For the second year in a row, marketers will spend more money on digital video ads than on traditional linear TV, according to a new report from the Interactive Advertising Bureau.

The IAB estimates that 58% of all video ad spend in 2025 will go to digital channels via CTV, online video, and social video. The remaining 42% will go to traditional ads on linear TV.

That’s a dramatic shift in ad budgets over the past 5 years. In 2020, 71% of all video ads ran on traditional linear TV, with just 29% going to digital video, according to the IAB.

One of the fastest-growing ad types

Digital video ad spend has more than doubled since 2020, when brands spent an estimated $26.2 billion on the format, according to the IAB. That number has steadily grown each year, rising to $63.8 billion in 2024.

In 2025, the IAB estimates that digital video ad spend will grow another 14%, to $72.4 billion.

This shift is partly due to linear TV’s shrinking subscriber base. It’s estimated that traditional TV services lost nearly 15 million subscribers in the U.S. in 2023 and 2024.

This shift is also due to the improved targeting capabilities found with digital video ads, which allow brands to target consumers based on time, location, and individual interests.

Consumer packaged goods continue to outspend every other advertising category on digital video ads, with roughly $1 out of every $5 going to CPG ads, according to the IAB.

U.S. estimated digital video ad spend by category (2024 vs. 2025 growth %):

  • $14.3 billion: CPG brands (+13%)
  • $8.4 billion: Retail brands (+18%)
  • $7.3 billion: Technology brands (+5%)
  • $6.3 billion: Pharmaceutical brands (+19%)
  • $6.2 billion: Entertainment and media brands (+3%)
  • $6.1 billion: Automotive brands (+15%)
  • $5.1 billion: B2B brands (+22%)
  • $5.0 billion: Restaurant brands (+17%)
  • $5.0 billion: Financial brands (+6%)
  • $2.4 billion: Travel brands (+18%)
  • $1.7 billion: Wellness brands (+19%)
  • $0.9 billion: Clothing brands (+8%)

Source: Digital Video 2025: Ad Market Size and Growth Projections, IAB

Marketers say CTV is a ‘must buy’

In 2025, 68% of marketers now consider CTV a ‘must buy’—i.e. necessary for their media plan, according to an IAB survey of more than 360 advertisers.

Linear TV now sits at the bottom of the priority list with marketers, with just 33% saying they consider local broadcast/cable TV a ‘must buy.’ Audience-indexed linear TV is a ‘must buy’ with just 27% of marketers, according to the IAB.

Advertisers are largely shifting existing ad budgets toward CTV. Asked where they’re getting the money to spend on CTV ad campaigns, marketers say they’re:

  • 36%: Reallocating budgets from linear TV
  • 36%: Reallocating budgets from social media
  • 34%: Reallocating budgets from OLV (excluding YouTube)
  • 33%: Reallocating budgets from other types of traditional ads
  • 32%: Reallocating budgets from paid search
  • 31%: Reallocating budgets from digital display ads
  • 30%: Reallocating budgets from out-of-home campaigns
  • 27%: Reallocating budgets from digital audio/podcasts
  • 23%: Reallocating budgets from gaming campaigns
  • 10%: Reallocating budgets from non-media marketing dollars

Caveat: Digital ad projections could change in 2025

In their report, the IAB notes that ongoing economic uncertainty could impact their 2025 projections, as advertisers potentially pull back on budgets due to pressure from tariffs, geopolitical conflict, and changing consumer sentiment.

In a separate and unrelated report, analysts at eMarketer estimate that linear TV ad spend could decline between $2.78 billion and $4 billion this year, largely fueled by global U.S. tariffs. Spending on CTV ads could end the year flat, or slightly up, according to eMarketer. In other news, Nielsen estimates that 72.4% of all TV viewing in Q1—across both linear TV and CTV—was ad-supported. The remaining 27.6% of TV viewing appeared on ad-free platforms.