April 16, 2013, 3:55 PM

U.S. Internet advertising revenue grows nearly 16% in 2012

U.S. Internet advertising revenue increased to $36.6 billion in 2012.

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U.S. digital advertising revenue reached $36.6 billion in 2012, up 15.5% from $31.7 billion in 2011, according to an annual report released today by the Interactive Advertising Bureau, a trade group for sellers of online ads. The fastest-growing ad category in 2012 was mobile, which registered its second consecutive year of triple-digit growth. Its revenue increased 112.5% to $3.4 billion from $1.6 billion in 2011, the IAB says. Mobile ads accounted for 9.3% of total U.S. digital advertising last year, compared with 5% in 2011, it says.

Internet advertising, which first surpassed cable TV advertising in U.S. ad spending in 2011, is now the second-largest advertising category after broadcast TV, says David Silverman, a partner at PricewaterhouseCoopers LLP, which helped compile the report. “When we look at it on a longer-term trajectory, the growth in overall advertising is really being fueled by overall Internet spending,” he says.

That trend is further apparent in the rise of digital video advertising, which in 2012 generated $2.3 billion in U.S. advertising revenue, up 27.8% from $1.8 billion in 2011, the report says. The growing use of mobile devices and greater variety and quality of available digital videos have all led to the ad format’s growing popularity, says Linda Gridley, president and CEO of Internet research and advisory firm Gridley & Company LLC, who discussed the data today in a webinar with executives of the IAB and PricewaterhouseCoopers. Moreover, 39% of advertisers’ budgets for digital videos in Q1 2013 were reallocated from TV advertising budgets, she says, citing a recent study of online video advertising by digital marketing agencies Digiday and Adap.tv.

The IAB also reports the following for 2012:

• Search ad revenue totaled $16.9 billion, up 14.2% from $14.8 billion in 2011, and represented 46.2% of total digital ad revenue.

• Display ad revenue of $12 billion, up 9.1% from $11 billion in 2011, representing 32.8% of total digital ad revenue.

• E-mail ad revenue of $156 million, down 26.8% from $213 million in 2011 and representing less than 1% of total online ad revenue, making it the lowest-grossing ad format last year.

• Retailers spent more on digital advertising than any other industry, accounting for 20% of all online ad spending. Financial services came in second, with 13% of all online ad spending.

The IAB is a trade group with more than 500 media company members that together sell 86% of U.S. online advertising, it says. The IAB Internet Advertising Revenue Report, released quarterly since 1996, includes data collected by consultancy PricewaterhouseCoopers LLP, publicly available data and information submitted by online ad selling companies.

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