Over the past four years, the internet economy has grown seven times faster than the US economy and now accounts for 12 percent of the US GDP. In 2021 alone, US digital advertising experienced tremendous growth. Consumer time spent on digital media channels keeps growing and advertising spend on digital media is following—especially across digital video, digital audio, social media and search. Interactive Advertising Bureau’s (IAB) latest report breaks down the industry’s growth for the full year of 2021.

Key Findings:

  • Digital video continues to be one of the fastest-growing channels, up 50.8 percent compared to last year, with total revenues of $39.5 billion.
  • Digital audio captured the highest year-over-year growth, up 57.9 percent to $4.9 billion.
  • Social media advertising was up 39.3 percent to $57.7 billion, as consumers continue to engage with Meta platforms, Snapchat, TikTok and Twitter.
  • While search revenue grew substantially (32.8 percent) in 2021, it didn’t grow as strong as other areas, leading to a slight decrease in total revenue share (reduction of 0.8 percentage points).
  • Small business growth engine will be a key contributor to fueling ongoing digital media and marketing ecosystem acceleration.

Advertisers also looked to capitalize on opportunities to message consumers who, buoyed by government stimulus packages and a reopening economy, increased spending in 2021. The explosion of new businesses created in 2021 was undoubtedly an additional growth driver. According to the Census Bureau, 2021 saw the greatest business growth in history with 5.4 million new businesses created. Those businesses rely upon the ad-supported internet to attract new customers and provide ongoing products and services. We believe the small business growth engine will be a key contributor to fueling ongoing digital media and marketing ecosystem acceleration.

2021 Vs. 2020 Internet Advertising Revenue

Internet advertising revenue in 2021 grew by 35.4 percent YOY, surpassing expectations on Wall Street and showcasing the US internet advertising industry’s resilience post-pandemic. In 2020, internet advertising revenue increased by 12.2 percent YOY to reach $139.8 billion.

Streaming media, including digital video and digital audio, are growing faster than the overall industry. If the total internet ad revenue growth index baseline were 100, digital audio reached 164, digital video reached 144 and social reached 111, according to IAB. Search and display advertising formats experienced less than average growth rates.

Desktop Vs. Mobile Revenues

In 2021, mobile and desktop ad revenues experienced record levels, far outpacing prior years. While mobile revenue grew by 37.4 percent YOY, desktop grew by 30.7 percent YOY.

This rapid growth is the result of several factors, including:

  • The permanent shift to hybrid work environments post-pandemic along with reduced business travel and the simultaneous use of mobile and desktops.
  • Consumers spending more time with all mediums of digital media, especially mobile for online shopping.
  • The economy’s rapid recovery after COVID-19 lockdowns and restrictions.

Since 2011, overall internet advertising revenue experienced a compound annual growth rate (CAGR) of 19.6 percent, mobile saw a CAGR of 55.8 percent and desktop came in at 6.1 percent. In 2021, mobile internet ad revenue reached 135.1 billion while desktop earned $54.2 billion.

Revenue Concentration

Though the top 10 companies’ share of growth has relaxed, together they comprise 78.6 percent of digital ad revenue for a total of $148.7 billion in 2021. IAB believes that this phenomenon, coupled with the reversal of multi-year loss in share among mid-tier publishers, points to the possibility that advertising revenue among mid-tier and long-tail publishers is democratizing. In 2020, the top 10 companies comprised 78.1 percent of all internet advertising revenue and in 2019 that figure was 76.7 percent.

2021 Results By Format

Among the top formats in 2021, search (41.4 percent)—historically the most prominent format—held the highest share, followed by display (30 percent) and digital video (20.9 percent), found IAB.

In that same year, search earned $78.3 billion after a 33 percent increase from 2020, display earned $56.7 billion after a 29 percent increase and digital video earned $39.5 billion after a 51 percent increase. 

Between 2020 and 2021, digital video witnessed the greatest advertising growth with a 51 percent increase in revenue and a 2.2 percentage point gain in market size. All other formats held 7.8 percent of the market at $14.8 billion with a 40 percent increase over its 2020 figure.

Formats By Device

Among the top device formats, each grew on desktop and on mobile. In 2021, desktop revenue for search grew by 21.9 percent YOY to reach $23.5 billion, display grew by 25.4 percent YOY at $11.8 billion and digital video grew by 58.2 percent at $12.2 billion. 

In 2021, mobile revenue for search grew by 38 percent YOY to reach $54.7 billion, display grew by 29.8 percent YOY at $45 billion and digital video grew by 47.8 percent at $27.3 billion. Other revenues also experienced growth from 2020 to 2021.

Digital Video: Desktop Vs. Mobile

Overall digital video advertising revenues, including connected TV (CTV) and over-the-top (OTT), grew by 50.8 percent from $13.3 billion to $39.5 billion from 2020 to 2021. Mobile accounted for the majority of digital video revenues at $27.3 billion as desktop accounted for $12.2 billion—1 percent higher than its proportion in 2020. 

Digital Audio Desktop Vs. Mobile

Just as digital video experienced immense growth in 2021, so too did digital audio. Digital audio advertising revenues, including podcasting, increased by just under $1.8 billion between 2020 and 2021 for a YOY increase of 57.9 percent with mobile digital audio revenues driving most of the growth. Desktop digital audio revenues reached $739 million with a 23.8 percent YOY increase over 2020. 

Programmatic

Programmatic advertising revenues grew by 39 percent, or $27.8 billion, between 2020 and 2021, to reach $99 billion (excluding search). Digital video, in particular, experienced the greatest increase YOY versus other non-search advertising mediums, especially on mobile devices.

Social Media

In 2021, social media advertising revenues increased by $16.3 billion over 2020 to reach $57.7 billion. 

Advertising Revenues And Growth By Digital And Non-Digital Media

Besides magazines, all media types have seen positive advertising revenue growth since 2020—including internet advertising (35.4 percent), TV advertising (8.7 percent), terrestrial radio (12.8 percent), newspaper (3.6 percent) and B2B (46.3 percent). Of all the media types, cinema experienced the largest percentage increase between 2020 and 2021 at 61.8 percent.

2022 And Beyond

Some of the key trends IAB says industry leaders are focusing on in 2022 include:

More Dollars Flowing Into Digital

Ad monetization embedded in gaming and emerging devices and experiences like virtual reality (VR) and the metaverse are rapidly increasing and will likely provide publishers, tech companies and content creators continued opportunities to earn revenue. Another trend that may continue to drive ad investment into digital is the ongoing rise of ecommerce and smartphone shopping. In response, advertisers will seek to place their messaging where transactions are happening.

Privacy And Addressability’s Impact On Measurement And Monetization

Consumers are becoming more protective over and aware of the value of their data, and as they are, publishers and platforms are exchanging for it ad-free, ad-light or ad-heavy content experiences. As consumers migrate to these ad-free and subscription-based experiences, ad-supported streaming services’ revenues are being threatened. Advertisers are finding themselves in a predicament—either continue operating in the space where legacy models deliver expected ad content and ad loads or embark into new territory toward personalized content delivered on the consumer’s terms.

Diversity, Equity, Inclusion And Purpose

Consumers are now, more than ever, expecting brands to place diversity, equity and inclusion at the forefront of their business operations. And as advertisers respond and prioritize their needs to be purpose-driven, inclusive and authentic, their publishing partners will also have to engage in business practices and messaging that embody those values.