This week saw the release of the IAB’s Internet Advertising Revenue Report for the US, which served up further proof of an industry-wide move towards performance-based ad models.
If there was anything to take from last year, it’s that performance is big business in the US - even bigger, in fact, than it was in 2013.
Readings from the IAB show that 66% of internet ad revenue in 2014 was generated by inventory priced on a performance model, up from 65% in the year before. Cost per mille (CPM) on the other hand, a go-to structure for premium publishers, maintained its share of 33%.
The remaining 1% is represented by ‘hybrid’ pricing models, accounting for any mix of impression and performance-based pricing, which shrank by the same proportion over 2014.
A graph from the IAB shows just how far performance advertising has come in the US since 2005. It’s been ten years since CPM was the dominant ad-pricing model and the table shows the chances of a comeback remaining slim.
The report also confirmed that internet advertising is the leading source of ad revenue, earning $49.5 billion in 2014 compared to broadcast TV’s $40.5 billion.
An assessment on TV advertising in general may have thrown up a different result, as cable channels were found to be generating $25.2 billion in ad revenue last year.
But where growth is concerned, internet comes out streaks ahead. It’s a market where search advertising, banner ads and mobile placements are driving spend, according to the IAB’s readings.
In outlining the report’s highlights, IAB CEO Randall Rothenberg cited the 76% full-year increase in mobile ad revenue as proof of marketers recognising that consumers lead “mobile-first lives”.
David Silverman of PricewaterhouseCoopers also focused on mobile’s growth in comments after the report was released, describing this as a “reflection of a continued shift in consumer behaviour”.
In the US, mobile advertising generated $12.5 billion in ad revenue during 2014, higher than social media on $7 billion but much lower than search on $19 billion.