Ad Buyer Survey XIII: Digital and Gen AI Gaining Traction

Overview:

• Advertising (Ad) buyers expect their 2025 advertising spend to rise 2.7% year-over-year (YoY). Buyers cited politics, macro, consumer sentiment, new products and tariffs as drivers of growth.
• We expect the U.S. digital share of U.S. advertising spend to increase from 2024 to 2026 led by video growth.
• More advertising buyers are leveraging generative artificial intelligence (AI) tools for advertising unit content creation compared to last year and over three-quarters of those surveyed expect to drive higher return on ad spend (ROAS).

The TD Cowen Insight

We surveyed 54 U.S. advertising buyers totaling approximately US$26 billion in U.S. advertising spend in December 2024. We raised our worldwide digital advertising estimates approximately 5% annually from 2024-2029 given higher digital advertising growth in 2024 coupled with advertising buyers indicating a continued shift to digital. Buyers cited politics, macro, consumer sentiment, new products and tariffs as drivers. We estimate U.S. digital share to rise from 75% of U.S. advertising spend in 2024 to 79% in 2026, led by video growth of 13% annually over the period.

Forty-four percent of advertising buyers are leveraging generative artificial intelligence (AI) tools for advertising unit content creation (vs 37% last year), and >75% expect to drive higher return on ad spend (ROAS).

Digital U.S. Advertising Spend Expected to Increase as Traditional Advertising Spend to Decelerate

Our Advertising Outlook report assesses emerging advertising trends in 2025 and beyond based on our proprietary annual survey of senior U.S. advertising buyers. Advertising buyers expect total advertising spend growth to decelerate slightly to +2.7% YoY versus +3.4% YoY last year. Digital share gains continue with advertising buyers expecting to shift 6% of their advertising budget to digital at the expense of traditional media. In terms of overall sentiment, key drivers of spend intentions in 2025 include:

• political changes,
• macro environment and consumer sentiment,
• launching new products and services and
• tariff concerns, among other catalysts.

Given better than expected digital ad spend in 2024 and expected digital share gains, we raised our global digital advertising forecast by approximately 5% annually on average from 2024-2029.

Further highlights in our Advertising Outlook include:

• Digital video is a key spend driver. We estimate short form video grows 17% annually 2024 to 2029;
• GenAI is gaining traction as 44% of advertising buyers are using GenAI content creation tools (up from 37% last year) as 76% expect to — or are already seeing — ROAS upside from GenAI implementation.
• Influencer marketing as 61% partner with social media influencers to promote products and services.

Expected Advertising Budget Growth 2025 vs. Prior Years (%) – Overall Average & Spend Weighted

Beneficiaries should China's Leading Platform be Banned

We continue to believe that there would be beneficiaries should China's leading platform be banned in the U.S. Per our U.S. Consumer survey in Q4 2024, users indicated that they would reallocate their viewing time to other platforms.

Expected Shift to Digital Advertising Spends from Traditional Advertising

The report is based on our proprietary annual survey of 54 senior U.S. advertising buyers representing nearly US$26 billion in U.S. advertising spending across all advertising channels (digital, TV, etc.) and excluding digital-only advertising buyers. The survey focused on upcoming digital advertising trends, advertising spend expectations for 2025 and 2026, expected digital advertising share gainers and losers across platforms and channels, and new questions on GenAI's impact and the rise of influencer marketing.

The migration to digital advertising from traditional channels like TV continues. Advertising buyers expect the digital share of total U.S. advertising to rise 9 points over the next two years as social video and digital video advertising are expected to be the fastest growing channels within digital advertising.

Key Changes vs. Prior Year Survey - Contributors to Growth in Digital Ad Budgets:

• 79% of respondents cited "shift from TV," up from 67% in last year's survey.
• 75% cited "growth of overall advertising spend," up from 47% last year, which in our view reflects incremental budget going to digital more than last year.
• 20% cited "shifting spend from non-TV media" vs. 25% last year.