented reality and the vast potential of 5G.

The coming US privacy laws could also present challenges to advertisers and media owners, but the silver lining is that industry organizations like the IAB are coming together to advocate for national laws that will make it easier to protect consumer privacy, while continuing to fuel the digital economy.

No opportunity ever comes without significant challenges. For advertisers, fragmentation and consumers’ expectations of content everywhere make it evident that digital has to be a significant part of the marketing mix—and innovation in the space is giving them plenty of new avenues for keeping pace with consumers’ ever-changing viewing habits.

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