Digital ad spend passed $200B in 2022 for first time; growth slowed

Digital advertising growth surpassed a key milestone in 2022, but still slowed from the prior year.

A report out Wednesday from the Interactive Advertising Bureau and PwC shared the following data for digital advertising:

Growth: Revenue for internet advertising in 2022 grew 10.8% year-over-year from 2021.

Dollars: Total revenue surpassed $200 billion for the first time, rising to $209.7 billion.

Tale of two halves: In the first half of the year, revenue surpassed $100 billion for the first time. Growth particularly slowed down in the second half of 2022, as Q3 was up 8.4%, and Q4 was up 4.4%.

The trends in digital advertising mirrored ecommerce as a whole, which surpassed the milestone of $1 trillion in the U.S., even as growth slowed down.

“After unprecedented growth in 2021, we expected more moderation in 2022. Economic uncertainty, geo-political unrest, a shifting regulatory environment and addressability changes have all contributed to revenue growing at a slower pace,” said David Cohen, CEO of IAB, in a statement. “Looking ahead, there is definitely still growth to be had, but it will be harder to achieve and likely less than we have become accustomed to.”

These results came in a year of major shifts for digital advertising. In particular, attribution changes spurred by Apple’s App Tracking Transparency feature led to a decrease in revenue for social platforms such as Facebook, Instagram and Snapchat as brands adjusted strategies to a more privacy-focused environment. Overall, social media revenue growth slowed, with revenues in the second half of the year virtually plateauing.

Yet there were also rising forms of advertising. Retail media, which places ads on the ecommerce platforms where people shop, grew at a rapid pace as retailers stood up new networks. TikTok also gained increased attention from brands as a result of massive user growth. And CTV, which describes advertising on streaming platforms, is seeing increasing spend as brands see new opportunity to combine the ability to reach viewers on their couch with the targeting and measurement tools of the internet. Shoppable ads, affiliate marketing, and direct-to-consumer advertising other areas seeing innovation, the report notes.

Still, the IAB report indicated that advertisers are spreading spending to a wider range of channels. At the same time, the market share of ad revenue among the top 10 companies declined for the first time since 2016.

“Advertisers are diversifying their spending to target audiences using fewer identifiable data points,” said Jack Koch, SVP Research and Insights at IAB. “Digital video, digital audio, and the long tail of publishers are benefiting.”

It’s worth remembering that these advertising approaches remain in the early stages. Advertisers are going to continue to develop new forms of targeting and measurement for these emerging formats, the report states.

One to watch: A particular area of growth is mobile advertising, which grew 14.1% year-over-year to hit a record high of $154.1 billion. Podcasts and the 5G rollout are likely to continue to drive revenue, IAB said.