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Digital Video Advertising on the Rise

The landscape of television advertising is undergoing a seismic shift, with the Interactive Advertising Bureau (IAB) projecting that digital video will account for nearly 60% of total TV and video ad spend by 2025. This trend is galvanized by a resurgence in live events and sports programming on various streaming platforms, along with the improvement and accessibility of programmatic advertising tools.

CTV Growth in 2024

In the latest report titled "2025 Digital Video Ad Spend Strategy Report Part One," IAB revealed that connected TV (CTV) bounced back with an impressive 16% year-over-year growth in 2024. This resurgence is attributed to the increased availability of high-quality content on streaming services that attract both viewers and advertisers. David Cohen, CEO of IAB, emphasized the significance of 2024 as a turning point for digital video advertising. As more high-quality content transitions to streaming platforms, the advertising technology sector is also advancing, enabling companies to effectively reach their target markets.

Dominance of Digital Video

Digital video advertising witnessed an 18% growth in 2024, reaching approximately $64 billion. Projections indicate that this trend will continue, with expectations of a 14% increase in 2025, pushing digital video spending to about $72 billion. This growth represents a major shift, as digital video's share of total TV/video ad spend is forecasted to double in just five years, overtaking linear TV for the first time.

Digital Video Categories on the Rise

The report breaks down digital video spend across multiple categories:

• - Connected TV (CTV): Increase from $20.3 billion in 2023 to an expected $26.6 billion in 2025.
• - Social Video: Expected to rise from $19.5 billion in 2023 to $27.2 billion by 2025.
• - Online Video: Projected growth from $14.2 billion to $18.6 billion in the same period.

The year-on-year growth in all three categories underscores the shifting focus of consumers and advertisers alike towards digital platforms, where engaging and measurable advertising opportunities abound.

The Shift in Budget Allocations

Interestingly, much of the money flowing into CTV advertising is derived from reallocating budgets from traditional linear TV—approximately 36%—as well as other channels such as social media and online video. This signifies a growing confidence among brands in the capabilities of CTV to deliver targeted and impactful campaigns, now made even more accessible through evolving programmatic self-serve tools.

Small and Mid-Sized Businesses in CTV Advertising

Moreover, programmatic and self-serve solutions have democratized the space, enabling small and mid-sized businesses to participate in CTV advertising. This transformation is vital as businesses can now effectively promote their products without needing extensive advertising budgets. Cohen highlighted that the self-service technology and accessible pricing have empowered many businesses to engage with their desired audiences effectively.

Industry Impact and Future Outlook

As sectors like CPG, retail, and pharmaceuticals gear up to enhance their digital video ad budgets by double digits, the effectiveness of advanced targeting technologies—including AI-driven personalization—enables brands to create more compelling advertisements that resonate with today's consumers.

The second part of IAB's report, slated for release on July 14th during the Video Leadership Summit, will delve deeper into the strategies behind these impressive growth rates and provide insights into how advertisers can harness the momentum within the digital video landscape.

IAB continues to play a critical role in unfolding the potential of the digital economy, ensuring that its members—comprising over 700 industry leaders—are equipped with the necessary insights and tools to navigate this rapidly evolving space.

In conclusion, as digital video trends continue to flourish and reshape the advertising environment, stakeholders must adapt and innovate to build effective media strategies that align with consumer behaviors and expectations.