Downturn Shmownturn. During a time of economic uncertainty and retracted brand spending – when ad budgets are normally first to be slashed – ad spending is in high gear. Or at least it was: IAB’s 2024 U.S. ad spend “actuals” are out, and they paint a positive picture… with some caveats.

First, the good news. U.S. advertisers spent record levels in digital media last year, to the tune of $258.6 billion. That represents 15 percent year-over-year growth, with bright spots in video and search. Macro factors also propelled spending, including ad-heavy events like the Olympics and an election year.

Video saw the biggest gains with $62.1 billion and a total ad share of 24 percent – up from 23.2 percent in 2023. But search is still the leading format with 40 percent of digital ad spending in the U.S.. That’s followed by display at 28.7 percent, though it has slipped from a high of 31.5 percent in 2020. 

Politically-Charged

Podcasting was also a contender with $2.4 billion in ad spend in 2024. This is a relatively small piece of the pie, but it’s growing quickly – at 26.4 percent year-over-year to be exact. Among all the above formats, this was likely the most influenced by the election year, as podcasts can be politically charged.

Speaking of politically charged, social media is in a similar boat in terms of algorithmic content feeds that tend to appease political views. That plus social users’ tendency to engage in political discourse in their feeds buoyed the category with $88.7 billion in ad spend in 2024 – up 36.7 percent year over year.

The other area worth noting is the talk of the town in digital media circles: Retail media. It grew 23 percent year over year to $53.7 billion. And it’s still in early stages of development. This could also be one category that – unlike some of the above – isn’t beholden to political cycles, for better or worse.

Wait & See

As for the bad news. Though 2024 saw record levels, confidence signals aren’t high for 2025. The culprit there comes down to one major factor: tariffs. Uncertainty around global economic trade conditions is causing many advertisers to take a wait & see approach, which could have economic ripple effects.

In addition to anecdotal evidence from around the brand advertising world, IAB cites a recent survey of 100 U.S.-based advertising decision makers. And the outlook isn’t good, with 45 percent saying that they plan to reduce ad spend while tariff-impacted global trade uncertainty continues to loom.

Beyond U.S. advertisers, impact will come from overseas advertisers that buy ads in – or geotargeted to – the U.S. For example, Temu spends big on U.S. digital ads, but has slammed the breaks in the current environment. So we’ll have to see what broader and longer-term effects end up playing out.

Header image credit: Joshua Earle on Unsplash