Last updated June 2016
In 2015, mobile advertising spending in the U.S. across all categories (including news) overtook desktop advertising spending. The growth in mobile pushed total spending on digital advertising to its highest point in the past six years. Video advertising continued to grow as well, with an uptick reminiscent of the early days of mobile growth. Ad spending on video still trails that on banner ads, but the gap is narrowing.
This robust digital advertising market has not lifted most news publishers – even digitally native ones – out of a place of financial uncertainty, as competition for those ad dollars and the rise of consumer ad-blocking poses challenges to their digital business models. For some digital publishers, a quest for scale has resulted in annual revenue estimates in the tens of millions of dollars, bolstered in some cases by venture capital funding. Yet there is little evidence that many of these sites are profitable. For the many local and regional digital publishers that dot the U.S., a combination of ad sales, philanthropy, individual giving and other revenue streams pay the bills.
Even though some news sectors offer data on their digital revenue, there are no comprehensive data available for the news industry overall. What is available, however, are broad digital advertising forecasts for the platforms on which news publishers have a presence. In the few cases where news-sector-specific digital revenue data does exist, they can be found in the newspaper and local TV fact sheets. At the end of this fact sheet are digital revenue highlights for online-only news publishers such as The Huffington Post and BuzzFeed.
Total digital advertising
In 2015, $59.6 billion was spent on any digital advertising, including on search engines, social media, news or any other kind of website. This is up 20% from 2014, according to estimates by eMarketer. This growth rate is slightly higher than in the previous three years, when annual growth hovered around 15-17%.
[chart id=”56261″ title=”Digital advertising continues to grow and to account for a larger portion of all ad spending”]
Digital now accounts for one-third (33%) of all ad spending ($183 billion) on any platform. That represents a slightly greater share for digital than in 2014, when it accounted for 28% of the $175 billion in total ad spending.
Mobile advertising
Digital ad spending is divided into mobile and desktop categories.
[chart id=”56102″ title=”Mobile now more than half of all digital advertising spending”]
Mobile1 now accounts for slightly more than half of all digital advertising spending (53%) for a total of $31.6 billion, slightly outpacing the $28 billion in desktop spending.
The $31.6 billion represents a 65% increase for the mobile ad sector over 2014 levels. While that is a steep climb for mobile, the rate of growth is down from recent years, when growth rates were in the triple digits. It is worth noting, though, that the past years’ exaggerated growth largely reflected a buildup from little to nonexistent mobile display ad spending (mobile advertising spending was only $1.45 billion in 2011, compared to $31.6 billion in 2015).
Mobile ad spending now represents 17% of the $183 billion in total media advertising across all platforms, up from 11% in 2014. (In 2010, mobile represented only 0.5% of total media advertising.)
Digital display advertising
Digital advertising can also be divided another way – by the type of ad that is served. Display ads such as banners or videos are typically how news organizations make much of their digital revenue. (The other main type of digital advertising, search ads that appear next to keyword searches, is the domain of search companies like Google.)
Display ad spending overall, which includes mobile display, grew 27% in 2015 to $26.8 billion, modestly more than the 20% growth in 2014.2
[chart id=”56130″ title=”Display advertising continues to grow, spurred by mobile”]
There are multiple ways to further break down display ad spending. We consider two here: by platform (mobile versus desktop) and by type of display ad (banner ads versus video ads).
We look first at platform distribution. Just as mobile exceeded desktop digital spending overall, spending on mobile display ads in 2015 exceeded spending on desktop display – by $5.4 billion. This was spurred by a large 67% rate of growth in mobile display ad spending alongside a 6% decrease in desktop display spending.
When it comes to the types of display ad, banner ads – the often rectangular display ads that are embedded into webpages – still account for the largest segment of the market.3 Total banner display ad spending grew 13% to about $12 billion in 2015 and accounts for 44% of total display ad spending. Nonetheless, this share has decreased over time, as spending increased more rapidly on other formats, particularly video.
Video advertising spending increased 46% to $7.7 billion in 2015 and now accounts for 29% of all display ad spending. Video ads are a fast-growing display ad format, second only to rich media in rate of growth.
Rich media ads (ads that interact instantly when the user’s mouse passes over it or use advanced technology like streaming video) increased 50% in 2015 to $5.6 billion and made up 21% of display ad spending.
[chart id=”56136″ title=”Video ads growing faster than banner ads”]
The sponsorship category, which includes the native advertising format being used by publishers such as BuzzFeed, The Atlantic and others, saw less growth, at 9% to $1.7 billion. It accounts for just 6% of total display spending, making it the smallest category. While some publishers moved quickly into native advertising as a new potential source of revenue, it has not been universally embraced across the news industry.
Total digital ad revenue by company
Five technology and social media companies – Google, Facebook, Yahoo, Microsoft and Twitter – continue to dominate the digital advertising market, accounting for 65% of all revenue from digital advertising in 2015, or $38.5 billion out of $59.6 billion. This is slightly higher than the share generated by the top five companies in 2014 (61%).
[chart id=”56141″ title=”Top five companies account for more than half of total display revenue”]
Of these, Facebook and Twitter in particular rely heavily on mobile for their digital ad revenue: 88% of Twitter’s digital ad revenue came from mobile in 2015, as did 77% of Facebook’s. Mobile ads account for smaller shares of digital ad revenue for Google and Yahoo (41% and 35% respectively), but mobile’s share is growing in both cases (these data are not reported for Microsoft).
Total display ad revenue by company
In display ad revenue, a similar, but not quite identical, group of five companies (with Verizon in the mix instead of Microsoft) account for 59% of the total – $15.7 billion of $26.8 billion. The share made up by the top five companies is increasing: They made up 55% in 2014 and 48% the year before.
Facebook alone now takes in 30% ($8 billion) of total display ad revenue, up from 25% of the total in 2014. That $8 billion, though, amounts to a slower growth for Facebook than in 2014, 52% versus 61%.
The remaining 41% in the “other” category, or $11 billion, is split among content publishers such as news sites and other web properties like ad networks and other social media sites.
Mobile display ad revenue by company
Looking just at mobile display ad revenue, five companies again dominate. It is nearly the same five as for display ad revenue overall, with Pandora in place of Verizon. These five held onto a slightly smaller share of the mobile display ad market in 2015 (61%) as they did in 2014 (63%).
[chart id=”56144″ title=”Top five companies make up majority of mobile display ad revenue”]
Digital news revenue
Legacy media companies and digital startups alike must compete for digital dollars in an environment dominated by large companies like Facebook and Google.
No comprehensive data are available for digital revenue going to news companies overall. Each legacy media fact sheet highlights whatever limited or anecdotal data exist, in order to provide as complete a financial picture as possible (see the newspaper fact sheet and the local TV fact sheet for more). Here, we do the same for digital news publications, most of which were born on the web, to gather clues about general trends in advertising, venture capital, philanthropy and other forms of funding that underpin this sector.
The available data for many high-traffic digital news startups suggest that some are generating tens of millions of dollars annually in display and native advertising, in addition to multiple rounds of funding raised through venture capital. Some venture funding comes from investment firms that specialize in startups, while in other cases it comes from legacy media companies through their own venture arms. Below is a look at some of the larger digital publishers for whom recent revenue and investment figures have been reported:
- Vox Media received a $200 million round of funding from NBC Universal in August 2015, on top of an earlier $100 million from a group of investors including NBC Universal’s parent, Comcast.
- BuzzFeed was reported to have generated at least $100 million in 2014 and raised $200 million in equity from NBC Universal in 2015. News reports in 2016 suggested that BuzzFeed had missed its 2015 financial targets, though representatives of the site denied the specifics of those claims.
- Business Insider received $25 million in early 2015 from a group of investors led by German media conglomerate Axel Springer SE. A few months later, in September, Axel Springer bought a controlling stake in the publication, valuing it at $442 million.
- The Huffington Post was reported to have broken even on $146 million in revenue in 2014.
In addition, a number of major digital news publishers shifted their content strategy and focus in 2015 and early 2016, leading to structural and staffing changes that serve as indicators for the state of the digital news business:
- Mashable shifted focus to entertainment video early in 2016, initiating a number of editorial layoffs. This was preceded by a $17 million round of funding led by Time Warner Investments in early 2015.
- Gawker rebranded as a politics site in late 2015, eliminating a number of staffers and contributors who covered other topics.
- For its launch in the spring of 2015, Politico Europe added a number of journalists to its staff, then, later in the fall, announced plans to double its size in 2016.
- Yahoo announced in 2016 that it is working on a plan to cut at least 10% of its workforce. This restructuring is reported to especially affect its media properties.
Aside from these national publishers, a large number of smaller, often local, websites get by with substantially more modest annual revenue.
Local digital news publishers
A 2015 survey of 94 local digital publishers, conducted by digital news consultant and researcher Michele McLellan in collaboration with the Tow-Knight Center for Entrepreneurial Journalism at the CUNY Graduate School of Journalism, found that while seven-in-ten of these sites reported revenue increases in 2014 compared with the prior year, fewer than half (47%) reported turning a profit. About another one-in-five (22%) said they had a steady flow of revenue but did not earn profit in 2014. (While the population surveyed is drawn from a curated list that does not purport to be exhaustive, the study nevertheless provides among the most comprehensive data available on the financial health of this sector.)
The total money coming into these types of publishers remains small, relative to other media. Two-thirds of the sites generated $100,000 a year or less in annual revenue in 2014, and about half (53%) generated $50,000 or less.
Advertising does seem to be a key part of the revenue structure of these local publishers. Nearly three-quarters of the sites (72%) reported local advertising as making up half or more of their total revenue. Another 22% derived some revenue from local advertising, but also from membership, sponsorship, grants, donations or events. Nearly all (94%) of the surveyed sites sold traditional digital display advertising and about three-in-ten (29%) sold only that.
Of the 94 sites surveyed, the majority (81%) were for-profit, while the remaining 19% were nonprofit.
Digital nonprofit news publishers
Digital nonprofit news organizations have traditionally relied heavily on foundation funding, but efforts have increased to diversify revenue streams.
[chart id=”56147″ title=”Nonprofit digital news organizations rely heavily on foundation funding”]
A 2015 John S. and James L. Knight Foundation analysis of financial data provided by 20 local and regional nonprofit digital news organizations found that median revenue for these publishers increased by 45% from 2011 to 2013 to around $518,000, with 23% of revenue generated through earned income such as sponsorships, events, advertising, training, subscriptions and syndication. The sites in the study represent a nonprobability sample chosen for tracking purposes by the Knight Foundation. They include local and regional nonprofit news organizations across the country ranging in size and age, with a budget of anywhere from $34,000 to $7.1 million. While the publishers in this group do not necessarily represent the entire range of nonprofit news outlets, the data provide at least a sense of the financial health of this sector.
Foundation funding accounted for 58% of the total revenue generated across the 20 outlets in 2013, a slightly smaller share than in 2011. The median amount of foundation funding received across these sites was around $268,000 in 2013. Foundation and grant support decreased from 2012 levels for half of the sites included in the study.
Apart from earned income, individual donations and membership dues were an area of growth for two-thirds of the sites studied. The average number of donors for all of the sites increased 18% between 2012 and 2013 to more than 750. Median revenue from donations nearly doubled during the same time period, from $33,000 to $60,000. Much of this growth was driven by smaller donations: 97% of all donations in 2013 were of amounts less than $1,000.
