This past year, digital advertising online and via mobile crossed the $40 billion mark for the first time ever, according to the Internet Advertising Bureau. Since 2004, the average growth rate has been 18 percent. And this year, digital ad revenues surpassed broadcast television for the first time.
Not shockingly, mobile is leading the charge.
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It’s important to note that, while web and mobile advertising revenues beat out broadcast TV for the first time, broadcast + cable advertising revenues still dwarf the digital take. And, of course, networks are aggressively expanding to new digital means of distribution.
While the digital ad market is expanding, it’s also extraordinarily concentrated — perhaps more so than any advertising market since there were just three TV networks.
Top 10 companies have 71 percent of revenues
The top 10 companies in the mobile and online ad space have almost three quarters of all the ad revenue, the IAB said. That’s actually down just a little from 72 percent in the fourth quarter of 2012 — probably due to upstart mobile companies. But even so, it’s very concentrated in the hands of industry giants such as Google and Facebook.
Unfortunately, the IAB could not break out which companies are in those top 10, since companies report their revenue figures in confidence.
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That concentration has remained fairly stable for the past decade, even as the ad world has expanded by a factor of six, fluctuating only between 69 and 74 percent.
Retail is driving the dollar bus
Where’s all the money coming from? Retail is the largest category, at 21 percent, of Internet and mobile ad spend, according to the IAB. That’s up a point from the previous year.
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Financial services made up 13 percent of revenues, automotive was 12 percent, and telecom accounted for nine percent of the total digital ad spend.
Ad formats are changing
Ad formats are changing from the traditional search and banner of 2005. Not only is mobile growing, but digital video jumped up to the fourth-biggest category of digital ad spend, at $2.8 billion.
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That’s less than half of mobile’s $7.1 billion, but it’s more than classifieds, at $2.8 billion, and rich media, and lead generation, and sponsorship. And while display ads grew six percent in 2013, video-based ads are growing faster, according to the IAB.
Search is down from 46 percent in 2012 to 43 percent in 2013, while display is down two percentage points from 21 to 19 percent.
Performance-based pricing down, but still the majority
Interestingly, performance-based pricing models are down slightly from the previous year. CPM, or cost per thousand views, was up slightly to 33 percent, while performance-based models like CPA (cost per acquisition) dipped slightly to 65 percent.
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Interestingly, CPM pricing is at its highest point since 2010, the IAB said.
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