The digital advertising industry reached its highest revenue level in history in 2025, generating $294.6 billion and posting a 13.9% year-on-year increase, according to the Interactive Advertising Bureau’s (IAB) internet advertising revenue report for full year 2025.

The report, now in its 30th year and considered the industry benchmark for United States advertising revenue across digital media platforms and publishers, was conducted by PwC and released Thursday.

The results are particularly notable given that 2025 lacked the major cyclical events such as the Olympics, FIFA World Cup or elections that have historically driven elevated advertising spending across the digital ecosystem.

Social media emerged as the dominant advertising channel in 2025, generating $117.7 billion in revenue, a 32.6% yoy increase that outpaced all other media categories.

According to the IAB report, social media accounted for 40% of total digital advertising revenue in 2025, driven primarily by growth in the creator economy, enhanced commerce integration and ongoing advancements in targeting, measurement and attribution capabilities. The scale of social media’s performance cemented its position as the single largest contributor to the industry’s record-breaking year.

Search advertising followed as the second largest category, with revenue rising 11% yoy to $114.2 billion, representing 38.8% of total media spend. Display advertising posted revenue of $81.6 billion, up 9.8% yoy, accounting for 27.7% of media spend.

Commerce media, which the report describes as a growing performance channel powered by first-party data, generated $63.4 billion, up 18 percent yoy and representing 21.5% of media spend.

Digital video was one of the standout growth stories of the year, rising 25.4% yoy to $78 billion, capturing 26.5% of media spend. The IAB attributed this growth to shifting consumer behaviour toward connected television, social video, online video and short-form video formats.

Compared to the prior year when video represented 19.2% of digital advertising revenue, this increase demonstrates that video continues to capture a growing share of incremental digital advertising investment relative to other formats.

The creator economy has firmly established itself as a core advertising channel. According to the IAB report, creator advertising spend reached $37 billion in 2025, growing faster than the broader advertising market.

Spending is projected to reach $44 billion in 2026 as brands continue to shift from campaign-based influencer strategies to longer-term creator partnerships. Podcast advertising also posted solid growth, rising 17.6% to $2.9 billion, representing 1 percent of total media spend.

Programmatic advertising experienced significant expansion, rising 20.5% yoy to $162.4 billion and adding $27.6 billion in new spend.

The IAB noted that automated buying is scaling and laying the groundwork for agentic artificial intelligence driven media buying, signalling a structural shift in how digital advertising inventory is bought and sold. The rise of programmatic reflects the industry’s broader reorientation around performance and measurable outcomes.

David Cohen, Chief Executive of the IAB, said the record revenue growth reflects a market that has fundamentally reoriented around performance channels. “As expectations for measurable outcomes rise, investment is concentrating in areas that can directly correlate spend to business results,” Cohen said.

“At the same time, artificial intelligence is rapidly moving from theory into practice, emerging as a meaningful driver of efficiency and effectiveness across the ecosystem.”

The report positions AI not as a feature layered on top of marketing but as the emerging infrastructure layer through which discovery, commerce and media execution increasingly operate.

Looking ahead, the IAB identified five key trends expected to shape the industry in 2026. AI is expected to deepen its role as advertising infrastructure rather than a supplementary tool. Streaming video will face increasing demands for accountability and proof of incremental impact.

The creator economy will continue its transition from tactical influencer campaigns to sustained brand partnerships. Commerce media will evolve into a broader data-powered ecosystem as measurable outcomes become more essential across industries.

Finally, fragmentation, signal loss and privacy constraints will continue to challenge measurement, with advertisers expected to turn increasingly to modernised marketing mix modelling, privacy-safe signals and AI-driven solutions to navigate the complexity.