Digital ad revenue jumps 7.3% to record $225 billion in 2023: IAB report
Digital advertising revenue grew 7.3% to a record $225 billion in 2023, according to the Interactive Advertising Bureau’s (IAB) latest report. Retail media, video ads, and audio delivered the highest growth rates.
The fourth quarter of 2023 (Q4) saw the most significant jump in spending, up 12.3% year over year (YOY). Revenue for the last quarter totaled $64.5 billion,primarily due to increased spending holidays.
Audio advertising revenue grew 18.9% year over year, while retail media grew 16.3%. Video advertising saw 10.6% Year-over-year growth, rising to $52.1 billion in 2023. The combination of Connected TV (CTV) and over-the-top (OTT) platforms delivered 42% of the video ad revenue.
Audio advertising grew to $7 billion in 2023, retail media revenues reaching $43.7 billion, and major e-commerce companies expanding retail media platforms.
This impressive digital ad revenue growth defied many negative economic indicators like fears of a recession and the challenges presented by ongoing inflation. IAB had earlier forecasted an average 25% increase in advertising budget for content creators in 2024.
Social Media Ads jump 8.7% YOY
Social media advertising also jumped 8.7% YoY in 2023 after a slow ad spend in 2022, reaching $64.9 billion, driven partly by creator economy strength. The second half of 2023 accounted for $4.1 billion of the $5.1 billion YoY increase to finish the year on a solid note.
Social media platforms are expected to continue pursuing the merging of social commerce, reality tech, and influencer marketing to drive engagement and conversions.
Search for 5.2% YOY growth ($88.8 billion) and display that revenues of 5.2% YOY growth ($66.1 billion) remained high.
2024 outlook
Advertising is undergoing a transformation due to channels that offer addressable audiences at scale, personalized messaging, and privacy-compliant standards, according to the IAB.
The report also looks at what 2024 may hold for marketers, including the impact of generative artificial intelligence (AI), which is fast utilized to help replace missing signals like third-party cookies that have been earlier used for measurement and personalization.
Privacy will remain a top concern in 2024, especially as the industry moves away from cookies. The IAB views privacy as more of a permanent change than a trend, now and in the future.
IAB expects the CTV/OTT to be the fastest-growing advertising platform 2024.
PwC Advisory Services LLC conducts the research on an ongoing basis. The new report was produced by compiling online databases, historical data, and a web-based survey.
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