US digital ad spend up 22% in 2016, consumers move away from traditional media

Marketers spent $72.5 billion on digital advertising last year, an increase of 22 percent from 2015, as Google and Facebook once again booked the lion's share of new revenue, a report released by the Interactive Advertising Bureau said on Wednesday.

The Internet Advertising Revenue Report underscored a migration by consumers away from traditional forms of media like television to online and mobile platforms, which has left digital companies competing for a larger share of advertising dollars.

However, digital and television advertising is not an apples-to-apples comparison.
Analysts for the Pivotal Research Group wrote that despite digital advertising outpacing the $69 billion spent on U.S. television advertising in 2016, it was not taking away ad dollars as many observers would expect.

“Advertisers commonly look to allocate digital budgets to video ad units without necessarily impacting TV spending one way or the other,” the analysts said.

The increase in ad spending, which was again dominated by Facebook Inc and Alphabet’s Google, comes as marketers are increasingly wary about where their ads show up online, and how effective it is for them.

Facebook and Google accounted for 99 percent of the industry growth, said Pivotal Research, meaning that almost everyone else in the digital ecosystem was either flat or down from last year.

Google’s YouTube is in the midst of an ad boycott on its digital video site YouTube after companies like Verizon Communications Inc and Johnson & Johnson found their ads appearing next to extremist and other hate content.

Last year also saw Facebook admit to a string of measurement errors in the data is gives to advertisers regarding the amount of people that are watching their video ads.