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Digital video ad spending in the United States is expected to reach $81.9 billion in 2026, double what advertisers were spending just five years ago, according to the IAB’s “2026 Digital Video Ad Spend & Strategy Report.” It is expected to grow 11% this year, nearly 20% faster than the overall advertising market, and account for 61% of all U.S. TV and video ad spending for the first time.
The report highlights three major trends: targeting has overtaken content quality as the top purchasing priority, social video continues to overtake connected TV, and agentic AI is moving into campaign operations without making spending decisions.
Digital video’s growth is slower than the rapid gains of the post-pandemic years, but that reflects a larger, more mature market rather than weaker demand. Even in a year filled with Olympics, World Cups and midterm elections, events traditionally favorable to linear television, digital video continues to gain ground.
Targeting becomes the new competitive advantage
The report reveals that targeting capabilities are now the most important factor buyers consider when deciding where to spend their TV and video budget. Nearly half of respondents ranked targeting ahead of content quality, reach, guaranteed business results, and price effectiveness.
This reflects a constant difficulty in finding the right audience. Signal loss, identity fragmentation and AI-generated traffic make it more difficult to know who advertisers are targeting and how their campaigns are performing.
Small and mid-sized advertisers’ focus on targeting has increased sharply over the past year as they have expanded into digital video while trying to avoid wasting impressions on audiences unlikely to convert. For these organizations, better targeting is often more valuable than broader reach.
Social video extends its lead
The growing importance of targeting explains why social video continues to advance.
The IAB predicts spending on social video will reach $31.9 billion this year, compared to $29.3 billion for connected TV. Nearly seven in ten shoppers now consider social video a must-have channel, while CTV remains a close second.
The report attributes the rise of social video to its combination of creator content, AI-driven personalization, commerce capabilities, creative optimization and measurement. These features make it easier for marketers to connect media investments to business results.
Connected TV’s growth is driven by premium programming, live sports and the expansion of streaming rights, which continue to attract advertising revenue. Self-service shopping platforms attract more small and medium-sized advertisers to the market. Much of this increased spending comes from linear TV budgets.
The growth of social video extends well beyond consumer brands. Spending is expected to increase in almost every sector measured by the IAB, from retail and technology to B2B and healthcare. Automotive is the only major category expected to see a decline.
AI continues to grow as an operational tool
This year, two-thirds of buyers are already using, testing, or planning to use agentic AI for their digital video campaigns, while 28% are actively evaluating it.
The report finds that marketers are using AI primarily where it enhances decision-making rather than replacing it. Media planning, inventory assessment, creative testing, performance analysis, and campaign optimization are among the top use cases because they allow AI to process large amounts of information before marketers decide how to act.
AI is used much less for spending or managing financial transactions. Buyers are much less comfortable using AI to negotiate deals, execute purchases, or manage invoicing. This says as much about operational maturity as it does about technology. AI is now part of the workflow, but marketers still want people to make the most important decisions.
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Different organizations solve different problems
The report also shows that there is no single path to adopting agentic AI.
Small and mid-sized advertisers use it to provide features they lack. Creative testing, media pre-planning, and performance analysis are their most common use cases, as these tasks require more staff and expertise.
The priority for large advertisers is inventory discovery and assessment, where AI helps analyze increasingly fragmented media markets, spanning publishers, private marketplaces, direct deals and open auctions. This shows that organizations are applying AI to operational bottlenecks and have moved out of the evaluation and adoption phase.
The report is based on Guideline’s advance billing and booking data, market estimates, industry interviews and a survey of 360 agency and brand advertising decision makers between February 20 and March 13, 2026. Respondents were involved in digital video spending decisions and worked for organizations that spent at least $1 million on advertising in 2025.
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