• by Jack Loechner , Staff Writer @mp_research, May 5, 2016

According to the industry survey conducted by PwC and sponsored by the Interactive Advertising Bureau (IAB), Internet advertising revenues (“revenues”) in the United States totaled $59.6 billion for the full year of 2015, with Q4 2015 accounting for approximately $17.4 billion and Q3 2015 accounting for approximately $14.7 billion. Revenues for the full year of 2015 increased 20.4% over 2014, and mobile advertising increases 66% in FY 2015 from the prior year total of $12.5 billion.

Randall Rothenberg, President and CEO, IAB, says “… mobile’s impressive upswing… (and) digital video seeing strong growth… (is) a testament to its increasing importance to marketers… ”

David Silverman, partner, PwC US also notes that  “… Internet advertising was a disruptive innovation when the industry was formed… we (now) see double-digit growth rates… (including) three key disruptive trends… mobile, social, and programmatic… fuel(ing) this exceptional rate of growth…”

Revenues of $17.4 billion in Q4 2015 broke the prior quarter record of $14.7 billion set in the third quarter of 2015 by $2.7 billion. Fourth quarter 2015 revenues were $3.2 billion (22.8 %) higher than in the fourth quarter of 2014.

Strong revenue growth continued in 2015 on a year-over-year percentage and dollar basis. The compound annual growth rate (CAGR) over the past ten years for internet advertising of 17% has outpaced U.S. current dollar GDP growth of 3%* over that period.

Since 2010, internet advertising growth was fueled by a 100% CAGR in Mobile (compared to 9% growth in non- Mobile revenue over the same period).

Quarterly Internet advertising continued to build on the momentum from 2014.

Over the past decade we have seen a clear seasonal trend of strong fourth quarter revenue followed by a first quarter dip. Despite the seasonal dip, first quarter revenues have outpaced the prior year's third quarter since 2010. Historical revenue mix: second-half revenues reached $32.1 billion, and over the past ten years, second half revenues averaged 53% of the annual total.

The historically higher proportion of revenues in the second half of the year results from both the continued growth in the industry and from the seasonality of higher ad spend in the fourth quarter.

Second-half revenues totaled $32.1 billion in 2015, an increase of $5.7 billion from second-half revenues of 2014, which totaled $26.4 billion. Second-half revenues in 2015 represented 54% of total revenues in 2015, up from the 53% reported in 2014 and consistent with the broader trend of higher revenues in the second-half of each year.

Online advertising continues to remain concentrated with the 10 leading ad-selling companies, which accounted for 75% of total revenues in Q4 2015, slightly higher than the 71% reported in Q4 2014, says the report. Companies ranked 11th to 25th accounted for 9% of revenues in Q4 2015, a slight decrease from the 11% reported in Q4 2014.

Despite the emergence of a few heavyweights in internet advertising publishing, the concentration of top-10 revenue has remained relatively unchanged over the past ten years, fluctuating between 69% and 75%.

Mobile accounted for 35% of full year 2015 revenues, says the report:

• Non mobile Search revenues accounted for 34% of FY 2015 revenues, down from 38% in FY 2014. Search revenues totaled $20.5 billion in FY 2015, up 8% from FY 2014, when Search totaled $19.0 billion
• Non mobile Display-related advertising accounted for $13.9 billion or 23% of total revenues during FY 2015, up 3% from the $13.5 billion (27% of total) reported in FY 2014. FY 2015 Display-related advertising includes Banner Ads (13% of FY 2015 revenues, or $7.7 billion), Digital Video (7% or $4.2 billion), Rich Media (2% or $1.3 billion), and Sponsorship (1% or $649 million)
• Mobile revenues totaled 35% of FY 2015 revenues, or $20.7 billion, up 66% from the $12.5 billion (25% of total) reported in FY 2014
• Non mobile Classifieds revenues totaled $2.8 billion or 5% of FY 2015 revenues, up 2% from the $2.7 billion (5% of total) reported in FY 2014
• Non mobile Lead Generation revenues accounted for 3% of FY 2015 revenues, or $1.8 billion, down 6% from the $1.9 billion (4% of total) reported in FY 2014

Historical format trends show that mobile revenues continued to climb, 66% over FY 2014, says the report.

• Mobile revenue now represents the largest share, representing 35% of total revenues in FY 2015, as compared with 25% reported in FY 2014 and 17% in FY 2013. While Mobile has eroded share of other formats, the Mobile format itself is comprised of multiple formats
• Non mobile Search is now the second largest format at 34% of FY 2015 revenues. Decline in its overall share is attributed to growth in Mobile and Mobile Search, which is included in the Mobile category
• Non mobile Search, Banner, Lead Generation, Sponsorships, and Rich Media are all down slightly as a percentage of total revenue due to the substantial growth of Mobile. Classifieds and Video remained consistent as a percentage of total revenue in comparison to FY 2014 results

Social Media advertising revenue totaled $10.9 billion for 2015 compared to $7.0 billion in 2014

For the second half of 2015, social media revenue was $6.4 billion. Social has experienced growth each half-year since we first measured it in 2012. These steady increases are reflected in the 55% compound annual growth rate of social from 2012 to 2015. In 2015, approximately 18% of internet advertising was related to Social Media, which is up from 14% in 2014.

N.B. The report 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.

Showing ad revenues by industry category, the report says that Retail drove advertising, as dollars shifted to digital:

• Retail advertisers continue to represent the largest category of internet ad spending, accounting for 22% of total revenues in FY 2015, up from the 21% reported in FY 2014
• Financial Services advertisers accounted for 13% of revenues in FY 2015, consistent with the 13% reported in FY 2014
• Automotive advertisers accounted for 13% of revenues in FY 2015, up from the 12% of total reported in FY 2014
• Telecom companies accounted for 9% of revenues in FY 2015, consistent with the 9% reported in FY 2014
• Leisure Travel (airfare, hotels, and resorts) accounted for 9% of revenues in FY 2015, consistent with the 9% of revenues reported in FY 2014
• Consumer Packaged Goods represented 6% in FY 2015, consistent with the 6% reported in FY 2014
• Consumer Electronics and Computers advertisers represented 7% of revenues in FY 2015, consistent with the 7% reported in FY 2014
• Pharmaceutical/Healthcare accounted for 5% in FY 2015, consistent with the 5% of revenues reported in FY 2014
• Media accounted for 5% in FY 2015, consistent with the 5% reported in FY 2014
• Entertainment accounted for 4% of FY 2015 revenues, consistent with the 4% reported in FY 2014

The results reported are considered to be an accurate measurement of internet/online/mobile advertising revenues because much of the data is compiled directly from information supplied by companies selling advertising online, says the report. The report includes data reflecting online advertising revenues from websites, commercial online services, ad networks and exchanges, mobile devices, and email providers, as well as other companies selling online advertising.

The report is conducted independently by PwC on behalf of the IAB. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

Additional detailed information and the complete report may be found here.