Last year, spending confidence and economic activity plunged, with advertisers pausing campaigns and shifting ad dollars from traditional to digital media. According to the Interactive Advertising Bureau’s 2020/2021 Internet Advertising Revenue Report, that shift resulted in an overall 12.2 percent increase in digital ad revenue last year compared to 2019.
The first half of 2020 was hit particularly hard, with digital ad revenue growth in Q2 declining 5.2 percent YoY. Nevertheless, IAB’s analysis reveals that those losses were offset by revenues in Q3 and Q4—an increase of 11.7 percent and 28.7 percent, respectively.
Lockdown-induced behavior, including the rise in adoption of connected TV, online shopping and at-home services, as well as the surge in social media usage, are among the reasons why digital ad revenues rebounded, and will continue to grow this year.
First off, social media accounted for 29.6 percent of all internet ad revenue, as revenues ballooned to $41.5 billion in 2020—a 16.3 percent YoY growth.
Search continues to dominate, bringing in $59 billion in ad revenues, a 7.8 percent increase since 2019 and representing a 42.2 percent share of total ad revenue.
Yet it’s digital video that saw the biggest ad growth last year, with a 20.6 percent increase in revenue since 2019. It now accounts for a 18.7 percent share of total ad revenue for 2020, a 1.3 percent increase YoY.
Pointing to the format’s rising prominence, IAB mentions that total digital video ad revenues were 61 percent higher in 2020 compared with 2018.
Mobile accounted for a majority of digital video’s growth, surging 25.3 percent to $18.5 billion—the strongest revenue growth across all formats when compared to desktop.
IAB also observed gains in audio revenues. The format grew by over $350 million in 2020, a 13 percent increase YoY largely driven by higher mobile audio revenues.
Programmatic ad revenues grew by $14.2 billion, a 25 percent increase YoY in line with the uptick in agencies and brands that shifted from performance to mission-based marketing. Digital video in particular has seen the biggest increase YoY versus other non-search ad methods, reports IAB.
In 2020, display just slightly increased its share as revenues totaled $44 billion—a 15.4 percent increase. During Q4, display format revenues experienced the strongest YoY growth in revenue, up 35.4 percent since 2019.
In addition to internet advertising, the only other media types with positive ad revenue growth were eSports and video games, at 17.9 percent and 2.5 percent, respectively.
As far as revenues by pricing model, IAB’s data show that 67.1 percent of 2020 internet ad revenues were priced on a performance basis, up from 62.9 percent in 2019; 32.4 percent were priced on a cost per thousand (CPM) basis, down from 35.2 percent in 2019; and 0.5 percent were priced on a hybrid basis, a 1.9 percent decline from 2019.