NEW YORK—Digital advertising set records in 2021 according to the newly released “IAB Internet Advertising Revenue Report: Full Year 2021,” conducted by PwC. It found that total U.S. digital advertising jumped 35% to $189 billion in 2021, the biggest increase since 2006.
The news was even better for digital video advertising, OTT, CTV and streaming companies, with digital video advertising being one of the fastest growing sectors, spiking by 50.8% in 2021 to $39.5 billion.
“We fully expected 2021 to be an exceptional year for digital ad growth, but even we were surprised at the degree of acceleration. Not only was every single digital channel up, but some were up more than 50% year on year,” said Libby Morgan, senior vice president, chief strategy officer, IAB. “This year’s increase is 3x what it was last year.”
The growth is consistent with a recent study from Harvard Business School, commissioned by IAB, which showed the internet economy has grown seven times faster than the U.S. economy over the past four years and now accounts for 12% of the U.S. GDP.
“What’s underneath these numbers is a very clear narrative. We are witnessing the total and complete democratization of access afforded by ad-supported digital channels,” said David Cohen, CEO, IAB. “Increased consumer usage coupled with extraordinary growth of small and mid-sized businesses during the pandemic has fueled growth across all digital — but especially digital audio and video. We expect this digital migration to drive the continued growth of a healthy and competitive digital marketplace driven by innovation and entrepreneurship.”
Although the industry continues to face uncertainty surrounding privacy regulation, the deprecation of third-party cookies and identifiers, measurement challenges and supply-chain transparency, the IAB and PwC forecast continued digital ad growth in 2022, driven by significant innovation in retail media, CTV/OTT, gaming, and digital audio. The continued rise of AR/VR, the metaverse, and Web3 technologies is expected to spark innovation — and continue to drive ad revenue in the years ahead.
“According to the Census Bureau, 2021 saw the greatest business growth in history with 5.4 million new businesses created,” said Cohen. “Those businesses rely upon the ad-supported internet to attract new customers and provide products and services to the American public. We believe this small business engine will be a key contributor to fueling ongoing digital media and marketing ecosystem growth.”
Other key highlights of the 2021 results include:
- Digital video continues to be one of the fastest growing channels, up 50.8% compared to last year, with total revenues of $39.5B.
- Digital audio captured the highest YoY growth, up 57.9% to $4.9B.
- Social media advertising was up 39.3% to $57.7 billion, as consumers continue to engage with Meta platforms, Snapchat, TikTok, and Twitter.
- While search revenue grew substantially (32.8%) in 2021, it did not grow as strong as other areas, leading to a slight decrease in total revenue share (reduction of 0.8 percentage points).
"The IAB Internet Advertising Revenue Report: Full Year 2021" can be downloaded here.
