Internet Advertising Revenue Increases as Traditional Media Decreases

It’s official! Digital advertising revenues in the U.S. rose to an all-time high to nearly 50 billion in 2014 according to the IAB Internet Advertising Revenue Report. This is the fifth consecutive year for double-digit growth for the industry – a 16% increase over 2013 numbers. Although the time spent on the internet through laptops and desktops dropped 24%, internet advertising increased.

The rise of mobile advertising revenue is not too surprising, especially when you consider that majority of people nowadays own a smartphone and use it to shop, download promotions, coupons and discounts, read reviews, check out competitor products, as well as make the purchase online. People like to tell others about their experiences and their purchases on social, too. Mobile advertising brought in nearly 13 billion in 2014 – a 76% increase from 2013. Mobile advertising is the second largest opportunity. With only 8% of advertising dollars being allocated to mobile, this subset of the internet marketing industry is poised to accrue another 25 billion – an incredible opportunity that is expected to be realized in the next few years.

“High double-digit growth in mobile advertising is a reflection of the continued shift in consumer behavior away from desktop and towards mobile devices,” said David Silverman, Partner, PwC US. “A prominent rise in social, a significant mobile activity, is driving growth in advertising revenue as consumers spend more time connected.”

However, as the chart shows, TV remains the top medium for advertising revenue, including the time spent with it. TV is the most widely used advertising medium, reaching almost 90 percent of the U.S. population. The average person spends over 2.5 hours a day or nearly 160 hours per month with television. According to TVB, TV is the biggest influencer across all other advertising media with respect to awareness, interest, consideration, purchase desire, visiting the store or website, and making a purchase. Television commercials are a mix of medical insurance, political ads, hospitals and medical centers and miscellaneous services. Still, traditional television watching is falling especially with 18-24 year olds. The younger population watches more video with game consoles, computers, and mobile phones. Advertising spending has fallen, too. This, of course, has been beneficial to the internet as time spent online continues to grow as well as its advertising revenue.

At the bottom of the ad revenue list is print and radio.

Print newspaper revenue is down considerably. In 2014, ad revenue was just over 160 million, compared to 11 years ago when it was 450 million – this is a 64% decrease in revenue. Compared to the newspaper or magazine’s online site, we see an interesting juxtaposition: in 2003, the online version of the print medium was 121 million compared to 2014 data, where it rose to 350 million. “Interactive marketing has generated remarkable revenue growth, a testament to its power to reach today’s consumers with innovative formats at critical junctures in the path to purchase,” said Sherrill Mane, Senior Vice President, Research, Analytics, and Measurement, IAB.

Although the Radio Advertising Bureau states that over 240 million Americans ages 12 and up tune in to radio every week, the time spent with radio is down and so are its advertising dollars.

The expected trend is for traditional advertising media (print, radio, and TV) to grow their audiences on their mobile platforms. Digital advertising revenue will continue to grow and will help maintain or supplement the traditional advertising sectors.

Is it time for you to revisit your marketing mix? Give Jim Glasgow at Media Genesis a call at 248.687.7888 today.

Sources:
http://www.iab.net/about_the_iab/recent_press_releases/press_release_archive/press_release/pr-042215
http://www.statista.com/topics/977/television/