Digital Ad Revenue Soars, Mid-Tier Firms Thrive

Digital Ad Revenue Surges, Mid-Tier Firms See Fastest Growth

Digital advertising revenue reached record growth levels in 2024, hitting $258.6 billion, a 14.9% year-over-year increase, according to a new report from the Interactive Advertising Bureau (IAB) and PwC. This marks the highest growth since the post-pandemic boom of 2021.

Video advertising continues to be the fastest-growing format, now accounting for nearly a quarter of the market. Podcasts also experienced significant growth, while spending on social and commerce media remained strong.

Several factors contributed to this growth, including cyclical events like the Olympics and the election season. However, advertisers face increasing uncertainty in 2025 due to the absence of such large-scale events, as well as macroeconomic volatility, the impact of artificial intelligence (AI), and evolving privacy regulations.

Dive Deeper into the Digital Advertising Boom

The 2024 digital advertising growth rate more than doubled the 7.3% increase seen in 2023, when revenue reached $225 billion. While this growth is encouraging, advertisers must remain adaptable to navigate the potential impact of global uncertainties and emerging technologies.

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.

- David Cohen, CEO of the IAB

Despite macroeconomic pressures like inflation, major events like the Summer Olympics and a contentious election cycle boosted ad spending in 2024. The elections saw increased digital ad spending, with podcasts and influencer marketing playing a more prominent role.

Podcast advertising grew by 26.4% year-over-year, a significant jump from the previous year. Social media investments also remained robust, rising 36.7% to $88.7 billion, representing 34.3% of the market. Brands were drawn to creator partnerships, user-generated content, and community-oriented marketing on social media—trends expected to continue into 2025. The IAB anticipates a shift towards long-term creator partnerships over one-off campaigns.

While major platforms like Google, Meta, and Amazon dominate the digital advertising landscape, mid-tier companies experienced the largest share of growth in 2024, reaching 11% of the market. These companies include 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. 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.

- David Cohen, CEO of the IAB

The rise of retail media networks, leveraging first-party customer data for targeted advertising, contributes to the diversification of ad spend. Emerging players in AI and the creator economy are also expected to further drive this trend.

Antitrust probes against Google and Meta, along with potential bans on TikTok, could reshape the digital advertising landscape. The IAB sees significant opportunities in the streaming and connected TV (CTV) space, particularly with the shift of premium live sports from linear TV to streaming platforms.

However, some brands are exercising caution with their advertising plans due to uncertainties surrounding tariffs imposed by the Trump administration. Agencies and ad forecasters suggest a cautious approach, with some budgets potentially shifting towards lower-funnel tactics like retail media, which are often more cost-effective and less risky.