NEW YORK—After record-breaking growth in 2021, internet advertising revenue has slowed but still delivered double-digit growth in 2022 according to the newly released “IAB Internet Advertising Revenue Report: Full Year 2022,” conducted by PwC.
Between 2021 and 2022, internet advertising revenues grew 10.8% year-over-year (YoY) totaling $209.7 billion, and overall revenues increased $20.4 billion YoY. Q1 saw the highest growth of 21.1%, followed by Q2 at 11.8%, resulting in ad revenues for the first half of the year surpassing $100 billion for the first time. Revenues, however, slowed in Q3 (8.4%) and Q4 (4.4%) as the economy began to cool.
Digital video advertising continued to see impressive growth. In 2022, digital video revenues totaled $47.1 billion, up 22.5% from $29.5 billion in 2021 and $26.2 billion in 2020.
"After unprecedented growth in 2021, we expected more moderation in 2022. Economic uncertainty, geo-political unrest, a shifting regulatory environment, and addressability changes have all contributed to revenue growing at a slower pace," said David Cohen, CEO, IAB. "Looking ahead, there is definitely still growth to be had, but it will be harder to achieve and likely less than we have become accustomed to."
Other key highlights include:
- In 2022 digital audio revenues hit $5.9 billion.
- Programmatic advertising revenues grew by $10.4 billion, bringing the total number to $109.4 billion, an increase of 10.5% YoY.
- Market share of the top 10 companies has declined, but they still accounted for $76.8% of the market. The 2022 decrease in the share of ad revenue among the top 10 companies was the first time that has occurred since 2016.
- Social media revenue growth has slowed. While first half revenues of 2022 grew (+$1.8 billion YoY); second half revenues plateaued at $31.4 billion (+$0.3 billion YoY).The implementation of Apple’s App Tracking Transparency (ATT) has impacted total revenue.
- Mobile advertising revenues grew 14.1% YoY. Revenues hit a record high of $154.1 billion: the continued increase in consumption of digital audio formats such as podcasts, plus the rollout of 5G and its beneficial impact on VR and AR advertising capabilities, are likely to continue to drive mobile ad revenues in 2023.
- Search revenue grew 7.8%, but overall market share continues to decrease. While search revenue grew 7.8% YoY, its overall market share continues to decrease as buying shifts to digital video and display.
“Advertisers are diversifying their spending to target audiences using fewer identifiable data points,” said Jack Koch, senior vice president of research and insights, IAB. “Digital video, digital audio, and the long-tail of publishers are benefiting.”
Looking forward, the group noted that 2023 promises to be a challenging year.
One area highlighted by the report was how privacy and regulation are changing advertising. Companies need to adapt to state-level privacy regulations enforced this year in California, Virginia, Colorado, Connecticut, and Utah (and, effective January 1, 2025, Iowa), along with consumers’ worries about their data that resulted in privacy legislation and signal loss.
The researchers also noted that the advertising industry is witnessing a shift towards solutions that can leverage their first-party data. This has resulted in the continued growth in connected TV (CTV) and retail media networks (RMNs), as these channels provide advertisers with a way to reach specific audiences with relevant ads at scale.
In addition, E-commerce and media companies are also working hand-in-hand to develop new ways to target and measure the effectiveness of advertising, including shoppable ads, affiliate marketing, and direct-to-consumer advertising, the IAB said.
The status of premium content is also in flux, the group noted. While "premium" content once meant "Hollywood production" value, it's now more than ever in the eyes of the beholder. Viewer attention is shifting to content that can match specific interests - regardless of the production value, format, or screen - and creator content is now viewed as premium by many, the report noted.
“2023 promises to be a challenging year. But this industry, more than most, is galvanized by change,” added Cohen. “The job now is identifying where the areas of growth are going to be, follow the consumer and develop solutions that meet and exceed their needs.”
IAB Internet Advertising Revenue Report: Full Year 2022 can be downloaded here.
