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Internet ad revenues hit new high

News, 13 June 2016

NEW YORK: Internet ad revenues in the US reached a record-breaking $15.9bn in the first quarter of 2016, surpassing last year's Q1 high of $13.2bn, according to the latest data from the Interactive Advertising Bureau (IAB).

That equates to a 21% year-on-year rise, the IAB said, and also means the Q1 2016 figure represents the sharpest quarterly spike in revenues for four years.

"These landmark revenues confirm the growing importance of interactive for brand marketers to reach consumers who are increasingly spending their time on digital screens," said David Doty, Executive Vice President and CMO at IAB.

"Last year the industry reached its highest level of investment at over $50bn, and this first quarter lays the foundation for what could very well be the biggest year yet for digital ad spending."

The IAB report was conducted independently by PwC US, the professional services firm, which last week published a separate study that forecast spending on media and entertainment in the US will reach $720bn by 2020, up from $603bn in 2015.

Globally, PwC expected entertainment and media revenues to rise at a compound annual growth rate (CAGR) of 4.4% over the next five years, from $1.7tr in 2015 to $2.1tr in 2020.

The report also noted that internet advertising in the US remains the largest in the world, with revenues of $59.6bn in 2015, and PwC expected that to grow to $93.5bn by 2020.

With a CAGR of 9.4%, internet advertising in the US is expected to be worth $75.3bn by 2017 when it is forecast to overtake broadcast TV advertising for the first time.

Much of this growth is being driven by mobile, the report said, as it predicted mobile ad revenue to account for around half (49.4%) of total internet ad revenue by 2020, up from about a third (34.7%) in 2015.

Data from Warc's Global Adspend Outlook 2016/17, a free summary of emerging ad expenditure trends, suggest that approximately one-third of global adspend growth in 2016 will come from the US.

The research also notes that ad expenditure for desktop internet has stagnated in the world's largest ad market, with mobile now accounting for almost the entirety of internet adspend growth.

Data sourced from IAB, PwC; additional content by Warc staff