Record growth in mobile and digital video ad spending

An increasing number of companies are beginning to realize the benefits of mobile advertising, as revenue from the channel has grown by about 95 percent during the first half of this year.

Posted on Oct 29, 2012 by YuMe

An increasing number of companies are beginning to realize the benefits of reaching consumers through mobile advertising, as revenue from the channel has grown by about 95 percent during the first half of this year.

An October report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers found that revenue from mobile ads totaled $1.2 billion. In comparison, mobile ad revenue during all of last year was $1.6 billion, The New York Times reported.

Another big growth area, according to the IAB report, was internet video advertising. Revenues from preroll, postroll and display online video ads totaled more than $1 billion from January to June from this year, an 18 percent increase over 2011 levels, the Times reported.

"This report establishes that marketers increasingly embrace mobile and digital video, as well as the entire panoply of interactive platforms to reach consumers in innovative and creative ways," Randall Rothenberg, President and CEO of IAB, said in the report. "These half-year figures come on the heels of a study from Harvard Business School researchers that points to the ad-supported internet ecosystem as a critical driver of the U.S. economy. Clearly, the digital marketing industry is on a positive trajectory that will propel the entire American business landscape forward.”

In the scope of all of the ad types available, mobile and digital video combined to account for about 14 percent of the $8.7 billion spent on web advertising from April to June of this year. In 2011, the two ad formats represented an estimated 10 percent of the marketplace, the IAB report found.

"The tremendous growth of mobile advertising revenue over the past year is an indication of the importance of location to advertisers and mobility to consumers," PricewaterhouseCoopers partner David Silverman said in the report. "Bringing the power of the internet to mobile devices has opened up a world of possibilities to both consumers and marketers."

Top industries and formats for internet advertising
According to the report, the retail and financial industries had the largest revenue from online ad spending, but the automotive and healthcare sectors experienced the greatest year-to-year increases. Retail and financial combined accounted for close to one quarter of all digital ad revenues from the first half of this year, but the healthcare and automotive industries both experienced a 2 percent increase over levels from the first six months of 2011.

In terms of evaluating online ads, performance-based modeling has become the go-to standard for brands, the IAB study found. In 2005, 46 percent of all internet ads were measured on a cost per impression basis, versus 41 percent of ads on performance. Fast forward to the first six months of 2012, and 67 percent of web-based advertising is on a performance pricing model with only 31 percent of ads judged by CPM.