Internet ad revenues have reached a historic half-year high at $23.1 billion, up 15 percent from half-year 2013, according to a study by the Interactive Advertising Bureau (IAB) and PwC. The unprecedented revenue is due in large part to a surge in mobile advertising dollars.
This year, mobile revenues increased 76 percent to $5.3 billion from the $3 billion reported at half-year 2013. $2.7 billion came from mobile search, while $2.5 billion came from mobile display. $103 million came from other formats.
For the first time in the study’s history, mobile ad revenues were broken into search and display categories. However, Joe Laszlo, senior director of the mobile marketing center at IAB, believes that there is plenty of overlap in mobile and desktop ad buying.
“If you do a search ad buy in Google, almost by default it’ll include desktop and mobile,” says Laszlo. “There’s a combination factor that’s going on there that’s very interesting.” He also believes there are blurred lines on the display side as well. “Technologies like responsive design make it easier to build an ad that changes size and shape to fit the devices audiences have. I think this line between the desktop world and the mobile world is going to get more blurry.”
While search revenues held strong at just around $4.5 billion, they didn’t see the same exponential growth as mobile, with only a slight uptick of 4 percent from $4.4 billion last year. Laszlo believes that the slow growth is probably due to a maturing industry, which has become comfortable with its search spend. “The underlying numbers are beginning to get very big,” says Laszlo, “and as revenue numbers get big, growth percentages inevitably start to slow down. Attribute the deceleration of search more to the market beginning to mature than marketers losing confidence in it.”
The study also shows that most advertisers are losing faith in classifieds and directories (which are combined in the survey) as a viable marketing medium. The revenue numbers for classifieds and directories have remained at a standstill from half-year 2013, holding at around $1.3 billion.
Laszlo says that aside from localized directories, classified and directory style advertising is probably in decline. “Outside of very specific niche categories where directories have a lot of value to add, we are seeing the end of an era or a transition away from directories as a major ad opportunity. Directories as a way to navigate information are on their way out. Directory services need to reposition how people sort through, find, and access their content to stay relevant.”
One advertising platform that’s on the rise, according to Laszlo, is social media, which was included as its own category for the first time this year. Social spending topped $2.9 billion at half-year 2014, up from $2.6 billion last year. “This is the first time we’ve given the industry and the marketplace a sense of specifically how big social media revenues are. I think everybody’s very interested in social.”
To read the full report, download it here.