$225 billion: That’s how high U.S. digital advertising revenues were in 2023, according to the newly released “IAB Internet Advertising Revenue Report: Full Year 2023,” compiled by PwC. According to the IAB (Interactive Advertising Bureau) report, these revenues increased by 7.3% year-over-year overall (YoY) between 2022 and 2023. The IAB report also found that Q4 2023 saw the highest growth rate of 12.3% from the year prior (4.4%), with revenues rising to $64.5 billion.
“Despite inflation fears, interest rates at record highs, and continuing global unrest, the U.S. digital advertising industry continued its growth trajectory in 2023,” said IAB CEO David Cohen. “With significant industry transformation unfolding right before our eyes, we believe that those channels with a portfolio of privacy-by-design solutions will continue to outpace the market.”
The biggest channel for growth during 2023 was audio digital advertising, which grew 18.9% to reach $7 billion. According to IAB, audio is still the fastest growing channel, although at a slower pace than last year.
Retail Media digital advertising revenues were another growth area. This channel experienced 16.3% YoY growth in advertising revenues in 2023, reaching $43.7 billion. According to IAB, major e-commerce players are all expanding their retail media platforms to enable future growth.
Video advertising revenue saw double digit (10.6%) YoY growth as well, rising to $52.1 billion in 2023. 42% of this revenue was generated by CTV and OTT (over the top/streaming). While this increase was less than in 2022, IAB expects the combination of CTV/OTT to be the fastest growing media channel in 2024, especially as ad-supported streaming services are capturing a larger share of consumer attention.
After slowing in 2022, social media advertising revenues regained strength with 8.7% YoY growth, increasing to $64.9 billion in 2023. Revenues in the second half of 2023 accounted for $4.1 of the total $5.1 billion increase over the previous year.
Meanwhile, although digital advertising revenues for search ($88.8 billion) and display ($66.1 billion) remain high, both showed relatively modest annual growth rates during 2023. Search was at 5.2% and display at 4% YoY growth respectively.
IAB expects the trends that drove the digital advertising market last year to continue to affect it in 2024. As well, IAB points to privacy-preserving advertising practices; social media combinations of social commerce, reality technology, and influencer marketing; and generative AI as factors shaping the U.S. digital advertising environment.
“Looking ahead, while there are no shortage of challenges, there are also strong opportunities in sports streaming, creator-based marketing, retail media networks, and beyond,” said Jack Koch, IAB’s senior vice president of research and insights. “2023 is proof that the industry can stay resilient in the face of change.”
