IAB 375

Podcasts and more music choice powered digital audio advertising revenue forward in 2018. The Interactive Advertising Bureau (IAB) reports digital audio ads totaled to $2.25 billion last year compared to a $1.8 billion finish in 2017. “Digital audio is now a significant piece of the pie,” said Sue Hogan, SVP of Research and Measurement at the IAB. “Part of that is due to podcasts. It is not the only reason for growth in audio, but it is a significant reason.”

During a webinar Tuesday morning, Hogan said the IAB estimates two-thirds of Americans aged 12 and older listened to online audio in 2018. And podcasts reached 73 million people last year, a 7% increase from the prior year. “We are expecting to see podcasts take off in a very big way in the very near future,” she said.

The IAB Internet Advertising Revenue Report is prepared by PricewaterhouseCooper (PwC) on behalf of the trade group. David Silverman, a partner at PwC U.S., said digital audio remains in its “nascent” phase compared to other digital media, agreeing, “This is an area we are seeing growth and expect to see continued growth.”

Silverman thinks increasing smart speaker use and improving digital connectivity in vehicles will help spur digital audio use. “And content has improved and has continued to increase both on the music front and the podcast front,” he said. “All of that has contributed to the growth.” The IAB will release a more detailed report on podcast revenue later this month.

Today, search accounts for 45% of internet advertising dollars, or more than $48 billion. The growing number of smart speakers may help radio stations, podcasters, and other audio content providers tap into those budgets. “We see growth potential in that area with smart speaker and as people being to increase their actions with devices through audio means as opposed to a keyboard,” Silverman said.

Audio remains a small piece of digital revenue for now and the overall digital ad industry had what Hogan described as “a mind blow of a number” for 2018. Total U.S. digital advertising revenue hit $107.5 billion, a milestone since it was the first time what has become the largest media type has topped the $100 billion mark. The IAB says the 2018 total represents a 22% year-over-year increase from $88.3 billion of online ad revenue in 2017. It is also the fourth consecutive year that digital ad revenue has grown more than 20%. “As ad dollars chase consumers, the number continues to climb,” Hogan said. The IAB says 257 million Americans now use the internet, a 1% increase from 2017.

To put the growth trend into perspective, Silverman said the total online ad billings in 2012 were a thousand-times what the IAB recorded when it released it first numbers in 1996. The tally is also 15-times as big as size of what was logged at the height of the “bubble” in 2000. That growth has continued in recent years too with a five-fold increase during the past decade.

“Despite the law of big numbers and the fact that the industry has been around for almost a quarter century, it’s still finding phenomenal growth,” Silverman said. “And a large part of the growth in the past five or six years has been the shift to mobile. As consumers have shifted to mobile devices and multiple devices it’s created tremendous opportunity for advertisers.”

Three-quarters of digital audio consumption in 2018 occurred on mobile devices and that’s not a surprise considering the overall picture. Accounting for nearly two-thirds of 2018’s internet ad revenues, mobile ad revenue soared 40% last year. Hogan said that mobile ad dollars are now in line with time spent on mobile devices. “The eyeballs have been followed by dollars much more closely than they have in the past,” she said.

Digital video saw the largest rise among all formats with an uptick of 37% last year. And combining the two, the IAB says digital video ad revenues on mobile devices comprised 63% of all digital video ad revenues in 2018, up from 52% in the prior year.

Read the full IAB report on 2018 revenue here.