The Internet has replaced broadcast television as the biggest advertising medium – for the first time ever. This feat comes two years after it eclipsed cable TV advertising. However, online advertising still falls to the No. 2 spot when broadcast and cable TV ad revenues are combined. It is only equivalent to 57% of their total.
Meanwhile, “search” also stayed as the single largest online ad category. Mobile skyrocketed 110%! These are just some of the revelations in the 2013 Internet Advertising Revenue Report, which has just been released by the Interactive Advertising Bureau (IAB).
Online Now Bigger than Broadcast TV Advertising
The report, conducted by PwC for IAB, found that online advertising revenues for 2013 reached a record $42.8 billion. This represents a 12% growth from 2012 figures. This also means online advertising has grown steadily for the past four years since dipping in 2009. Last year’s total rode on a strong second half, with a combined third and fourth quarter revenue of $22.7 billion. Although traditionally the strongest quarter, this was the first time Q4 crossed the $12-billion mark.
“The news that interactive has outperformed broadcast television should come as no surprise. It speaks to the power that digital screens have in reaching and engaging audiences,” IAB president Randall Rothenberg said.
To put this growth into context: Internet advertising has risen at a compound annual growth rate (CAGR) of 18% from 2004 to 2013. Meanwhile, the U.S. dollar gross domestic product has only grown 4% within the same period, according to the U.S. Bureau of Economic Analysis. Internet and cable TV are also the only media to have a positive CAGR since 2005.
After Internet, broadcast TV was the second-biggest medium with a $40.1 billion revenue. Cable TV followed with $34.4 billion. With much lower revenues, other traditional media were next: newspaper ($18 million), radio ($16.7 billion), consumer magazine ($13.4 billion), and out of home advertising ($7.9 billion). Video game and cinema were farther, as both were under the billion-dollar mark.
Search Stays at the Top of Internet Advertising
Broken down by categories, search advertising remains the largest single advertising category in the Internet group. Although its share of the pie slipped three points to 43%, search revenues for 2013 rose 9% to $18.4 billion from $16.9 billion in 2012. And despite the small share too, search is still larger than the next two formats – display /banner and mobile – combined. Display / banner advertising took a 19% share while mobile was the third-largest with 17%.
The rest were below the 10% mark. Digital video slightly went up to 7% while classifieds slipped to 6%. Lead generation also dropped a point to 4% while rich media and sponsorship stayed the same, with 3% and 2%, respectively.
Mobile Eating Search & Banner Ads Share
The smaller share of search and other formats is attributed to the sharp growth of mobile, which included other formats as long as they were consumed via mobile devices (mobile search, mobile video, etc.). This category surged by a whopping 110% in 2013, nearly doubling its 9% share in 2012. Mobile advertising revenues went up to $7.9 billion from only $3.4 billion the year before. And for the first time, mobile was also able to match display advertising in a quarter. In Q4 2013, display and mobile contributed $2.3 billion apiece to the total revenue.
“Our survey confirms that we are fully in transition to the post-desktop era. Triple-digit advertising revenue growth from mobile devices contrasted the more tepid 8% growth from traditional computer screens. This is simply a reflection of the change in how and where consumers are viewing their information – on the go!” said David Silverman, a partner with PwC.
Mobile’s growth was expected as advertising media tend to post a high compound annual growth rate their first four years. From 2010 to 2013, mobile advertising’s rate reached 123%. By comparison, the Internet as an advertising medium posted a 159% growth rate between the years 1996 and 1999. Broadcast TV had a 98% rate from 1949 to 1952 while cable TV had 72% from 1980 to 1983, the report said, citing additional data from McCann-Erickson.
Reseller Targets: Big Spenders in Online Advertising
Here are the industries our white label online marketing and web design resellers can target. Year on year, the retail industry remained the biggest Internet advertiser. Retailers’ ad share rose a bit in 2013, accounting for 21% of the total. Take note that IAB includes several sectors under retail, such as apparel, restaurants / fast food, and home furnishings.
The second biggest spender is the financial services sector, which constitutes 13% of the total. That’s the same percentage as 2012. Auto advertising on the Internet also remained at 12%. The telecommunications (9%) and leisure travel (8%) sectors had smaller shares in 2013 compared with the previous year. Other industries either didn’t move, except for the computing products industry and the pharma and healthcare, which lost two percentage points at 6% and one percentage point at 5%.
Takeaways from the 2013 Advertising Report
The 2013 full-year edition of the IAB report has many positive statistics that you can use to convince your potential clients to invest or increase their spending on online marketing. Obviously, two services are to benefit the most directly from these developments: Pay per click advertising and mobile responsive web design. However, do not forget SEO. Paid search is big because search engine usage is big and that is why search engine optimization will remain to be one of the largest sources of unpaid traffic.
Search is here to stay. While its advertising share got smaller, search generated more revenue in 2013. It’s still the biggest online ad medium today. And no doubt, businesses are spending more on paid search or pay per click advertising to appear on Google and other search engines. Make sure your clients – potential and existing – understand the importance of instant visibility on search engine results. Search advertising remains on top because of the dominance of search engine usage. Make sure your clients are also strong in the search engine optimization arena.
You and your clients need to adapt to the mobile revolution today. As for mobile’s massive growth, the best way to help your clients adapt is to build responsive website for them. Google prefers the responsive configuration over any other method of optimizing for mobile traffic. The increase in mobile ad spending only means advertisers are going where their audiences are – they are searching and browsing via mobile devices.
Also, look into creating videos for your clients. On percentage points, video’s share only rose a meager one point to 7% from 2012. However, it’s worth noting that that small growth was enough to allow it overtake classifieds and become the fourth-largest online advertising format after search, banner, and mobile. You should start using video for your own business, too.
Finally, the second biggest revenue producer is display/banner advertising which account for 19% of Internet advertising revenues.. There are new ways of using banners, such as Pay per Click Remarketing, which you will configure to display banners to your client’s website visitors after they’ve left the site without leaving their contact information or without doing any desired action.
Endlessrise stays up to the date with online marketing industry trends to keep our resellers up to speed to where the market is heading. We also constantly update our services to ensure they are relevant, effective and competitive. If you want the latest and most-effective SEO, mobile, video, or remarketing services for your clients, and if you are a serious online marketer sign up as an Endlessrise reseller now and ask for the free 2013 IAB Internet Advertising Report 2013.