Editors note: We are republishing an article by Faisal Kalim that looks into growth of digital media. This piece was originally published on What’s New in Publishing.

Total U.S. digital ad revenue for 2021 came to $189B – a 50B jump in a single year, and at 35.4%, the highest YoY growth since 2006, according to the latest Internet Advertising Revenue Report by IAB and PwC. The increase is 3x compared to the previous year’s 12.2%, and twice that of 2018-19.

“Surprised at the degree of acceleration”

Revenues remained consistently upbeat throughout the year, with the second half of 2021 garnering $102.8B. The rapid acceleration has exceeded Wall Street expectations, according to the report.

“We fully expected 2021 to be an exceptional year for digital ad growth, but even we were surprised at the degree of acceleration,” said Libby Morgan, SVP, Chief Strategy Officer, IAB. “Not only was every single digital channel up, but some were up more than 50% year on year.”

“The trajectory in recent years suggests there is no slowing down for the industry,” the report states.

Source: Internet Advertising Revenue Report

Most media types registered negative growth in 2020 due to the pandemic. The 2021 results show that media advertising is rebounding across all major categories (including newspapers). Most of them show positive growth with internet advertising dominating in terms of overall revenue.

“Key contributor to fuelling ongoing digital media and marketing ecosystem growth”

Increasing consumption of digital media and significant growth of eCommerce are the chief trends driving the increase in digital ad revenues. eCommerce was up 50% to $870B in 2021, according to the US Department of Commerce. It reached $55B, the highest level to date in Q4 2021 driven by the holiday season.

2021 also saw the greatest business growth in history with 5.4M new businesses launched, according to the Census Bureau. “Those businesses rely upon the ad-supported internet to attract new customers and provide products and services to the American public,” notes David Cohen, CEO, IAB. “We believe this small business engine will be a key contributor to fuelling ongoing digital media and marketing ecosystem growth.” Local or region-focused publishers reliant on ad revenue stand to benefit from this significant increase in the number of advertisers.

“Digital is where they are putting their dollars”

IAB and PwC forecast continued digital ad growth across channels, particularly across digital video, digital audio as well as social media, and search, from both established and new publishers and platforms.

Brands have spoken, and digital is where they are putting their dollars. By continuing to focus on and invest in the areas needed to evolve the consumer value chain, the digital industry has the opportunity to tune established models from a position of financial strength and vibrant growth.
Internet Advertising Revenue Report, IAB & PwC

Digital audio advertising revenues registered the highest growth among the top formats. It increased by over $1.7B in 2021 – a 57.9% YoY growth with total revenue coming to $4.9B. The report predicts that podcasts will drive growth for this format as monthly podcast listeners are expected to grow at a 6.7% CAGR from 2021 to 2025 in the US, according to PwC’s Global Entertainment & Media Outlook.

Digital video ad revenue registered the second-highest YoY growth at 50.8% generating total revenue of $39.5B. Social media advertising was up 39.3% totaling $57.7B. Programmatic advertising revenues increased by 39% equalling $27.8B.

Note: Formats with index scores above 100 indicate a greater than average growth rate
Source: Internet Advertising Revenue Report

Search continued to have the highest share of total ad revenues at $78.3B in 2021 but a comparatively lower rate of YoY growth at 33%. Display recorded the second-highest share at $56.7B – it grew 29% since 2020.

“What’s underneath these numbers is a very clear narrative,” says Cohen. “We are witnessing the total and complete democratization of access afforded by ad-supported digital channels.

“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.
David Cohen, CEO, IAB

The report can be downloaded from IAB:
Internet Advertising Revenue Report: Full Year 2021

Photo by Jack Carter on Unsplash

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“There is no slowing down”: Exponential growth in digital advertising, IAB report shows