Advertising revenue growth slows

What is Ad Revenue

Would online advertising ever come to an end?! 

This is one of the questions that can be asked when looking at the latest study by IAB and Pricewaterhousecoopers. In 2019, the digital advertising market was worth 124.6 billion dollars; about 54 billion more than television advertising, which comes second.

Despite this good result, we note that the growth of online ads weakens by going below 16%. In terms of distribution, this represents:

• 33.5% in video advertising,
• 24% in mobile advertising,
• 23% in advertising on social networks,
• and 21.2% in audio advertising.

In 2019, approximately 70% of digital ads were aired and viewed on mobile devices. This is a five point gain over the previous year, but the platform seems to be maturing. On the desktop side, performance is rather stable at $37.9 billion in 2019 compared to $37.6 billion in 2018.

Where does the income come from?

It is paid research that comes first, representing 43.9% of total advertising revenues, or 54.7 billion dollars and an increase of about 13% in one year. The display and the purchase of space is equivalent to about 31%, an amount of 38.1 billion dollars. Video ads represent about 17% of revenues, or $21.7 billion and an increase of 33.5% compared to 2018. The remaining billions of dollars come from small ads, audio ads and lead-gen (creating potential customers).

In this story, the big winners are the programmatic platforms. Indeed, the programming of ads is at the origin of 81.5% of the ads broadcast on the web (not related to online searches). They reached $57 billion in revenues last year, up $10 billion from 2018.

In addition to the slowdown in revenues, we also see that revenues are concentrated on a smaller number of businesses. According to IAB, the 10 largest companies in the market controlled 77% of revenues, compared to 76% a year ago. This may seem like a small increase, but it is still $14 billion.

First Quarter of 2020, Revenues were $31.4 Billion, or 12% Growth

According to the analysis, the record figures for the online advertising market should now stagnate. The Internet is now the biggest advertising space and experts estimate that double-digit growth will soon be history.

The results of the current year remain unclear for IAB, since the COVID-19 crisis has inevitably impacted the market. But, if we look at the first quarter of 2020, revenues were $31.4 billion, or 12% growth.