Internet Ad Revenue Tops the Charts

We just read some stats that made us stop and say, “Wow!” 2013 online ad revenues in the U.S. were $42.8 billion—the highest ever. Not impressed? Maybe these details will make you say, “Wow” with us. 2013 Internet ad revenue was $2.7 billion more than 2013 U.S. ad revenue for broadcast television and $8.4 billion more than cable television’s 2013 ad revenue.

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Source: IAB Internet 2013 Advertising Revenue Report, conducted by the New Media Group of PwC

In the world of Internet ad spending, search is still king, but mobile ad spending increased at a meteoric rate of +110% in 2013 versus 2012. In fact, mobile ad spending seems to be growing at the expense of ad spending on traditional desktop ad banners / display ads—which saw a modest decline in 2013 versus 2012.

Truthfully, we aren’t surprised by these stats. Internet advertising delivers an important advantage for marketing folks: a built-in ability to track and measure advertising’s performance (click-through rates, engagement and conversion). In fact, in 2013, 65% of Internet advertising pricing models were performance-based, while one-third were impression-based (e.g., cost per million impressions or CPM)—the more common pricing model for traditional media. Why is tying ad spend to performance important to marketers? CEOs want to know if there is an ROI for their marketing investments. And, more and more marketers’ success metrics are tied to conversions and sales, not just awareness (or impressions). Furthermore, marketing budgets won’t increase if the current ad spend isn’t delivering proven, measurable results. You get the idea.

We don’t think online ad revenue will take over the world and fully replace traditional media. However, we do know more people are engaging with multiple screens at the same time (tweeting while watching The Voice on NBC). We also know engagement doesn’t just happen when people are in front of their TVs or in front of their desktops—consumers’ lives are filled with different types of digital engagement points at different times of day (TV in the morning, mobile on the train to work, desktop during the day, mobile on the way home, multi-screens in the evening). These ad revenue stats prove brands can (and should) engage with their audiences via both traditional and digital channels throughout different parts of the day for maximum impact.