The digital video advertising landscape is on the brink of a significant transformation, as a new report from the Interactive Advertising Bureau (IAB) projects a substantial increase in ad spending. By 2025, digital video ad spend is anticipated to soar to $72.4 billion, marking a 14% rise from the $63.8 billion projected for 2024. This upward trend in spending underscores the growing dominance of digital video over traditional advertising channels.
In 2024, digital video ad spending surpassed linear TV for the first time, capturing an impressive 51% of total video ad expenditures. The momentum is expected to continue, with digital video projected to account for 58% of video spending in 2025. This shift reflects a broader trend among advertisers who are increasingly prioritizing digital channels for their marketing efforts.
Key Drivers of Growth
The rise in digital video ad spend can be attributed to several factors:
– Connected TV (CTV): CTV is emerging as a critical component of digital advertising strategies. With its ability to scale programmatic tools, CTV is providing marketers with enhanced flexibility. The IAB report highlights that 68% of marketers consider CTV a “must buy” for their media plans, emphasizing its growing importance.
– Social Video and Online Video: These platforms continue to attract significant investment. Social video is projected to be the largest category, with spending expected to reach $27.2 billion in 2025. Online video follows closely, with an anticipated spend of $18.6 billion.
– Shifts in Budget Allocation: The report indicates that marketers are reallocating budgets from traditional channels to digital video. Notably, 36% of marketers planning to boost CTV spending intend to source funds from linear TV budgets. Another 36% plan to shift resources from social media budgets, while 32% will pull from paid search.
Industry Insights and Predictions
The IAB’s “2025 Digital Video Ad Spend & Strategy Report” provides valuable insights into industry trends. The report is based on data from an online survey conducted between February 17, 2025, and March 17, 2025, involving 364 respondents who manage or influence digital video advertising budgets.
The survey reveals a strong consensus among advertisers about the potential of digital video platforms. All measured platforms, including CTV, social video, and online video, are expected to experience double-digit growth in 2025. CTV, in particular, stands out with a projected 13% growth, bringing its ad spend to $26.6 billion, making it 43% larger than online video.
Sector-Specific Projections
The report also highlights anticipated spending increases across various sectors:
– Consumer Packaged Goods (CPG): CPG brands are set to lead the charge in digital video ad spend, with an estimated $14.3 billion in 2025, a 13% increase from 2024.
– Retailers: Retail is another sector poised for growth, with expected spending of $8.4 billion, reflecting an 18% increase from the previous year.
These projections underscore a strategic shift among brands towards digital channels to maximize reach and engagement.
Broader Implications for Digital Advertising
The growth in digital video ad spend aligns with the broader expansion of digital advertising. In 2024, digital advertising grew by 14.9% year over year, achieving a total of $258.6 billion. This growth has been driven by factors such as diversification in spending strategies and the increasing reliance on digital platforms to reach target audiences.
For advertisers, the continued expansion of digital video presents both opportunities and challenges. As digital video captures a larger share of advertising budgets, marketers must stay ahead of trends and leverage advancements in programmatic advertising to optimize their campaigns.
In conclusion, the digital video advertising landscape is evolving rapidly, with significant growth projected for 2025. As brands and advertisers navigate this dynamic environment, they are likely to prioritize digital video platforms to capitalize on their expanding influence.
Note: This article is inspired by content from https://www.marketingdive.com/news/digital-video-ad-spend-grow-14-in-2025-per-iab/746572/. It has been rephrased for originality. Images are credited to the original source.