The Internet Advertising Industry Continues to Grow

According to the IAB Internet Advertising Revenue Report, Internet ad revenues reached a new milestone in 2013. For the first time in history, Internet ad revenues surpassed broadcast TV ad revenues by hitting the $42.8 billion mark. Meanwhile, mobile ad revenue continues to grow year over year.

IAB Internet Advertising Report 1

Here are some revenue numbers from 2012 to 2013 for the Internet ad industry:

IAB Internet Advertising Report 3

As you can see, the biggest gainer has been the mobile market nearly doubling in market share since the year before. With the exception of Sponsorships and Rich Media display ads, mobile has taken market share from all other ad formats, including search.

So what does this mean? Simple. The future is in mobile. If you look at any stats online, you’ll see that mobile is unanimously going up.

IAB Internet Advertising Report 2

Why are the other ad formats losing ground?

Search

Don’t feel sorry for the search market. It has actually grown in revenue, but the market share has dipped 3% due to the explosive popularity of mobile. But, have no fear, search isn’t going anywhere – as long as people use desktop computers, it will continue to thrive. Mobile offers convenience and accessibility, but there are some things that are better to do on a desktop computer.

Classifieds and Directories

Like the search market, classifieds and directories have actually grown in revenue as well, but lost 1% market share for the same reason. Classifieds and directories have been around for as long as the Internet has been around. Unlike search engines that mainly cater to big businesses, classifieds and directories level the playing field by allowing small businesses to get local listings. Also, search engines, online classifieds, and directories have pretty much replaced the traditional yellow pages.

Lead Generation

Revenue for the lead generation market has also grown, but again lost market share to mobile. As more people look to the Internet to make money, the lead generation market continues to grow. For entreprenuers and freelancers who do not have their own products or services to sell, the next best thing is do is sell someone else’s product or service and make some commission. That’s where affiliate and lead generation networks have thrived.

Email

Did you know that email marketing is one of the most effective ways to promote your product or service online? According to multiple sources, email marketing offers a 4,300% ROI on average. Despite this incredible return on investment, email marketing accounts for less than 1% of total Internet ad revenue. I believe there is a couple of reasons for this: 1) Email has gotten a bad rep over the years due to spam, and 2) It is still an untapped market. Most small businesses do not know how to do email marketing properly. Trust me… there is a right and a wrong way to do email marketing. If you are buying a list from a seller and blasting your email to thousands of people who have never heard of you, you are doing it wrong.

Mobile

The total Internet ad revenue market share rose from 9% in 2012 to 17% in 2013 for the mobile sector. As more people start to use mobile devices, the more the market share grows. With the exception of a few tasks, you can pretty do everything on your smart phone or tablet. Furthermore, new sites are being built with Responsive Design so the mobile-web is becoming more mobile device friendly.

Display Media Ads

In total, display ads accounted for 30% of the market share in 2013 – a 3% drop from the previous year. However, digital video commercials and rich media ads grew in revenue, while traditional ad banners and sponsorships fell in revenue. This makes sense, as YouTube and other video sharing sites have maintained its popularity with more advertisers gravitating towards video marketing. On the other hand, traditional ad banners have been on a gradual downward trend as the public become more ad blind and as more people install ad blockers on their browsers.

The Retail sector drove the Internet advertising market:

  • Retail advertisers continue to represent the largest category of internet ad spending, accounting for 21% of total revenues in FY 2013, up from the 20% reported in FY 2012.
  • Financial Services advertisers accounted for 13% of revenues in FY 2013, consistent with the 13% reported in FY 2012.
  • Automotive advertisers accounted for 12% of revenues in FY 2013, consistent with the 12% of total reported in FY 2012.
  • Telecom companies accounted for 9% of revenues in FY 2013, down from the 11% reported in FY 2012.
  • Leisure Travel (airfare, hotels, and resorts) accounted for 8% of revenues in FY 2013, down from the 9% of revenues reported in FY 2012.
  • Consumer Packaged Goods represented 7% in FY 2013, consistent with the 7% reported in FY 2012.
  • Computing products advertisers represented 6% of revenues in FY 2013, down from the 8% reported in FY 2012.
  • Pharmaceutical/Healthcare accounted for 5% in FY 2013, down from the 6% of revenues reported in FY 2012.
  • Media accounted for 5% in FY 2013, consistent with the 5% reported in FY 2012.
  • Entertainment accounted for 4% of FY 2013 revenues, consistent with the 4% reported in FY 2012.

Data courtesy of IAB.

Overall, the entire Internet advertising industry looks strong. With the exception of a couple of markets losing revenue, all others have gained. The Internet is still fairly young, growing, and evolving. Will it ever slow down? I doubt it when you consider the world population is growing by over 140 million people each year. These newborns will eventually grow up to be future Internet users, customers, and ad clickers.

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