U.S. mobile advertising is on a tear, increasing 66.1% in 2015 to $20.68 billion, up from $12.45 billion the year before, according to a new study from the Interactive Advertising Bureau.
Mobile revenue now represents the largest segment of U.S. online ad revenue, at 35%, up from 25% in 2014, the IAB’s Internet Advertising Revenue Report says. Total Internet ad revenue in the United States for 2015 increased 20.4% to $59.6 billion from $49.5 billion in 2014, according to the IAB.
“Mobile’s impressive upswing is a testament to its increasing importance to marketers,” said Randall Rothenberg, president and CEO of IAB. Mobile advertising is tailored for such mobile devices as smartphones and tablets and includes search ads, rich media display ads and text messaging, according to the study.
The report notes that the surge in mobile advertising represents retailers’ and other advertisers’ recognition that consumers are increasingly reachable on their smartphones and tablets. “Internet advertising was a disruptive innovation when the industry was formed,” says David Silverman, partner, PwC US. “Twenty years later we still see double-digit growth rates, including 20% in 2015. Three key disruptive trends—mobile, social, and programmatic—continue to fuel this exceptional rate of growth.”
Social media advertising increased 55.7%, generating $10.9 billion in revenue last year compared with $7.0 billion in 2014. That exceeds a 2011 prediction from BIA/Kelsey, a media research and consulting firm, which said U.S. social media ad spending would hit $8.3 billion in 2015. IAB’s data indicates that category is on track to beat a 2014 BIA/Kelsey projection said that social media advertising will hit $15 billion by 2018. The Interactive Advertising Bureau defines social media as advertising delivered on social platforms, including social networking and social gaming websites and apps, across all device types, including desktop, laptop, smartphone and tablet.
Revenue from search advertising (non-mobile) increased 8.0% in 2015 to $20.48 billion from $18.96 billion in 2014, and accounted for 34% of total U.S. online revenue, the IAB study finds.
“Retail advertisers continue to represent the largest category of Internet ad spending, responsible for 22% percent last year, followed by automotive and financial services which each accounted for 13% of the year’s revenues,” the report states.
Google, the leading Internet search provider, and Facebook, the biggest social network operator, claimed 64% of the $59.6 billion in online advertising revenue, according to Pivotal Research analyst Brian Wieser. Google scooped up $30 billion and Facebook gathered $8 billion, while other smaller companies lost market share, the analyst noted. “Smaller companies will continue to operate in the shadows of the industry’s two dominant players,” Wieser wrote in a note to investors.
The report is based on data from companies that report meaningful online advertising revenue and includes data concerning online advertising revenue from websites, commercial online services, free email providers and other companies selling online advertising.
Bloomberg contributed to the report.