The Digital Advertising Market

Digital advertising has moved from “the fast-growing part of media” to the center of gravity for the entire advertising economy. In most major markets, incremental ad dollars now follow audiences into mobile feeds, search results, streaming video, and commerce ecosystems—where targeting, measurement, and automated buying make spend easier to justify and scale. Forecasts from multiple industry trackers now converge on a common milestone: total advertising is a trillion-dollar global category, and digital is taking the dominant share of both budgets and growth.

This Economy Insights report maps the market’s size and trajectory, profiles the platforms and ecosystems capturing the largest pools of spend, and explains the structural forces—technological, behavioral, and regulatory—pushing digital advertising forward.

Market size: a trillion-dollar ad economy with digital taking the growth

Global ad spend is crossing key thresholds

By 2025, worldwide ad spending is widely expected to clear $1 trillion, with digital accounting for roughly three-quarters of the total. EMARKETER’s 2025 outlook explicitly highlights the “$1 trillion” threshold and notes that digital will represent more than 75% of worldwide total media ad spending for the first time.

At the same time, WPP Media (GroupM’s rebranded intelligence unit) projects global advertising revenue growth strong enough to surpass $1 trillion in 2024 (excluding U.S. political advertising) and reach $1.1 trillion in 2025, with “pure-play digital” comprising 72.9% of total advertising in 2025.

WARC’s more recent forecast framing (Q3 2025) puts the 2025 global ad market at $1.17 trillion, growing to $1.27 trillion in 2026.

These figures differ because of scope choices (e.g., “total media” vs. “advertising revenue,” inclusions/exclusions, and market coverage), but the direction is consistent: the ad economy is large, still expanding, and increasingly digital-first.

Table 1: Global advertising market size—selected benchmark forecasts

Sources: WPP Media topline forecast; EMARKETER 2025 forecast summary; WARC Q3 2025 forecast highlights.

Where the growth is going: search, social, retail media, and streaming video

A useful way to understand the digital market is to stop thinking in “websites and banners” and instead map spend to digital behaviors:

1) Search remains the performance backbone—but the product is evolving

Search continues to attract budgets because it sits closest to declared intent (“I want to buy X”), which makes ROI measurement straightforward. WARC’s breakdown of incremental ad dollars suggests 22.2% of new ad dollars are going to search advertising.

The next evolution is already underway: AI-shaped search experiences (summaries, conversational results, and shopping assistants) are changing how ads are inserted and how often users click outward. Reuters reported EMARKETER data projecting AI-driven search advertising in the U.S. rising sharply through 2029, explicitly framing it as a disruptive shift away from legacy keyword mechanics.

2) Social and short-form video are now foundational, not experimental

WARC projects social media ad spend rising to $306.4B (2025), and says 40.6% of incremental ad dollars are going to social platforms.

This reflects two realities:

• Social is simultaneously upper funnel (reach, discovery) and lower funnel (click-to-buy, lead gen, app installs).

• Formats have matured—especially short-form video, creator integrations, and algorithmic feeds that improve matching between ads and audiences.

3) Retail media is the “third pillar” alongside search and social

Retail media—ads sold by retailers and marketplaces using on-site behavior and purchase signals—has become one of the fastest-growing slices of digital. WPP Media estimates retail media will reach $177.1B globally in 2025, surpassing total TV revenue (including streaming) for the first time in their framing.

WARC’s forecast similarly suggests 21.5% of new ad dollars are going to retail media platforms.

The structural reason retail media is scaling so quickly is signal quality: retailers sit on first-party purchase data and can often close the loop from impression → product page → basket → transaction.

4) Connected TV (CTV) brings brand budgets into digital pipes

Streaming has opened premium inventory to programmatic buying and improved targeting relative to linear TV. Reuters, summarizing PwC’s Global Entertainment & Media Outlook 2025–29, points to advertising—especially digital formats like connected TV—as a key growth driver, with digital ad formats rising as a share of total ad revenue over time.

Key players: who actually captures digital ad dollars?

Digital advertising is often described as fragmented (many publishers, apps, channels), but revenue capture is highly concentrated at the platform layer.

The platform triad: Alphabet, Meta, Amazon

In a global context, three companies sit at the core of the monetization stack:

• Alphabet (Google + YouTube) dominates search advertising and holds major positions in video and networked display.

• Meta (Facebook + Instagram + WhatsApp monetization) is one of the largest global sellers of targeted social advertising.

• Amazon has built a rapidly scaling advertising business tied to commerce behavior, Prime video inventory, and marketplace demand.

WARC explicitly states that Meta, Alphabet and Amazon attract over half (55.8%) of total advertising spend outside of China, and notes that share is on track to rise further by 2030.

China’s parallel ecosystem

Outside China, the market is dominated by the U.S.-based platforms above. Inside China, the largest pools of digital ad inventory and data sit with domestic ecosystems (e.g., ByteDance/Douyin, Alibaba, Tencent, Baidu), shaped by local platforms, regulatory constraints, and commerce behaviors. Global forecasts typically separate or caveat “outside China” concentration for exactly this reason.

The “next layer”: TikTok, Microsoft, Apple, and the streaming/CTV sellers

Even in a concentrated market, there is a second tier of important players:

• TikTok / ByteDance is one of the most important incremental budget recipients in short-form video (and a key competitive pressure on Meta and YouTube). WARC’s outlook references continued advertiser commitment to TikTok budgets in its narrative around platform growth.

• Microsoft participates via search and news advertising (Bing, Microsoft properties), with its annual reporting emphasizing ongoing growth in that line.

• Apple participates via App Store Search Ads and broader ad placements inside its ecosystem (not always cleanly disclosed as a standalone “ad revenue” line item).

• Streaming platforms and CTV intermediaries (e.g., YouTube, Roku, Disney, Netflix, Amazon’s video surfaces) are increasingly important as brand video budgets move to digitally addressable supply.

Ad tech and infrastructure players: enabling the market

Finally, a large enabling layer powers targeting, measurement, auctions, and buying workflows:

• demand-side platforms (DSPs),

• supply-side platforms (SSPs),

• measurement firms,

• identity and clean room vendors,

• brand safety and fraud detection vendors,

• creative tooling and dynamic content systems.

This layer matters because it determines how easily budgets can shift between ecosystems and how effectively outcomes can be compared.

Table 2: Advertising revenue at leading digital ad platforms (reported)

(USD billions; company-reported figures)

Source filings: Alphabet Form 10-K (Google advertising); Meta Form 10-K (Advertising); Amazon Form 10-K (Advertising services).

What the table suggests: from 2022–2024, reported ad revenue growth is strong across all three, with the fastest percentage expansion coming from Amazon’s advertising services line and Meta’s rebound/growth off the 2022 base—while Alphabet remains the largest by absolute dollars.

The forces driving digital ad growth

1) Measurability and “finance-friendly” ad budgeting

Digital’s biggest long-run advantage is not just targeting—it’s budget accountability. Performance campaigns can be tied to:

• site visits, signups, purchases,

• incremental lift models,

• cohort-based retention and LTV,

• multi-touch attribution (with caveats).

Even when measurement is imperfect, the feedback loops are faster than most offline channels, keeping budgets “liquid.”

2) Mobile as the default attention environment

Mobile screens are where feed-based discovery, location-aware signals, and app-based conversion flows live. Digital ad products keep improving to match mobile behaviors: vertical video, native formats, click-to-message, and embedded checkout.

3) Auctions + programmatic: price discovery at scale

The auction model (search keywords, social audiences, commerce placements) makes pricing responsive to demand. Programmatic pipes scale this across publishers and streaming inventory, enabling:

• audience-based buying,

• real-time optimization,

• automated creative rotation.

The result is a market that can absorb budget shifts quickly when economic conditions change.

4) Commerce integration turns ads into distribution

The growth of retail media and shoppable formats reflects a deeper trend: advertising is becoming a distribution layer inside commerce journeys. When ads can be measured in “sales per impression,” they compete directly with trade spend and promotions.

WPP Media’s retail media projection (global $177.1B in 2025) signals how strongly brands value purchase-linked signals.

5) The creator economy expands supply and formats

User-generated content has become a major inventory pool, and creators act as performance media channels in their own right. WPP Media’s recent framing highlights the growing weight of these ecosystems in the overall market mix.

6) AI is changing creative production, targeting, and buying logic

AI is now affecting three layers simultaneously:

• Creative: faster variant generation, localization, and dynamic assembly.

• Targeting: improved relevance using large models and multi-signal systems.

• Optimization: more automated budget allocation and bidding strategies.

Reuters’ reporting on PwC’s outlook emphasizes AI-powered advertising as a driver for industry growth, including digital formats like connected TV and personalization.

7) Privacy changes are reshaping (not stopping) the market

Privacy regulation and platform changes (e.g., reduced third-party signals) have forced a transition:

• from third-party cookies to first-party data strategies,

• to server-side measurement,

• to data clean rooms,

• to modeled conversions and aggregated reporting.

Meta’s own filings highlight how changes in platforms and regulation can negatively impact targeting and measurement signals—and how the business adapts through tooling and performance improvements.

8) Economic uncertainty pushes spend toward flexible, optimizable channels

In uncertain periods, advertisers prefer channels where spending can be dialed up/down quickly and tied to outcomes. This often benefits performance-heavy digital channels relative to long-lead traditional buys.

Market risks and friction points

Ad fraud, brand safety, and trust

Digital’s scale attracts fraud, low-quality inventory, and misleading creative. These costs show up as wasted spend, reputational risk, and pressure for stronger verification.

Platform concentration and regulatory scrutiny

As budgets consolidate into a few ecosystems, antitrust and platform regulation become more salient. WARC’s concentration statistic (55.8% of spend outside China going to three firms) captures why regulators watch this market closely.

Measurement fragmentation across walled gardens

While advertisers want unified reporting, platforms often provide platform-specific metrics. The industry response has been:

• media mix modeling resurgence,

• incrementality testing,

• standardized outcome APIs where available,

• privacy-preserving measurement approaches.

What to watch next: the likely shape of digital advertising through 2026+

1. Retail media standardization (measurement, transparency, incrementality) will determine how much budget shifts from search/social into commerce networks.

2. AI-shaped search may reduce traditional clickouts and force new ad formats, new publisher economics, and new competitive dynamics.

3. CTV expansion will continue to pull brand dollars into addressable, programmatic video—especially as streaming inventory broadens.

4. Identity and first-party data strategy becomes a core competence, not a marketing ops detail.

5. Regulation and platform policy will keep evolving, shaping what targeting and measurement look like market-by-market.