Dive Brief:

• Digital advertising revenues last year hit their highest levels of growth since 2021, the period following the pandemic bump, according to new research from the Interactive Advertising Bureau (IAB) and PwC. 
• The category grew 14.9% year over year in 2024 to $258.6 billion, with video remaining the fastest-growing format and a segment now representing nearly a quarter of the market. Podcasts surged while advertisers continued to firm up spending on channels like social and commerce media. 
• Cyclical events such as the Olympics and an election season created tailwinds while advertisers this year face greater uncertainty and a lack of such blockbuster occasions. Disruption stemming from artificial intelligence (AI), privacy regulations and macroeconomic volatility, among other factors, will further reshape the business in the months ahead.  

Dive Insight:

Digital advertising received a second wind in 2024 following a post-pandemic slowdown. The category’s rate of growth last year more than doubled that of 2023, when digital ticked up just 7.3% to $225 billion. That said, advertisers will need to stay reactive as global uncertainty threatens to again tip the scales toward contraction and emergent technologies mandate changes in strategic thinking. The IAB claimed generative AI is moving past its buzzword phase to automate more aspects of campaign management, personalization and search advertising.

“As we look ahead to this year, there is no doubt that we will see an even more dynamic market driven by geopolitical and economic factors. There is absolutely growth to be had for those that embrace the volatility and innovate,” said David Cohen, CEO of the IAB, in a statement attached to the report, which PwC conducts on behalf of the trade group.

While macroeconomic pressures like inflation were prevalent in 2024, tentpole occasions such as the Summer Olympics and a heated election cycle helped drive momentum. The elections delivered higher levels of digital spend, with formats like podcasting and influencer marketing playing larger roles than they have in the past. 

Podcast advertising was up 26.4% YoY in 2024, an over 20 percentage-point jump from the year prior (though the channel still commands less than 1% of the overall pie). Social investments were also robust, climbing 36.7% YoY to $88.7 billion, or 34.3% of the market. Brands were drawn to creator partnerships, user-generated content and community-oriented marketing on social, themes that are carrying over into 2025. The IAB expects that more brands will adopt long-term creator partnerships versus one-off campaigns, particularly as online personalities broaden their media presence beyond a single app or channel.  

While digital is largely dominated by a handful of walled garden platforms, namely Google, Meta Platforms and Amazon, the IAB noted an expansion for mid-tier companies, which experienced the largest share of growth in 2024 to reach 11% of the market. Mid-tier companies analyzed by the IAB consist of media platforms, streaming and interactive media services and e-commerce businesses.

“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 Cohen in a statement. “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.”

Advertising has lately seen an influx of media networks, a term first coined by retailers that refers to leveraging first-party customer data to target and sell ads, that have capitalized on the appetite for alternatives to third-party cookies. Upstarts in areas such as AI and the creator economy could further contribute to the diversification in spend. 

More ad dollars could be shuffled around as top players like Google and Meta contend with the possibility of breakups over antitrust probes. TikTok, which has set trends for the larger social sphere, is also facing a ban, though the deadline for finding a U.S.-based backer has been extended twice by the Trump administration.   

Looking ahead, the IAB sees ripe opportunities in the streaming and connected TV landscape as premium live sports make the jump from linear. So-called “skinny” bundles will help media owners retain subscribers and a steady flow of revenue while programmatic and self-serve CTV technology will grant brands greater control on the back end, the organization predicts.

In the near term, some brands are pumping the brakes on their advertising plans due to the chaos caused by the Trump administration’s tariffs. Agencies and ad forecasters have signaled that the environment is one of caution while some budgets may be redirected toward lower-funnel tactics, including retail media, that tend to be cheaper and less prone to risk.