January 23, 2025

Ad Spending on the Rise for 2025, Says Latest IAB Study

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News Summary

A recent IAB study reveals an overall growth rate of 7.3% in ad spending for 2025, driven by sectors like retail media and Connected TV. The report highlights a strong focus on customer acquisition, with notable challenges and the growing role of generative AI in advertising strategies.

Ad Spending on the Rise for 2025, Says Latest IAB Study

It seems 2025 is shaping up to be an exciting year for ad spending, despite the challenges that have come along the way! According to a fresh study released by the Interactive Advertising Bureau (IAB) on January 16, 2025, advertisers are gearing up for an overall growth rate of 7.3%, even though this is a step down from the stellar growth experienced in 2024, largely fueled by major events like the Olympics and the presidential election.

Key Highlights of the Study

The IAB’s study, aptly titled “2025 Outlook: A Snapshot into Ad Spend, Opportunities, and Strategies for Growth,” provides insight into ad spending trends based on a thorough survey performed among buyers from various brands and agencies. It’s revealing that, while the overall growth may seem modest, specific sectors are set to take off!

For instance, retail media is expected to shine, enjoying a remarkable growth projection of 15.6%—that’s more than double the average rate! This makes a lot of sense as retail media continues to evolve and capture the attention of consumers. It’s a space that brands are focusing on heavily, and it’s paying off.

What’s Hot and What’s Not

Interestingly, the landscape doesn’t stop with retail media. Other sectors like Connected TV (CTV) are also on the upswing, projected to grow by 13.8%. It appears that viewers are increasingly gravitating towards streaming services, which has opened a whole new realm for advertisers to explore. Additionally, social media ad spending is set to rise by 11.9%, highlighting our enduring love affair with social networks.

The Focus on Customer Acquisition

In this ever-evolving advertising ecosystem, it’s important to note that buyers’ main focus is shifting towards customer acquisition. According to the study, this priority has surged by 12% year-over-year. This emphasis arises from the need for revenue growth in light of inflation and tighter profit margins—it just goes to show how much the market conditions are influencing advertising strategies.

Challenges Remain

Nonetheless, advertisers aren’t sitting back and relaxing. The fragmented ad ecosystem, alongside challenges such as signal loss and the notorious walled gardens, has led buyers to rethink their marketing mix models (MMM). Plus, they are grappling with measurement challenges, especially regarding cross-platform analysis in the ever-expanding realm of video streaming.

AI on the Rise

generative AI. The study revealed that a remarkable 80% of surveyed buyers are either using (42%) or exploring (36%) generative AI for media planning and activation. These smart tools are proving to be game-changers in providing insights and optimizing campaigns.

However, it’s not all smooth sailing. Half of those utilizing generative AI stress the necessity for mandatory human oversight and strict brand safety protocols. Also, it appears that only a third of companies currently leveraging AI have formed organized resources for collaborative efforts within their teams—a revealing statistic that highlights room for improvement.

A Message from the Top

Amid all this change and adaptation, IAB CEO David Cohen chimed in, emphasizing the importance of transparency, choice, and delivering effective business results to keep the spirits of buyers high. Optimism is key, and these elements are pivotal in building a sustainable advertising landscape moving forward.

Looking Ahead

The full findings of the “2025 Outlook” study can be accessed through the IAB’s official channels, offering an in-depth look into what advertisers can expect in the upcoming year. As we cautiously embrace 2025, it’s clear that a mix of innovation, strategic realignment, and a bit of elbow grease will be crucial in navigating the evolving advertising terrain.