Digital Ad Revenue Rose Reports Biggest Gain since 2006

Last year's US digital advertising revenue increased 35% to $189 billion as marketers discouraged consumers from spending more time online and shopping, according to new reports from Interactive Advertising Bureau and PricewaterhouseCoopers LLP. 

This increase far exceeded the 12% growth rate in 2020. This was temporarily hampered by the early pandemic downturn. According to the Online Trade Group, 2021's annual growth rate was the highest since 2006, when the digital advertising market grew at the same rate.

IAB Chief Executive David Cohen has said that a flood of new businesses across the economy contributed to the growth in digital ads. Around 5.4 million new business applications were filed in 2021, according to US Census Bureau data.

The report said that e-commerce will continue to drive ad investment in digital channels. A growing part of the investment will go to retail media networks. Consumer-facing businesses are increasingly offering advertisers more ways to reach consumers using retailer data, often by letting brands buy ads on retailers’ own websites or apps.  

But digital advertising is at the mercy of larger economic factors. In an equity note last week, Morgan Stanley analysts said advertising was highly cyclical and related to economic growth. Digital advertising also benefits from marketers who spend more on performance advertising, where budgets are allocated to campaigns that directly drive consumer behaviour.