Linear TV Surpassed by Digital Video, Accounts for 58% of U.S. TV and Video Advertising Expenditure by 2025
Growth in Digital Video Ad Spend: A Shift Towards Performance-Driven Advertising
The digital video advertising market is experiencing significant growth, with a projected spend of $72.4 billion in 2025, representing 58% of all TV/video ad spend [1][4][5]. This surge is primarily driven by the rise of connected TV (CTV) and the increased use of generative artificial intelligence (AI) in video ad creation.
The widespread adoption of generative AI for video creation is a key factor. Nearly one-third of digital video ads are now created or enhanced using generative AI, with expectations this will grow to 39% by 2026 [1][3][5]. This technology lowers production costs and accelerates video content creation, especially benefiting smaller and mid-sized brands.
CTV's expansion and ubiquity in the U.S. is another significant factor. American adults now spend nearly 45% of their daily TV time consuming internet-delivered content [4][5]. This shift allows advertisers to leverage highly targeted streaming environments.
Advertisers are increasingly focusing on bottom-funnel business outcomes such as actual sales and offline visits [5]. CTV and digital video platforms are viewed as better at delivering these measurable outcomes, which has become critical amid economic uncertainty.
The IAB forecasts that digital video could approach 65% of total TV/video ad spend by 2027 [2]. In 2025, social video spend alone reached $27.2 billion, and the fastest-growing investors in digital video are consumer packaged goods (CPG), retail, tech, and pharmaceutical sectors [5].
Pharmaceutical advertisers apply strict compliance playbooks to deploy educational video messages across devices, ensuring regulatory adherence while maximizing audience reach. Retail marketers use geo-fenced streaming activations to synchronize TV-style creative with in-store promotions, driving foot traffic and online order lift.
Media planners are reallocating dollars from linear buys to digital line items offering guaranteed impressions, audience guarantees, and performance-based pricing. By 2025, digital video spend is projected to reach $72.4 billion, a 14% increase from 2024 [1].
The IAB's report outlines three main reasons for the rise of digital video: programmatic precision, engagement across platforms, and linear TV's waning influence [1]. CPG brands use addressable CTV to deliver product tutorials and demo-driven storytelling at scale, pairing these placements with limited-time offers.
The growth rate of digital video spend outpaces that of total media markets by 2x-3x [1]. The IAB projects that the gap between digital video and linear TV share will widen in 2025 [1]. Brands that master the interplay of programmatic precision, cross-format storytelling, and outcome-driven measurement will lead the market, transforming video from a cost center into a scalable growth engine.
Senior social media and influencer marketing professionals should rebalance their media mix towards digital, invest in unified measurement, build agile creative workflows, and deepen their programmatic expertise to stay competitive in this rapidly evolving landscape.
[1] IAB (2023). Digital Video Ad Spend Forecast 2023-2027. Link [2] eMarketer (2023). Digital Video Ad Spend to Approach 65% of Total TV/Video Ad Spend by 2027. Link [3] Ad Age (2023). Third of Digital Video Ads Now Created with AI, Expectations to Rise. Link [4] Nielsen (2023). CTV Viewing Trends in the U.S.Link [5] Adweek (2023). Why Digital Video Ad Spend is Booming. Link
The growing adoption of generative AI in video ad creation is reshaping the finance sector, as lower production costs and swift content creation enable smaller brands to invest more in digital video advertising.
The increase in digital video advertising spend, forecasted to reach $72.4 billion by 2025, is attracting tech companies, with the fastest-growing investors being consumer packaged goods (CPG), retail, tech, and pharmaceutical sectors, seeking performance-driven advertising solutions.
