U.S. search ad revenues hit record $88.8 billion in 2023

Paid search advertising revenues reached a new high in 2023 – though annual growth continues to slow, according to a new report.

In total, search accounted for $88.8 billion of a record $225 billion in U.S. digital advertising revenues, according to the IAB Internet Advertising Revenue Report: Full Year 2023, conducted by PwC. That figure represents a $4.4 billion increase over 2022.

Why we care. Paid search becomes more expensive and challenging every year, with less transparency. But advertisers continue to embrace paid search for one simple reason: it drives results for brands and businesses.

Paid search is still king. Search continues to own the largest market share of advertising – 39.5%, but that is down from 40.2% in 2022, 41.4% in 2021 and 42.2% in 2020.

• But YoY growth for search advertising is slower than the digital industry as a whole and the majority of other ad formats, according to the report.

The state of digital advertising. Resilient. Advertising continued to grow in a time of high inflation, rising interest rates and job cuts, according to the report. Of note from the IAB report:

• Q4 had the highest growth rate – 12.3% – with revenues growing to $64.5 billion. In 2022 the growth rate for the quarter was 4.4%.
• Social media ad revenue rose 8.7% YoY to reach $64.9 billion in 2023, with much of that growth coming in the second half of the year.
• Video advertising accounted for $52.1 billion, or 23.2% of all advertising revenue, in 2023.
• Display advertising revenues remained high in 2023 – $66.1 billion – though YoY growth was 4%, down from 12% growth in 2022.
• Retail media networks saw a 16.3% increase in revenue YoY, reaching $43.7 billion.

2024 outlook. It’s “promising,” according to the IAB. Advertisers must, as always, adapt to changing consumer behaviors, consumption channels, privacy regulations and the ongoing generative AI revolution.

The report. You can read the report here (registration required).