The Interactive Advertising Bureau, a trade body, today released its full-year report (pdf) on trends in the advertising industry compiled by PricewaterhouseCoopers. The headline finding is that advertising in various digital formats—through search, on mobile phones, videos and others—hit a record high of $36.6 billion in the US last year, up 15% from 2011’s $31.7 billion. Revenues crossed $10 billion in a single quarter for the first time in the final three months of 2012.
However, every online advertising format, except digital video which ticked up a bit, lost market share compared to the previous year. That includes search, which still accounts for nearly half on online ad spending. Why? Because all those dollars are being diverted to mobile, which more than doubled its share to $3.4 billion from $1.6 billion the previous year.
That’s still a drop in the ocean—search was a shade under $17 billion. But mobile ad revenues have more than doubled in each of the past two years, before which IAB didn’t even gather data on the category.
It’s not just the increasing ubiquity of mobiles that’s driving the growth. There are other factors too, including better speeds on 4G, more tablets and—ick, that word—phablets that can display more and bigger ads, and a lot of work from the likes of Google and Facebook trying to figure out how to stick ads onto your screens.
And where is all that growth coming from? This chart is going to be painful for some to look at:
No other category has fallen as sharply as newspaper advertising.
Online advertising is now the second biggest category after broadcast television. If you combine broadcast with cable, which is third, television is still light years ahead of the internet.
But don’t bet on it lasting. The people over at Aereo and Hopper, two services that are eating into the advertising and fee-based revenues of traditional TV networks, probably saw these charts too. And what they see is not an insurmountable gap but a wide-open opportunity measuring in the tens of billions of dollars.