THE US DIGITAL MEDIA AD REVENUE REPORT: The path to $100 billion in annual revenue by 2021

BI Intelligence

Consumers continue to increase their time spent consuming digital media, while advertisers continue to increase their ad budgets into digital channels.

The influx is not expected to let up in the near future. The US digital advertising industry will continue to experience remarkable growth through 2021 to reach nearly $100 billion in annual revenue, driven primarily by the sustained migration of ad dollars from traditional TV to digital video and the continued increase of social spending. 

Overall, the strong growth of the US digital ad market can largely be attributed to increased time spent by consumers on digital media and brands' increased comfort with allocating budgets to digital formats, particularly on digital video. In a recent 2016 survey of almost 400 US ad agencies and marketers, the IAB found that two-thirds of respondents plan on increasing spending on digital video in the next year. 

Moreover, mobile will become the top destination for digital ad spending as advertisers continue to attempt to resolve the disconnect between the rapid growth in time spent on phones and tablets and the relatively small share of ad budgets that are allocated to such platforms — known as the mobile opportunity gap. In fact, mobile is set to eclipse desktop ad spend by 2018.

In a recent report from BI Intelligence, we forecast revenue trends over the next five years, while outlining the key growth drivers for overall digital ad revenue in the US.

Here are some key points from the report:

• US digital ad revenue is expected to reach nearly $100 billion by 2021, according to BI Intelligence estimates. This represents compound annual growth of 8% from the $68.9 billion expected in 2016. 
• Mobile is positioned to become the top destination for digital ad spending as advertisers continue to attempt to close the "mobile opportunity gap."
• Digital video advertising will grow faster than any other segment over the next five years, as consumers shift time spent online to phones and tablets. Revenue in this category is forecast to rise from $8.5 billion in 2016 to $23 billion in 2021.
• Social advertising in all formats is gaining traction and will be among the key drivers of digital ad growth in the next five years. Social ad revenue is poised to climb to $30.8 billion by 2021, up from $15.5 billion this year.
• Artificial intelligence, augmented and virtual reality, and sponsored content will help propel further digital ad growth in the next decade.

In full, the report:

• Forecasts US digital ad revenue through 2021.
• Highlights the rising popularity of digital media with consumers and brands.
• Explores why digital video advertising growth will exceed all other formats over the next five years.
• Outlines emerging technologies that will help propel ad growth in the next decade.

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