Digital ad spend passed $200B in 2022 for first time; growth slowed
Digital advertising revenue grew 10.8% year-over-year in 2022, according to IAB.
Digital advertising revenue grew 10.8% year-over-year in 2022, according to IAB.
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.
Dealboard has funding and M&A updates from ecommerce aggregators and forecasting software.
This week, the aggregator space is active with M&A, IKEA is ready to roll out newly-purchased warehouse management software and Authentic Brands Group acquired a boot icon. Plus, there’s new investment to report for YouTube influencer Emma Chamberlain’s coffee brand and retail forecasting.
Here’s a look at the latest deals:
Chamberlain Coffee, the consumer brand founded by YouTube influencer Emma Chamberlain, raised $7 million in new funding.
The financing included backing from existing investors including Blazar Capital, Chamberlain and United Talent Agency. New investors include Volition Capital, Electric Feel Ventures, L.A. Libations and Noah Bremen, founder of PLTFRM.
The new funding follows the launch of a Ready-to-Drink (RTD) product and coffee pods. Previously, the brand raised a Series A in August 2022.
"Creating a uniquely inviting coffee brand has been my dream for so long now, and having key investors back us allows us to build Chamberlain Coffee in ways that feel fresh and exciting,” said Chamberlain, in a statement. “There are so many products I am eager to develop and projects I'm excited to get working on. With such an incredible team and group of investors I am more excited than ever to see what the future holds for Chamberlain Coffee."
Impact Analytics, a software company for retail supply chain and merchandise planning, raised new funding from Vistara Growth.
The new investment, the amount of which was not disclosed, comes after Impact raised funding in February 2021 and October 2022 from Argentum.
The funding will help Impact Analytics further develop its Impact Analytics SmartSuite product portfolio, which is designed to help optimize forecasting, merchandising and end-to-end lifecycle pricing. Rather than the traditional forecasting approach of basing decisions on the preceding year, Impact Analytics applies a model that includes 150 variables from internal and external sources, while combining recency and history. Clients include BJ's Wholesale Club, Dick's Sporting Goods, Puma and Tapestry.
Selva Ventures, a venture capital firm focused on consumer brands that promote healthier living, closed its second fund at $34 million, TechCrunch reported.
With the new funding, Selva will invest in brands across categories including health, wellness, beauty and personal care. The fund expects to write checks of $1-2 million in seed and Series A startups, while assisting in areas like finance, operations and retail partnerships.
Backers of the second fund include Unilever Ventures, PagsGroup and Obelysk.
Nautica and Forever 21 owner Authentic Brands Group acquired the intellectual property of Hunter, a 160-year-old British outdoor lifestyle brand known for its Wellington boots.
With the deal, ABG appointed longtime partners Batra Group and Marc Fisher to execute retail and ecommerce operations, as well as continue to expand the brand in the UK and U.S., respectively.
“At the intersection of fashion and outdoor, Hunter introduces another elevated global brand to Authentic’s diverse Lifestyle portfolio,” said Authentic CEO Jamie Salter, in a statement.
Terms of the deal were not disclosed.
The investment arm of IKEA parent Ingka Group acquired the warehouse management software platform Made4Net.
As a result of the deal, Made4Net’s software will be deployed across IKEA’s 482 stores and fulfillment centers. Made4Net will continue to operate as an independent subsidiary of Ingka, with a headquarters in New Jersey. CEO Duff Davidson will remain at the helm of the company.
“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, head of retail at Ingka Group, in a statement. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”
European ecommerce aggregator SellerX acquired Elevate Brands, a U.S.-based aggregator.
The combined companies will be known as SellerX Group. It will comprise a portfolio that includes 80 Amazon-native private label consumer brands in categories including sports and outdoors, home, mobile accessories, pets and consumables. The portfolio will span over 40,000 products.
With the deal, SellerX Co-CEOs Philipp Triebel and Malte Horeyseck will lead SellerX Group, while Elevate Brands cofounders Ryan Gnesin, Jeremy Bell and Robert Bell will remain in key leadership positions.
“This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure,” said Triebel, in a statement. “By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”
Ecommerce aggregator Society Brands acquired Wolf Tactical, a tactical gear company.
Founded in 2017 by Tim Wu, Wolf Tactical makes products including DC belts, range belts to weighted vest and tactical backpacks.
"I started Wolf Tactical by myself as a side hustle with very limited knowledge of business and entrepreneurship. A combination of hard work and relentless learning allowed me to build it into a multi-million-dollar business," said Wu who will remain as brand president, in a statement. "With the help of Society Brands, I have access to untapped potential that I would not be able to achieve by myself.”