The IAB Internet Advertising Revenue Report for 2024, conducted by PwC, shows that the U.S. digital advertising industry continues its strong growth trajectory, achieving a 14.9% increase year-over-year, with a total revenue of $258.6 billion. This marks the highest revenue since 2021, driven by the dynamic interplay of major events, shifting consumer behavior, and technological advancements in advertising.

Despite economic and geopolitical uncertainty, the digital advertising space has demonstrated remarkable resilience, offering businesses new opportunities to reach consumers more effectively. As we look ahead to 2025, AI, privacy regulation, and the creator economy are expected to play pivotal roles in shaping the future of digital advertising.

Growth Drivers in 2024

1. Digital Video: The Fastest-Growing Ad Format

Digital video continues to be the dominant force in the advertising space, accounting for nearly a quarter of total ad revenue in 2024. This surge reflects consumer engagement with video content across platforms like YouTube, social media, and streaming services, where advertisers are increasingly allocating more of their budgets.

"Video content's engagement levels have cemented its place as the most effective advertising format, providing brands with immersive ways to reach their audience," said David Cohen, CEO of IAB.

2. Podcast Advertising: A Major Comeback

Podcast advertising has made a strong recovery in 2024, with a 26% increase in revenue, compared to just 5% in 2023. This resurgence highlights the growing popularity of podcasts and the expanding advertising potential of this medium. Advertisers are tapping into niche audiences through long-form audio content, further diversifying their marketing strategies.

3. Social Media & User-Generated Content

Social media advertising has regained momentum, with increased investments in user-generated content, creator-driven partnerships, and community-led spaces. Platforms like Instagram, TikTok, and newer channels are proving to be valuable for advertisers seeking authentic engagement and expanding their brand presence.

4. Commerce Media and Retail Media Networks

Commerce media, particularly retail media networks, has continued its strong growth in 2024, with revenues climbing 23% to reach $53.7 billion. Retailers’ shift to first-party data and privacy-compliant audience targeting has solidified the critical role of commerce media in advertising budgets. As privacy-first strategies take precedence, brands are increasingly leaning into retail media networks for their highly targeted ad capabilities.

Revenue Performance: Mid-Tier Publishers on the Rise

While the entire digital ecosystem experienced growth, mid-tier media companies saw the largest share growth, with the top 11-25 media companies increasing their market share by 3.1% in 2024. This shift underscores the rising influence of emerging platforms and the democratization of the ad ecosystem. Brands are increasingly allocating budgets beyond the largest platforms, seeking more personalized, cost-effective advertising solutions offered by mid-tier players.

"The biggest shift in market share came from the mid-tier companies, which are adopting new business models, leveraging AI and data-driven insights to provide more personalized and efficient advertising options," Cohen noted.

Top Trends Shaping Digital Advertising in 2025

Looking ahead to 2025, several key trends are expected to transform the landscape of digital advertising:

1. AI-Driven Advertising: From Automation to Transformation

AI is no longer just a tool for automation—it is a transformative force in the digital advertising space. From generative AI to agentic models, AI is enabling autonomous campaign management and native ad experiences. While adoption remains limited due to challenges with data readiness and compliance, AI’s impact on ad operations is undeniable, reshaping traditional ad channels.

2. The Creator Economy: Long-Term Partnerships and Multi-Platform Expansion

Brands are shifting towards long-term creator partnerships rather than one-off influencer deals. This move enables more sustained, authentic engagement with audiences. Additionally, creators are expanding beyond traditional social media platforms into podcasts, newsletters, and retail partnerships, unlocking new monetization streams.

3. Privacy and Regulation: Embracing First-Party Data

As privacy regulations continue to evolve, brands are prioritizing first-party data strategies and contextual targeting. With signal loss from cookies and new state-level privacy laws, the shift towards privacy-first solutions has become essential for advertisers. Transparent data practices are now critical for gaining consumer trust and staying competitive.

4. Streaming CTV and Skinny Bundles: Monetizing a Fragmented Landscape

The rise of streaming platforms like Netflix, Disney+, and Amazon Prime has led to increased ad inventory, driving down CPM rates while offering advertisers more options. Live sports streaming is also attracting ad dollars, while skinny bundles help reduce churn and boost ad-supported revenue. Programmatic CTV is giving brands more control over ad placement in this fragmented landscape.

5. Reinventing Business Models: Multi-Platform Strategies and AI Integration

The digital advertising ecosystem is undergoing significant reinvention, with AI-driven automation and multi-platform strategies becoming the norm. Retail media networks continue to offer high-intent audiences, and shoppable media and subscription-based content are gaining traction as new monetization models.

2024 marked another year of growth for the U.S. digital advertising industry, with internet advertising revenue hitting $258.6 billion—a 14.9% increase year-over-year. As we look forward to 2025, the convergence of AI, privacy regulations, and the creator economy will continue to shape the industry, creating both challenges and opportunities. Brands that embrace innovation and adapt to these shifts will be best positioned to thrive in an increasingly dynamic market.