Digital ad revenue growth slows in 2023, IAB report reveals

The latest IAB/PwC Internet Advertising Revenue Report unveiled a deceleration in US digital ad revenue growth throughout 2023, citing various economic factors such as inflation, rising interest rates, and industry layoffs as contributing factors. Despite these challenges, digital ad revenues saw a 7.3% increase, reaching $225 billion compared to $209.7 billion in 2022. However, this growth rate marks a slowdown from the double-digit growth experienced in the previous year, which averaged at 10.3%.

According to David Cohen, CEO of IAB, despite concerns over inflation and global instability, the digital advertising industry maintained its upward trajectory in 2023. Cohen highlighted the importance of privacy-focused solutions in driving market outperformance, with retail media, Connected TV (CTV), and audio emerging as the frontrunners in revenue growth for the year.

Programmatic ad revenue, although experiencing a slower growth rate compared to previous years, still witnessed a $4.8 billion increase, reaching $114.2 billion in 2023. Retail Media revenues demonstrated significant growth, showing a 16.3% year-over-year increase to $43.7 billion, fueled by expansions in e-commerce platforms’ retail media offerings.

Video advertising revenue surged by 10.6% year-over-year, reaching $52.1 billion in 2023, with CTV and OTT contributing significantly to this growth. The combination of CTV and OTT is anticipated to emerge as the fastest-growing media channel in 2024, benefiting from the expanding ad-supported tiers of major streaming services.

Audio advertising also experienced robust expansion, growing by 18.9% to reach $7 billion, albeit at a slower pace compared to previous years. Despite a slowdown in 2022, social media advertising revenues rebounded in 2023, growing by 8.7% to $64.9 billion. This resurgence can be attributed to the continued proliferation of social media platforms and the growth of creator marketing.

Search and display advertising, while maintaining high revenue figures, exhibited relatively modest annual growth rates of 5.2% and 4% respectively. The second half of 2023 witnessed significant revenue growth, accounting for the majority of the total increase over 2022.