Ad Industry Experts Foresee Strong Advertising Expansion and Widespread AI Adoption by 2025
The Internet Advertising Bureau (IAB) has recently released a new study titled "2025 Outlook: A Snapshot Into Ad Spend, Opportunities, and Strategies for Growth." The study, based on a survey of buyers at brands and agencies, highlights robust growth across connected TV (CTV), retail media, and overall ad spend, with generative AI playing a pivotal role in transforming media planning, creative ad generation, and addressing data privacy and fragmentation challenges in advertising strategies.
According to the report, the overall U.S. advertising market is projected to expand at about an 8.5% Compound Annual Growth Rate (CAGR) from 2024 through 2029, reaching around $389 billion by 2029. CTV advertising is expected to grow faster than the overall market, with growth projected at 13.8%. Similarly, buyers anticipate double-digit growth in social media and retail media, with growth rates of 11.9% and 15.6% respectively.
The study reveals that much of this growth will be driven by retail commerce media, including retail media networks, which are forecasted to reach $74 billion by 2026. This growth is attributed to the increasing use of personalized, first-party data-driven ads that integrate across physical and digital shopping journeys.
In terms of the role of generative AI, the IAB highlights that 90% of advertisers will be using AI tools to create video ads by 2026. Generative AI is fundamentally reshaping media and entertainment by moving beyond automation and analytics into creative processes, enabling faster, scalable, and more relevant ad production. AI supports operational efficiency and unlocks new revenue streams, while helping advertisers cope with challenges such as privacy regulations, data fragmentation, and measurement complexity.
However, the survey found that only one-third of companies using generative AI have organized, collaborative resources in their organizations. Half of the users of generative AI already insist on mandatory human oversight and clear brand-safety protocols. This suggests that while there is widespread adoption of AI, there is still a lot of opportunity for companies to drive efficiencies and growth using generative AI.
IAB CEO David Cohen stated that budgets are being focused at the points where consumers, commerce, and video converge. He expressed optimism about the industry's prospects, emphasizing the need for transparency, choice, and business results for advertisers. Cohen encourages the industry to keep pushing forward to maintain advertiser optimism.
The study does not provide specific growth projections for the adoption of generative AI in ad spend. However, it stresses that it is still early days for companies leveraging generative AI. Nearly eight in 10 buyers are using or exploring generative AI for media planning and/or activation, indicating a growing interest in this technology.
The full "2025 Outlook: A Snapshot into Ad Spend, Opportunities, and Strategies for Growth" study is available for viewing. For those interested in learning more about the role of generative AI in media planning and advertising strategies, the IAB’s 2025 Unified Media Planning Playbook emphasizes embracing AI and modular solutions (like clean rooms and customer data platforms) to deal with fragmented identity systems, measurement inconsistencies, and privacy-driven signal loss in an increasingly complex media ecosystem.
- The study indicates that video ads will see widespread use, with 90% of advertisers expected to use AI tools for their creation by 2026.
- In terms of digital content, CTV advertising is expected to grow faster than the overall market, with growth projected at 13.8%.
- The growth in retail media is attributed to the increasing use of personalized, first-party data-driven ads that integrate across physical and digital shopping journeys.
- The IAB's CEO encourages the industry to focus on points where consumers, commerce, and video converge, and to embrace AI and modular solutions for addressing fragmented identity systems, measurement inconsistencies, and privacy-driven signal loss in the media ecosystem.
