Despite economic challenges, digital ad spending grew by 10.8% in 2022, a notable shift from the 21.1% increase in Q1 to a modest 4.4% increase in Q4. The IAB and PwC’s latest revenue report provides insights into this evolving landscape.
This article will reveal five key takeaways from the report, outlining the trends that shaped digital ad spending in 2022
Digital Audio and Video Continue to Lead the Way
As of 2021, digital audio and video formats were leading the way in growth through 2022. Although their growth rates were less dramatic than in the previous year, they still outpaced overall trends. Digital audio formats experienced a 20.9% year-over-year increase, nearly doubling the growth of digital ad revenues as a whole. However, they still accounted for only 2.8% of total spending. Digital video followed closely behind with a 19.3% increase, reaching $47.1 billion and claiming 22.5% of total spending, up from 20.9% in 2021.
Search Retains Dominance but Loses Market Share
Search advertising remained the dominant digital ad format in 2022, but its market share slightly decreased. Search comprised 40.2% of total digital ad revenues in 2022, down from 41.4% in 2021. Despite its reducing share, search advertising still saw a 7.8% growth in spending, setting a new record of $84.4 billion.
Social Media Ad Spending Growth Slows Down
Social media advertising experienced the most significant slowdown in spending growth in 2022, growing by just 3.6%, compared to a 39.3% increase in 2021. This was the lowest growth rate for the format in the past decade. Second-half revenues for social media advertising only increased by $0.3 billion year-over-year, totalling $31.4 billion. This slowdown was primarily attributed to the impacts of Apple’s App Tracking Transparency (ATT) feature.
Mobile Ad Revenue Share Continues to Rise
In 2021, mobile advertising stabilized at about 70% of digital ad revenues. However, in 2022, mobile advertising regained momentum, with revenues growing by 14.1% year-over-year to $154.1 billion. This growth pushed mobile advertising to 73.5% of total digital ad revenues.
Slight Easing of Digital Ad Revenue Concentration
In 2022, the top 10 companies held 76.8% of all digital ad revenues, a decrease from 78.6% in 2021. This was the first time since 2016 that the concentration of digital ad revenues among the top companies saw a reduction. However, the next 15 companies held an additional 6.8% share of revenues, leaving only 16.4% for the rest of the publishers. Total digital ad revenues amounted to $209.7 billion in 2022, meaning that the ad spend available for all companies excluding the top 25 was approximately $34.4 billion. Although this is still a small portion of the overall market, it represents an improvement from the estimated $28 billion in 2021.
These trends underscore the dynamic nature of digital advertising, indicating that marketers should consistently adapt their strategies to stay ahead. As consumer preferences evolve and new technologies emerge, advertisers must be ready to revise their approaches to capitalize on fresh opportunities and preserve their competitive advantage in the digital ad landscape.
Additional Insights on Digital Ad Spending in 2022
Programmatic Advertising Continues to Thrive
Programmatic advertising, an automated system for buying and selling digital ads, continued to garner momentum in 2022. This trend suggests that advertisers and marketers are progressively seeking more efficient and targeted methods to engage their audiences. Leveraging data-driven insights and automated workflows, programmatic advertising facilitates more accurate targeting, enhancing the return on investment (ROI). As the digital ad landscape becomes increasingly complex, the role of programmatic advertising in shaping marketers’ strategies is expected to grow in importance.
The Rise of Connected TV Advertising
Advertising through Connected TV (CTV), which delivers ads to viewers consuming content on internet-enabled TVs or over-the-top (OTT) devices, saw remarkable growth in 2022. This trend mirrors the ongoing consumer shift towards streaming services and the dwindling traditional TV viewership. As an increasing number of people consume content on CTV platforms, advertisers have identified the potential to reach highly engaged audiences via targeted ads in this medium. With the continued evolution of CTV advertising, it is poised to play a pivotal role in the future of digital ad expenditure.
Influencer Marketing Gains Momentum
Influencer marketing, utilizing the influence of social media personalities to endorse products and services, gained additional momentum in 2022. As consumers increasingly rely on trusted voices for product recommendations, influencer marketing has emerged as an effective method for brands to establish connections with their target audiences. Consequently, a growing number of advertisers are allocating a portion of their digital ad budget to influencer marketing campaigns. This trend is likely to persist as brands continue to pursue authentic engagements with consumers via trusted intermediaries.
The Importance of Data Privacy and Compliance
With the advent of Apple’s ATT feature and the intensifying focus on data privacy, it became imperative for advertisers to prioritize compliance with data protection regulations. This necessitated strategic adjustments to ensure transparent and secure collection, storage, and processing of consumer data. As data privacy concerns persistently mold the digital advertising landscape, it is crucial for advertisers to align their practices with the evolving regulatory framework and consumer expectations.
The Ongoing Impact of COVID-19 on Digital Ad Spending
Although the initial shockwaves of the global pandemic have subsided, the lingering effects of COVID-19 on digital ad spending remained evident in 2022. The pandemic accelerated the transition towards digital platforms and compelled marketers to adapt their strategies to engage consumers in an increasingly virtual environment.
Consequently, digital ad spending continued to grow, albeit at a slower pace than in the immediate aftermath of the pandemic. Looking ahead, the insights gained during the pandemic will likely continue to shape digital ad spending trends, as advertisers place a high priority on flexibility, innovation, and resilience in their marketing strategies.
In conclusion, digital ad spending in 2022 was characterized by several key trends and shifts that are expected to continue influencing the industry in the forthcoming years. To maintain competitiveness in the rapidly evolving digital advertising landscape, advertisers need to stay abreast of these developments and adjust their strategies accordingly.