IAB Projects 8% Growth In 2022 Digital Ad Spend, Warns About 'Bad' Ad Experiences

A new outlook report from the Interactive Advertising Bureau (IAB) predicts relatively modest growth of 8% in U.S. digital advertising spending in 2022.

The outlook, based on a survey of nearly 20 buy- and sell-side industry leaders by PriceWaterhouseCoopers (PwC) and insights from other IAB research, forecasts digital ad spend to reach $165.5 billion next year.

It also projects an increase of 11.8% in 2023, to reach $177.3 billion, and a total of $200.3 billion by 2025.

In 2020, U.S. internet advertising rose 12.2% to reach $139.8 billion.

IAB’s projections include desktop and mobile 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 new outlook warns about several factors that could impede growth in those digital advertising channels, starting with consumers’ increasing aversion to irrelevant, one-way advertising.

In that context, the report also alludes to growing competition not just from ad-supported video-on-demand (AVOD) services, free ad-supported streaming TV (FAST) services and limited-advertising/low-cost subscription streaming services, but new, crowd-sourced media fed by IPOs and mergers and acquisitions.

“Waning consumer tolerance” and higher expectations for digital advertising “is impacting the composition and size of audiences of ad-supported media and entertainment brands,” states the report.

“Today’s modern consumer is fleeing bad ad-supported media experiences,” it adds. “For both buy-and-sell-side marketers, the consumer migration to ad-light and ad-free content offerings indicates an expectation that advertising delivers a useful and contextually relevant experience, and providing ways to easily and quickly engage (i.e., explore/transact) is demanded.”

Surveyed executives cited several changes that need to be made quickly in digital advertising practices, including more strategic selection of partners; delivering highly customized advertisements in the right context, with scale; developing new formats that let consumers explore and transact; and identification and measurement of relevant KPIs.

A section on M&As observes that the battle between AVOD and subscription video-on-demand (SVOD) is evolving.

“New crowdsourced and user-generated platforms challenge both established digital leaders as well as traditional media players,” it states. “The recent IPO boom has created opportunities for new entrants, which is expected to fuel a new wave of M&A.”

“Due to broader pressures on media and entertainment companies — including the need to deliver highly engaged and scaled audiences — the appeal of more robust and integrated experiences is expected to persist for at least the next few years,” it adds. 

One executive is quoted as saying: “It’s not a matter of if the next big deal will happen, it’s a question of when.”

Other key digital advertising industry challenges include regulatory reforms in the data-collection/privacy area and changes needed to attract talent, according to the surveyed executives. 

To address consumers’ increasingly negative perceptions about data collection, the industry “should be educating consumers about what their information is being used for and how it’s being used, allowing them to make the choices they deem best for them,” said one agency participant. “This should be the responsibility not only of advertisers, because they’re the ones using that information, but also data providers, whose business models include tracking consumers’ digital behavior, particularly shopping and spending habits, collecting and storing information. 

On the talent front, companies may need to move away from heavy dependence on seeking candidates with traditional marketing education, as well as offer cultures that embrace diversity, equity and inclusion (DEI) values, the report stresses.

“As long as a person has certain universal intangibles, such as grit, a hard-working attitude and eagerness to learn a range of skills, degrees in marketing, advertising and related disciplines may not be relevant in the future workplace,” observed one publishing executive.

3 comments about "IAB Projects 8% Growth In 2022 Digital Ad Spend, Warns About 'Bad' Ad Experiences".
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  1. John Grono from GAP Research, October 15, 2021 at 6:13 p.m.

    That is a surprisingly linear annual increase across five years, with the rate of increase slowing in a pretty linear way as well.

  2. Ed Papazian from Media Dynamics Inc, October 15, 2021 at 6:43 p.m.

    John, are you implying that they just made up those estimates? After all, they "based" them on a survey of almost 20 "buy" and "sell" side industry "leaders". Maybe these leaders forsee a linear future for ad revenue growth---it's possible I guess.

  3. John Grono from GAP Research, October 15, 2021 at 6:46 p.m.

    Merely making a mathematical observation Ed.

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