Digital video is dominating ad budgets, thanks to connected TV and live sports

In 2020, the first COVID lockdowns kicked in, bringing with them extreme anxiety that brands would go megaconservative with their ad spends–and would see newer, younger digital ads as a place to cut the fat, so they could keep pumping dollars into legacy media marketing. But that’s not what happened. Instead, after a brief dip, digital ad spend (like viewership on digital platforms) surged.

Now, five years later, the Interactive Advertising Bureau (IAB) believes digital video–encompassing connected TV ads, social video, and online video–is on the verge of capturing 60% of all TV/video ad spend. That’s double its share from 2020, and builds on its growth from 2024, where digital video ad spend surpassed spend on linear TV for the first time.

In its 2025 Digital Video Ad Spend & Strategy Report, IAB says this growth makes digital video “one of the fastest growing channels in all of media.” In fact, it added, digital video ad spend is growing between two and three times faster than total media overall.

What’s that mean in terms of dollars? Well, in 2024, U.S. digital video ad spend rose 18% year over year, putting it at $64 billion total. It’s expected to rise another 14% this year, putting it at $72 billion by the end of 2025.

Top categories earning this spend are consumer packaged goods with an anticipated $14.3 billion spend in 2025, retail with $8.4B, tech with $7.3B, pharma with $6.3B, and entertainment/media with $6.2B.

A notable portion of digital video’s growth comes from the increasingly dominating presence of live sports on connected TV through platforms like YouTube, the IAB says. It points to a trend where platforms snagged exclusive deals with major sports leagues, then “stood up and scaled programmatic and self-serve activation tools making it easier for brands of all sizes to invest their ad dollars more seamlessly” and place their ads alongside that viewership-driving content.

We’ve written before about how live sports are maybe the only bulletproof thing out there in terms of always generating views, but this shows how they continue to be significant moneymakers for the outlets that air them. There’s a direct line from radio to broadcast TV networks to digital platforms–and it’s clear advertisers are following that line.

Another aspect worth noting: Connected TV alone generated $23.6 billion in ad spend last year, and is expected to generate $26.6 billion this year. That’s almost double what online video earns. This makes sense, considering people in the U.S. are now watching more YouTube on their TVs than on any other device. YouTube has been pushing living room TV viewership for years, and introduced new CTV-specific ad formats to go along with it. Now that seems to be paying off.

In 2025, the IAB expects to see connected TV’s continued growth come from brands reallocating ad spend from other types of media. For example, 36% of advertisers said they intend to reallocate funds from both linear TV and social media in favor of connected TV. 34% said they intend to reallocate from online video (excluding YouTube), while 33% said they intend to reallocate from “other types of traditional ads,” and 31% said they’ll siphon away from digital display ads.

“2024 was a pivotal year for digital video advertising. With high-quality content moving to streaming, advancements in advertising technology, and an influx of new inventory accelerated growth for both consumers and advertisers,” David Cohen, CEO of IAB, said in a statement. “CTV is making it clear it’s a go-to channel for both viewers and advertisers and is expected to continue growing along with social video and online video.”

The tl;dr here is that digital ad spend is bigger than ever–and YouTube is right on the money pushing connected TV.