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Digital advertising revenue growth slowed to 10.8% last year with a total of $209.7 billion spent, according to the annual report from the Internet Advertising Bureau (IAB), conducted by PwC. This is a significant drop from 2021’s record 35% gain, but still a healthy gain. Unfortunately, the report expects worse numbers for 2023. 

Why we care. You know you’re in pretty good shape when a 10.8% revenue increase is a major slowdown. The 35% of 2021 would have been tough to repeat even without last year’s inflation, interest rate hikes, geo-political thunderstorms and four quarters of being told there’s a recession right around the corner. Having near 11% growth and all those impediments? That may be a bigger accomplishment than 2021’s gaudy numbers.

IAB’s CEO David Cohen expects 2023’s number to be lower. “Looking ahead, there is definitely still growth to be had, but it will be harder to achieve and likely less than we have become accustomed to,” he said in a statement. 

He has good reason to say that. Consumer spending continues to slow as do housing sales. Inflation persists, although it’s an unusual type, caused by corporate profit-taking instead of too many dollars chasing too few goods.  

However, something could upset the doom-and-gloom apple cart: Artificial intelligence. Will it spur economic growth like two other revolutionary technologies, the telephone and the internet, did?

A troubling trend. The good growth numbers were a result of a phenomenal first two quarters, which saw internet ad revenue increase 21.1% and 11.8%, lifting the third and fourth quarters which saw increases slow to 8.4% and 4.4%.

Search finds its way. Organic search, which has the largest share of ad revenue, grew by 7.8% last year, to a record $84.4 billion. However, its total share of revenue dropped to 40.2%, from 41.4% in 2021. 

Display shows growth. Display ads, the second-largest format, saw increases in both revenue — up 12% to $63.5 billion — and total share, going from 30% to 30.3%.

Audio is mixed. Digital audio had the largest percentage gain of any format, increasing 20.9% to $5.9 billion. However, its overall share of total digital ad revenue was nearly flat, going from 2.6% in 2021 to 2.8% last year.

Video sees clear gains. With a 19.3% increase, digital video had the second-best percentage gain. More significantly it had the largest dollar increase of any format: up $7.6 billion, to $47.1 billion. Also, its share of Video’s share of total digital ad revenue rose from 20.9% to 22.5%

Strong programming. Programmatic advertising’s revenues increased by $10.4 billion, or 10.5%, to a total of $109.4 billion.

A bit less social. Social media growth got off to a strong start in 2022, with ad revenue rising $1.8 billion in the first half of the year, but dropping dramatically to $0.3 billion in the second half.

Mobile is on the move. Mobile grew 14.1% to a record high of $154.1 billion and a 73.5% share of total digital ad revenue. 

The post 2022’s strong digital ad revenue growth unlikely to continue appeared first on MarTech.