US internet ad market climbs to $258.6 billion: PwC

Everyone’s talking about that Coldplay jumbotron couple, but here’s something slightly more worthwhile to focus on.

The internet ad market in the US grew 14.9% last year to $258.6 billion, significantly more than the 7.3% growth it saw in 2023, according to a new report from the consulting firm PwC.

The report, released this week, projects an 8.5% compound annual growth rate for the internet ad market through 2029, bringing the total value to $389.1 billion by the end of the decade, and noted particularly strong growth in social, retail media, and connected TV.

While it may not be nearly as spicy a subject as an apparent coworker affair, the report lays out several important advertising growth areas and trends, which we dug into below.

For you page: Digital video continued to gobble up ad dollars in 2024, increasing 19.2% year over year to $62.1 billion, the report read. That growth came in part from short-form video: revenue from video ads that appeared within social media feeds, which PwC dubbed “social outstream video advertising revenue,” grew 19.7% in 2024 to $27.4 billion.

While TikTok was a major contributor to the growth, its uncertain future in the US could result in media buyers shifting ad spend to other platforms like Meta’s Reels and Google’s YouTube Shorts, the report noted.

Shop talk: Retail media advertising also continued to take off, according to the report. Digital retail media performed well in 2024, and 16.2% of US retail sales in Q3 last year were from e-commerce, up slightly from 15.4% in Q3 2023, according to Census Bureau data cited in the report.

More importantly, PwC expects retail paid search to reach $64.7 billion by 2029, making up just under half (44.2%) of all paid search ad revenue.

Press play: The over-the-top (OTT) video sector continued to grow last year, and the US market, despite its maturity, has continued to see double-digit revenue growth, according to the report. In 2024, domestic subscription video on demand (SVOD) revenue increased 18.3% year over year to $56.1 billion, and OTT video subscriptions overall rose by 9.5%.

Part of that revenue growth came from streamers hiking subscription prices: revenue per subscriber grew 8% last year, according to the report. Subscriber growth was also partially attributed to streaming services taking part in bundled offerings aimed at bringing in new customers.

The total US OTT market is expected to reach $112.7 billion by 2029, about half (44.1%) of global SVOD revenue, PwC projects.

In contrast to OTT advertising, traditional TV advertising took another hit in 2024, according to the report. Total revenue from “pay-TV” (defined in the report as “cable, satellite, and IPTV services”) and linear TV advertising in 2024 totaled $126.1 billion, down more than $20 billion compared to 2020 figures, and PwC projects that the sector will see a compound annual growth rate of -5.4% through 2029, marking “one of the most pronounced declines among its global peers.”

Touch grass: Physical out-of-home (OOH) advertising may not be growing at the same clip as OTT, but it increased a modest 1.6% in 2024, the report found. For advertisers looking to avoid digital ad fraud, OOH could be a viable option, the report noted, and growth is expected to come mostly from digital OOH. Last July, nearly all (96%) of US marketers and agencies said they planned to maintain or increase OOH spending in the next year, according to a survey from the Digital Place-Based Advertising Association cited in the report.

Increased integration between CTV and digital out-of-home (DOOH) that allows for multiplatform campaigns combining TV ads with billboards could encourage further investment, the report noted. AI is also expected to further support DOOH growth if the tech can support more customizable and targeted ads.

“Although only in its early stages of development, AI has the potential to make DOOH a more targeted, dynamic, and measurable medium,” the report’s authors wrote.