14 APR 2022

Digital Advertising Soared 35% to $189 Billion in 2021

The growth is consistent with a recent study from Harvard Business School, commissioned by IAB, which showed the internet economy has grown seven times faster than the U.S. economy over the past four years and now accounts for 12% of the U.S. GDP.

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As digital media consumption continues to grow, advertising dollars are following fast. According to the newly released "IAB Internet Advertising Revenue Report: Full Year 2021," conducted by PwC, all major channels increased significantly compared with a year ago, particularly across digital video (including CTV/OTT), digital audio, social media, and search. The growth is consistent with a recent study from Harvard Business School, commissioned by IAB, which showed the internet economy has grown seven times faster than the U.S. economy over the past four years and now accounts for 12% of the U.S. GDP.

"We fully expected 2021 to be an exceptional year for digital ad growth, but even we were surprised at the degree of acceleration. Every single digital channel was up, but some were up more than 50% year on year," said Libby Morgan, SVP, Chief Strategy Officer, IAB. "This year's increase is 3x what it was last year."

"What's underneath these numbers is a very clear narrative. We are witnessing the total and complete democratization of access afforded by ad-supported digital channels," said David Cohen, Chief Executive Officer, IAB. "Increased consumer usage coupled with extraordinary growth of small and mid-sized businesses during the pandemic has fueled growth across all digital — but especially digital audio and video. We expect this digital migration to drive the continued growth of a healthy and competitive digital marketplace driven by innovation and entrepreneurship."

"According to the Census Bureau, 2021 saw the greatest business growth in history with 5.4 million new businesses created," said Cohen. "Those businesses rely upon the ad-supported internet to attract new customers and provide products and services to the American public. We believe this small business engine will be a key contributor to fueling ongoing digital media and marketing ecosystem growth."

Streaming media is significantly outpacing the overall industry in growth. Although the industry continues to face uncertainty surrounding privacy regulation, the deprecation of third-party cookies and identifiers, measurement challenges, and supply-chain transparency, brands have spoken, and digital is where they are putting their dollars:

- Digital video continues to be one of the fastest-growing channels, up 50.8% compared to last year, with total revenues of $39.5B.
- Digital audio captured the highest YoY growth, up 57.9% to $4.9B.
- Social media advertising was up 39.3% to $57.7 billion, as consumers continue to engage with Meta platforms, Snapchat, TikTok, and Twitter.
- While search revenue grew substantially (32.8%) in 2021, it did not grow as strong as other areas, leading to a slight decrease in total revenue share (reduction of 0.8 percentage points).

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