Canadian internet advertising grew 21% – or $800 million – to $4.6 billion in 2015, far exceeding projected growth of 11%, according to IAB Canada’s latest Internet Revenue Report.
The report is calling for further growth of 21% in 2016, pushing overall Canadian internet ad spend to $5.53 billion. The figures are based on responses to IAB Canada’s 2015 survey, meaning the information is subject to marketplace developments that could impact the projections either positively or negatively.
IAB Canada president Sonia Carreno said consumer habits and prevailing trends such as augmented reality suggested a long runway ahead for internet advertising. “We’re only scratching the surface,” she said. “The significance of Pokémon Go is not the phenomenon of the game itself, but that it brought augmented reality into the mainstream virtually overnight.
“Within 24 hours everyone was actually doing it – it wasn’t just a trend you were going to consider, it was something that you did,” she said. “For years people have been thinking [augmented reality] was on the horizon, and I believe Pokémon Go brought it to the forefront.”
Heading into its 20th year of advertising, Carreno said the internet was acting its age. “When it was first born it was like a toddler, bumping into everything and getting itself into a bit of trouble, then it became an adolescent and become really engrossed with how to make [money] and take advantage of every opportunity, and now that it’s reaching its 20s it’s becoming a responsible adult,” she said. “It’s respecting consumer behaviours as well as what [consumers] are telling us.”
Carreno described 2015 as an important year for the global online advertising industry, with consumer feedback inspiring “pivotal conversations” among publishers and advertisers about the re-imagining of the online experience.
Mobile played a major role in last year’s internet ad growth, with revenues increasing 79% to more than $1.6 billion – up from $904 million in 2014. Mobile currently accounts for more than one-third of all digital ad dollars, putting it on par with the United States. Online revenues excluding mobile grew 3% to just under $3 billion ($2.89 billion).
The study also included new data on mobile ad revenues by format, which largely reflected the internet as a whole. The IAB said shifts in shares between mobile search and mobile display/video were consistent with those observed in the U.S.
This year’s study also provided the first-ever breakdown of mobile revenues by format, with mobile search accounting for 54% of total mobile revenues last year, followed by mobile display at 39% and streaming video at 7%. Mobile search also accounted for more than two-thirds (69%) of the growth experienced by internet search as a whole, growing 57%.
Elsewhere, mobile display/video combined grew $396 million or 116% – drastically surpassing the overall growth rate for mobile and pushing its combined share of revenues to 45% from 38% in 2014.
French-language internet advertising, meanwhile, grew 17% to nearly $800 million ($794 million), representing 17% of the total Canadian internet spend – down one percentage point from 2014.
The top 10 internet advertising companies accounted for 86% of all revenue in 2015, a 3% increase from the previous year. The top 20 earners, meanwhile, accounted for 90% of total internet revenues, which has remained unchanged since 2010.
Search and display represented nearly 90% of all internet advertising in 2015, with investment in each of those areas rising 22%. The two segments accounted for $4.1 billion of the total internet ad spend, up from $3.3 billion in 2014.
The report noted video advertising is on a “much faster” growth trajectory, however, with revenues growing 35% to $358 million in 2015. Video increased its total share of internet ad spending by a full percentage point last year, rising to 8%.
Three segments – video gaming (-58%) email (-31%) and classified/directories (-5%) – experienced a revenue decline last year.
Retail (14%), automotive (12%) consumer packaged goods and retail (11%) remained the largest of the 16 reported advertising categories, representing a combined 48% of overall internet ad revenue. While year-over-year fluctuations are typically small – usually in the +/- 1.4% range – the report noted media advertising grew 6% to a “strong” fifth place last year.
Digital first surpassed TV as the country’s dominant ad form in 2013, and the report said the internet’s revenues were 43% greater than TV in 2015, up from 12% in 2014.
Though reports portray the industry as increasingly bedevilled by ad blocking technology, the IAB released a report earlier this year that suggested only 17% of the population uses ad blockers, down from 20% last year.
The report also said 13% of ad blocker users had disabled their ad blocker, while more than three-quarters (78%) of Canadians supported an ad-supported web – meaning the industry is “well poised for delivering higher quality ad experiences without compromising reach into 2017.”
Carreno likened the evolution of digital advertising to that of other media like TV and radio, which have adjusted their business models over the years to better reflect consumer preferences. “The same kind of innovation and respect for consumers is going to be apparent in the coming years,” she said.
