Digital ad revenue hits $259B with unexpected mid-tier growth
Major advertising categories show double-digit increases as mid-sized companies outpace tech giants.
Digital advertising revenue reached unprecedented heights in 2024, climbing 14.9% year-over-year to $258.6 billion according to the latest IAB Internet Advertising Revenue Report released just two days ago on April 17, 2025. The comprehensive analysis, conducted by PwC, revealed this represents the strongest growth for the industry since 2021.
While the overall expansion was notable across sectors, perhaps the most surprising development has been the accelerated growth among mid-tier publishers. Market share for companies ranked 11-25 increased by more than 3.1 percentage points compared to 2023, reaching 11% of total digital advertising revenue. This shift indicates a departure from historical patterns where the largest platforms dominated growth.
"The biggest shift in market share came from the mid-tier companies, growing at a greater rate than both the largest and the smallest players," said David Cohen, CEO of IAB. "These midsized companies are adopting new business models, encouraging creator engagement, and leveraging AI and data-driven insights to offer more personalized, cost-effective advertising solutions. As a result, we're seeing renewed growth and a next generation market taking shape."
The report highlights substantial gains across multiple advertising categories. Digital video maintained its position as the fastest-growing format, now accounting for nearly a quarter of total ad revenue, reflecting consumer engagement with video content. Podcast advertising rebounded significantly with 26.4% growth compared to just 5% in 2023.
Social media demonstrated particularly robust performance with a 36.7% increase, reaching $88.8 billion. According to the report, this resurgence stems from "increased confidence amongst advertisers due to increased investment in user-generated content, creator-driven partnerships, and community-led spaces."
Commerce media, which includes retail media networks, continued its strong growth in 2024, with revenues rising 23% to $53.7 billion. As the critical importance of first-party data ecosystems becomes increasingly apparent, retail media is establishing itself as a key pillar in media budgets as brands shift towards privacy-compliant audience targeting.
Economic resilience despite uncertainty
The strong performance comes despite significant economic headwinds. According to Cohen, "The U.S. digital ad industry showed remarkable strength in 2024. Despite the volatility from geopolitical shifts, interest rate changes, and economic uncertainty, major events like the Presidential Election and Olympics provided meaningful tailwinds."
The full-year figures confirm that digital advertising has continued its upward trajectory across multiple sectors:
| Ad Category | Revenue | YoY Growth | % of Total Digital Ad Revenue |
|---|---|---|---|
| Digital Video | $62.1B | 19.2% | 24.0% |
| Search | $102.9B | 15.9% | 39.8% |
| Display | $74.3B | 12.4% | 28.7% |
| Podcast | $2.43B | 26.4% | 0.9% |
| Social | $88.8B | 36.7% | 34.3% |
| Retail Media | $53.7B | 23.0% | 20.8% |
Search advertising maintained its dominance, accounting for 39.8% of all digital ad spending with $102.9 billion in revenue. Display advertising captured 28.7% of the market with $74.3 billion, while social media's $88.8 billion represented 34.3% of total digital ad expenditure.
Notably, several categories overlap in measurement methodology. For instance, portions of social media advertising are also counted within video, search, and display categories, explaining why percentage totals exceed 100%.
Industry transformation underway
The IAB report identifies five key trends expected to shape the digital advertising landscape in 2025:
AI-Driven Advertising
Artificial intelligence has evolved beyond simple automation tools to become a transformative force in digital advertising. According to the report, AI is now driven by "generative and agentic models that can create content, make autonomous decisions, and manage campaigns end-to-end."
These advancements are disrupting traditional ad channels like search, shifting from keyword bidding to native, conversational ad experiences embedded in AI-generated results. However, widespread adoption remains limited due to challenges with data readiness, tool fragmentation, and compliance.
The report emphasizes that human creativity remains vital despite AI's growing capabilities: "As AI takes over operational tasks, human creativity remains vital—pushing companies to redefine how technology and talent work together in the new media model."
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Creator Economy Expansion
The creator economy continues its evolution, with brands shifting from one-off influencer deals to long-term partnerships. This approach aims to foster more authentic, sustained engagement with audiences.
According to the IAB report, creators are expanding beyond social media into podcasts, newsletters, and retail partnerships, unlocking new monetization avenues. Short-form video dominates the landscape, but emerging platforms are reshaping consumer behavior and pushing brands to adapt their strategies.
While platforms offer improved revenue-sharing models, many creators still face significant challenges in an increasingly crowded marketplace. The report concludes that success in this sector "hinges on authenticity, audience trust, and long-term strategy."
Privacy Regulation Impact
The digital advertising industry is undergoing a fundamental transformation in response to heightened privacy concerns. Signal loss and new state privacy laws that limit user-level tracking are accelerating the adoption of first-party data strategies.
Brands are increasingly turning to contextual targeting and consent-based tools to maintain compliance while preserving effectiveness. The report notes that as consumers simultaneously demand both protection and personalization, "trust and transparency have become key competitive advantages" for companies in the digital advertising ecosystem.
Streaming and CTV Evolution
Connected TV (CTV) and streaming platforms continue to attract advertising dollars previously allocated to linear television. Ad-supported tiers from major streaming services including Netflix, Disney+, and Amazon Prime are expanding inventory while driving down CPMs.
Live sports streaming on platforms like YouTube TV and Amazon is attracting significant advertising investment, while skinny bundles help reduce subscriber churn and boost ad-supported revenue. With increasing fragmentation in the streaming landscape, programmatic CTV and self-serve ad platforms are giving brands more control and efficiency in reaching engaged audiences.
Business Model Reinvention
The integration of AI, commerce, and media is fundamentally reshaping advertising, compelling brands to adopt multi-platform strategies and AI-driven automation to remain competitive. Retail media networks offer high-intent audiences and closed-loop measurement capabilities.
New monetization models including subscription-based content and shoppable media are gaining traction. As consumer habits continue to evolve, many advertisers are expanding their presence across emerging networks to mitigate platform-specific risks and maximize flexibility, providing "a competitive edge in a fragmented market."
Implications for marketing professionals
For marketing professionals, these findings present both opportunities and challenges. The democratization of the digital ad ecosystem, as evidenced by the growth of mid-tier companies, provides additional options for advertising placement beyond the largest tech platforms.
The report suggests that organizations should consider diversifying their digital advertising portfolios to include these emerging mid-tier players, which may offer more competitive rates and innovative targeting solutions. Additionally, the continued strength of retail media networks highlights the value of investing in strategies that leverage first-party data and directly connect advertising to commerce.
The accelerating adoption of AI tools across the advertising industry represents another critical consideration. Marketing professionals should evaluate their current capabilities and identify areas where AI implementation could enhance campaign effectiveness without sacrificing the human creativity that remains essential to advertising success.
Perhaps most significantly, the report emphasizes that 2025 will bring continued transformation to the digital advertising landscape. Jack Koch, Senior Vice President, Research & Insights at IAB, observed: "While digital advertising reached new heights in 2024, there are many forces that are quite literally transforming our industry in real time. Next year we expect the industry to look quite different as media companies adopt new business models and lean heavily on AI, not only survive but thrive."
Organizations that recognize these shifts early and adapt their strategies accordingly may gain significant competitive advantages in this rapidly evolving environment.
The IAB and PwC will discuss key findings and trends from the report during a webinar scheduled for April 24th at 2 PM ET.
Research methodology
The IAB Internet Advertising Revenue Report has been conducted continuously since its initiation in 1996. According to the report methodology, PwC compiles data directly from companies selling advertising online, supplemented by publicly available corporate information.
"The results reported are considered to be a reasonable measurement of internet/online/mobile advertising revenues because much of the data is compiled directly from information supplied by companies selling advertising online," the report states.
The research encompasses revenue data from websites, commercial online services, ad networks and exchanges, mobile devices, email providers, and other companies selling online advertising. PwC conducts this research independently on behalf of the IAB, maintaining strict confidentiality of individual company information while publishing only aggregate results.
Timeline of key developments
- April 17, 2025: IAB releases the Internet Advertising Revenue Report for Full Year 2024
- April 24, 2025: Scheduled webinar with experts from IAB, PwC, and MAGNA to discuss findings
- 2024: Digital advertising revenue reaches $258.6 billion, growing 14.9% year-over-year
- 2024: Mid-tier publishers (ranked 11-25) increase market share by 3.1+ percentage points
- 2024: Social media advertising grows 36.7% year-over-year, reaching $88.8 billion
- 2024: Podcast advertising rebounds with 26.4% growth compared to 5% in 2023
- 2024: Retail media networks continue expansion with 23% growth, reaching $53.7 billion
- 2023: Digital advertising experiences significant but unspecified growth
- 2021: Previous period of strongest growth in digital advertising revenue
- 1996: IAB initiates the Internet Advertising Revenue Report