CTV ad spending enters a new growth phase
CTV, Connected TV, is pulling ahead. After a sluggish year in 2023, CTV ad spending climbed 16% in 2024 and it’s expected to grow another 13% in 2025. That brings the total projected U.S. spend to $26.6 billion. At that number, CTV is outpacing online video by 43%, according to the IAB Digital Video Ad Spend and Strategy Report.
The reason? Streaming platforms have gotten smarter. They’ve improved their programmatic tools and self-serve ad platforms. That reduces friction for brands. Big or small, it’s easier to place, optimize, and measure ads than it was even a year ago. Combine that with stronger audience targeting and tracking, and CTV becomes the clear choice for advertisers who care about ROI, and nearly all of them do.
In fact, 68% of advertisers now say CTV is essential to their media plans. Not “important.” Essential. Social video ranks second, at 62%, but the gap is growing. The media landscape has always followed consumer attention. It’s now clear: that attention sits in front of smart TVs, not cable boxes.
If you’re leading media strategy, this isn’t something you wait to test, it’s something you integrate. These numbers aren’t speculative. They reflect a behavioral shift, backed by performance tools that weren’t in place just a few years ago. The friction is gone. Executives with the ability to move fast will define the next round of media leadership. The rest will follow.
Digital video is now the dominant force in TV/Video advertising
Let’s keep this simple, digital video advertising is dominant. Digital video, CTV, social video, and online video combined, grew 18% in 2024. It’s set to grow another 14% in 2025, reaching $72 billion. That’s two to three times faster than overall media spending.
Digital now accounts for nearly 60% of all TV/video ad spending. Not long ago, that share was less than half. In fact, 2023 was the first year digital video spending surpassed linear TV. That gap will grow in 2025. And no, it’s not because digital video is inflated, it’s because linear TV is losing its edge. There’s no Olympic bump. No presidential ad wave. Just a flat line.
This matters because, for too long, ad budgets have prioritized what’s familiar, not what’s effective. But the data is shifting priorities. Platforms offering deep targeting, real-time analytics, and audience flexibility are now where CMOs put their dollars. Because that spend delivers back.
Executives making media decisions should be looking at momentum. The velocity of digital video tells you where things are going, and fast. Every year that companies delay reallocating to these channels, they’re surrendering competitive ground to those that already have. Leading in this space isn’t about being first, it’s about being fastest to adapt, test, and scale what works.
Advertisers are shifting budgets toward CTV, and it’s strategic
Ad budgets are moving, and they’re moving in a clear direction. Brands are pulling money out of traditional and digital legacy formats and reallocating it toward CTV. This is a rebalancing of spend based on performance, precision, and platform maturity.
In the IAB’s latest data, 36% of those increasing CTV spend said the money is coming from linear TV. Another 36% are pulling from social media. Online video (excluding YouTube) is contributing 34%, while 32% comes from paid search, and 31% from digital display.
Take a step back. Paid search and display were once critical anchors of digital media. Their recalibration toward CTV means something fundamental has changed: advertisers now see higher potential in CTV’s accountability, reach, and targeting. They see value in platforms where they can control frequency, access larger screens, and track user-level impact.
For decision-makers, this momentum is actionable. When budget is coming out of formerly untouchable areas like search, it shows where advertisers now expect real returns. It also shows what they’re willing to trade away. If you’re still over-indexing in static formats or waiting for proof CTV is worth the shift, you’re already behind. This data confirms it’s happening, and it’s measurable. The dollars are the evidence.
CPG, retail, and pharma are leading digital video growth with targeted strategies
Some industries move ahead faster, and right now, CPG, retail, and pharma are defining how to unlock performance from digital video. These sectors are using the channel differently. More strategically. More intelligently.
CPG brands are working closely with retail media networks and applying retailer-level purchase data to video campaigns. That’s giving them sharper segmentation, more contextual targeting, and clearer performance attribution. Retail, restaurant, and auto brands are leaning into real-time, location-aware messaging, combined with interactive, shoppable ad formats that drive immediate conversions.
Pharma is a standout. Brands in the sector are increasing their use of AI and audience data to personalize messaging. This is a response to regulation, complexity, and demand for precision. CTV also gives pharma brands reach and relevance without compromising compliance, essential factors in high-stakes categories like prescription drugs.
For leadership teams, this is key intel. These verticals are setting new benchmarks for how it’s used. They’re proving that standard video placement isn’t enough. Success now depends on how granular your data targeting is, how fluid your messaging strategy becomes, and how well you optimize for each platform in your media stack.
The good news: almost every major category is projected for double-digit growth in digital video next year. But it’s CPG, retail, and pharma that are shaping how that growth translates into real brand value. If you want to capture similar results, look at the models these industries are adopting and evaluate your own team’s readiness to scale them.
Volatility is the constant, ad strategies need to be built for flexibility
Market dynamics are not stable right now. Executives operating in digital advertising today need to approach planning with built-in flexibility. The 2024 IAB Digital Video Ad Spend and Strategy Report makes this clear: economic uncertainty, ongoing geopolitical shifts, tariffs, and changing consumer sentiment all continue to shape how, when, and where brands invest in media.
This doesn’t mean pulling back. It means moving smarter. Brands are deploying capital where measurement is immediate, flexibility is structural, and optimization can run continuously. That’s why digital video, especially CTV, is accelerating. In volatile times, you prioritize channels that let you adjust in real time and still scale when demand rises. CTV does both.
Executives should also consider how these macro conditions impact timelines and expectations. Ad strategies can no longer be locked in months in advance without optionality. Stakeholders, from CMOs to CFOs, expect visibility, accountability, and the ability to reallocate spend quickly when market conditions demand it.
It comes from a defined group of 364 verified industry leaders surveyed between February 17 and March 7, 2024. These are professionals involved in managing $1M+ in digital advertising. Many operate directly for brand marketers or top agencies. Their choices reflect the best response to today’s environment: investing in platforms where speed, precision, and agility are requirements.
If you’re making strategic decisions right now, act with clear parameters. Invest in platforms that respond to conditions, not ones that are affected by them. That’s how media strategy stays viable, even in uncertainty.
Key executive takeaways
- CTV ad spend rebounds strongly: CTV ad spend rose 16% in 2024 and is projected to grow another 13% in 2025, reaching $26.6B. Leaders should prioritize CTV in media planning due to improved programmatic tools, broader accessibility, and leading audience targeting performance.
- Digital video overtakes linear TV: Digital video now accounts for nearly 60% of total TV/video ad budgets and is growing up to 3x faster than total media. Executives should shift spend from legacy formats to digital channels to keep pace with changing viewer behavior and ad performance benchmarks.
- Budget reallocation reflects strategic shift: Advertisers are moving funds away from linear TV, social, and paid search to support CTV, driven by its measurable reach and ROI. Leaders should reassess media mix models and ensure investment aligns with performance-based outcomes.
- Industry leaders are defining new use cases: CPG, retail, and pharma brands are pioneering CTV strategies using retail media, shoppable formats, and AI targeting. Executives in slower-moving verticals should evaluate these best practices and adopt CTV innovations that drive market differentiation.
- Uncertainty demands agile media strategy: Economic volatility is amplifying the need for flexible ad planning, making adaptable, measurable platforms like CTV more valuable. C-suite leaders should empower teams to reallocate spend dynamically based on real-time market and campaign data.
