More mobile listening and the growth of podcasts helped propel digital audio ad spending in 2019. The Interactive Advertising Bureau has released its final tally for ad spending across the online landscape and it reports total internet audio advertising revenue reached $2.7 billion last year. That was a 21.2% increase over the $2.3 billion spent by advertisers on digital audio in 2018.
The IAB said the year closed on a high note, as fourth quarter internet audio advertising spending totaled $864 million. It was the strongest quarter in 2019 for online audio. Spending in the digital audio category includes a range of services including podcasts, the audio stream of broadcast radio stations, streaming music services, in-game music, and playlist services.
“The 2019 internet advertising report demonstrates that even while the digital advertising industry matures, innovation continues to propel the growth of the industry at rates far surpassing other ad-supported media,” said PwC partner David Silverman, whose firm worked with the IAB to prepare the annual report.
Nearly eight of every ten online audio ad dollars were directed toward mobile listeners, according to the IAB. “Audio [advertising] on mobile devices grew 25.3% in large part due to the growth of podcasts,” the report said. That compared to 7.6% growth for desktop audio advertising. The share for mobile is also slightly bigger for audio than for other online segments.
Total mobile ad revenue grew by a quarter (24%) last year in the U.S. But despite that double-digit increase the IAB said there are signs mobile’s share is close to topping out after growing at three times the rate of internet advertising overall during the past decade. “While mobile is the preferred device, the rate of growth for mobile has been slowing over recent years as the underlying platform is maturing,” the IAB report said.
Slowest Growth Rate Since 2012
More advertising dollars continue to be directed toward digital media, and the IAB said across all online segments total spending increased 15.9% last year to $124.6 billion. That represented an increase of $17.1 billion – or roughly the size of the entire radio industry – to the tally between 2018 and 2019.
The IAB said that although last year brought the lowest growth rate since 2012, the online advertising sector has seen double-digit growth for more than two decades. “We view this as an inevitable trend as the industry matures,” the trade group said, predicting the next round of growth will come from “second generation” social media companies that are capturing market share and dollars.
The second half of 2019 was stronger than the first half, thanks to the seasonal spike in fourth quarter marketing. Digital revenue increased 13.3% in third quarter compared to a year earlier and increased 13.3% in fourth quarter. “This is due to advertising dollars following the consumer during the holiday season when the most retail spending occurs,” it said.
“It’s difficult to look back at advertising revenues in 2019 without noticing how often ‘social’ was a common thread,” the IAB said. Social media advertising accounted for nearly one third (28.6%) of all internet advertising revenues and the IAB predicts that number will continue to grow as companies are able to use “their troves of valuable data” and their ability to integrate ads to reach consumers in one of the least disruptive ways.
Weakest First Quarter In A Decade
Media companies across the board have said January and February ad sales collapsed in March as the impact of the COVID-19 pandemic led marketers to pull back on spending. The internet was no different. The IAB says that after “strong growth” in both January and February, March was “sharply impacted” by the coronavirus. It reported overall first quarter revenue still managed to post a 12% increase, however, with total ad sales of $31.4 billion.
The growth rate, the IAB said, would be considered “impressive” for any other media type, but not so for digital. Last year’s first quarter delivered a 17% growth rate. And first quarter was the slowest year-over-year gain reported by the IAB since 2010.
“Many companies are expecting a continuing negative impact to second quarter and significant uncertainty as to the severity and duration to the quarters beyond Q2,” the IAB report said. “It is unknown if advertisers will continue to slash or pull budgets for industry verticals that have been severely impacted by COVID-19.”
The IAB said its data also showed many advertisers don’t want to be associated with news content right now, meaning some digital publishers are seeing traffic soar while advertising remains weak.
Randall Rothenberg, CEO of the IAB, said coming off a year with “modest increases” in digital ad spending, no one could have expected a pandemic to challenge the global economy in 2020. “As important as it is to learn from our past, we must look forward to the opportunities and challenges that lie ahead for digital advertising,” he told his members.