2025 Digital Ad Outlook: IAB Reveals Surprising Growth Shifts

The Interactive Advertising Bureau (IAB) forecasts a notable deceleration in U.S. digital advertising growth in 2025, projecting a 7.3% increase compared to last year’s 11.8%. This decline is attributed to the absence of high-profile ad-heavy events like the 2024 Paris Olympics and major elections. Marketers are now shifting focus to emerging, high-growth channels as they navigate a more selective advertising environment.

David Cohen, CEO of IAB, emphasized the strategic redirection of budgets in a recent release, stating, “Budgets are being focused at points where consumers, commerce, and video converge – where advertisers can leverage the power of sight, sound, and motion, and consumers can engage and transact.”

Retail Media Networks and CTV Lead High-Growth Channels

Despite the overall slowdown, certain sectors continue to show promise. Retail media networks (RMNs) are expected to grow by 15.6% year-over-year, making them one of the fastest-growing channels in the digital landscape. Connected TV (CTV) and social media are also poised for double-digit growth, with projections of 13.8% and 11.9%, respectively.

These channels offer opportunities that blend branding and commerce, capitalizing on video’s unique ability to engage consumers across the marketing funnel. This trend highlights the importance of aligning advertising efforts with platforms that combine visual storytelling with transactional capabilities.

Advertiser Priorities: Performance-Driven Media Takes Center Stage

According to Mediaocean’s 2025 Advertising Outlook Report, performance-driven media remains the top priority for 62% of marketers. Measurement and attribution capabilities follow closely at 50%, reflecting the growing demand for accountability and data-driven decision-making in advertising.

Interestingly, brand advertising’s importance has declined, with only 45% of marketers ranking it as critical, compared to 57% in mid-2024. This shift underscores the increasing emphasis on measurable and performance-oriented advertising channels.

GenAI Tools Transform Media Planning Strategies

The advertising industry is experiencing a significant transformation with the adoption of generative AI (GenAI) tools. The IAB report reveals that 42% of marketers are currently using GenAI for media planning and activation, while an additional 36% are exploring its potential.

Top applications of GenAI include:

• Data analysis (47%).
• Market research (38%).
• Copywriting (32%).
• Image generation (22%).
• Customer service (14%).

GenAI’s ability to streamline processes and enhance creativity has positioned it as a critical tool for marketers navigating an increasingly competitive digital landscape.

The Broader Implications for Traditional Media

As digital advertising continues to evolve, traditional channels like linear TV are expected to face stagnation or even negative growth. The shift toward digital-first strategies is driven by advertisers’ pursuit of cutting-edge consumer engagement platforms.

The IAB’s report reflects this transition, urging advertisers to prioritize innovation and adaptability in an environment where consumer expectations and behaviours are rapidly changing.

Why This Matters

While the slowdown in growth may appear concerning, it reflects a natural adjustment following the boom year of 2024. Advertisers are strategically channelling resources into platforms that deliver measurable results and foster consumer engagement. This shift underscores the significance of marketers prioritizing high-growth digital channels such as RMNs and CTV, and utilizing emerging technologies like GenAI to maintain a competitive edge. Find more industry news and updates at Brand Activator.