2023 U.S. Digital Ad Industry Hits New Record

According to IAB’s annual Internet Advertising Revenue Report, retail media, connected TV and audio advertising experienced double-digit growth with the creator economy helping to spark a social media rebound.

Internet advertising revenues reached a record-high of $225 billion, increasing by 7.3% year-over-year overall (YoY) between 2022 and 2023, according to the newly released “IAB Internet Advertising Revenue Report: Full Year 2023,” conducted by PwC. The report found that Q4 saw the highest growth rate of 12.3% from the year prior (4.4%), with revenues rising to $64.5 billion.

“Despite inflation fears, interest rates at record highs, and continuing global unrest, the U.S. digital advertising industry continued its growth trajectory in 2023,” said David Cohen, CEO, IAB.  “With significant industry transformation unfolding right before our eyes, we believe that those channels with a portfolio of privacy-by-design solutions will continue to outpace the market. For 2023, the winners were retail media, CTV and audio which saw the highest growth.”

Growth Channels

Retail Media revenues showed 16.3% YoY growth in advertising revenues, reaching $43.7 billion in 2023. Key e-commerce players are all expanding their retail media platforms to enable future growth.

Video advertising revenue experienced double digit (10.6%) YoY growth, rising to $52.1 billion in 2023. Forty-two percent of this revenue was generated from CTV (Connected TV) and OTT (over the top/streaming). While growth was less than last year, the combination of CTV/OTT media is expected to be the fastest growing media channel in 2024, especially as the ad-supported tiers of major streaming services continue to capture a growing share of consumer attention.

Audio advertising also saw a robust expansion, growing 18.9% to reach $7 billion. It is still the fastest growing channel, albeit at a slower pace than last year.


After a slowdown in 2022, social media advertising revenues have rebounded with 8.7% YoY growth, increasing to $64.9 billion in 2023. This can in part be attributed to the continued proliferation of social media and creator marketing growth across multiple platforms and new social media forms. Revenues in the second half of 2023 accounted for $4.1 of the $5.1 billion total increase over 2022.

While advertising revenues for search ($88.8 billion) and display ($66.1 billion) remain high, both show relatively modest annual growth rates, with search at 5.2% and display at 4% YoY growth, respectively.

Outlook for 2024: Privacy Regulation, Innovation, and Generative AI

IAB said the trends identified in last year’s report made an impact in 2023 and will continue to grow stronger in 2024:

  • Privacy-preserving advertising practices should not be viewed as a temporary trend, but as a permanent change. The industry’s adaptability and innovation will be crucial in thriving within the privacy-by-design ecosystem.
  • Social media platforms are pursuing innovations that merge social commerce, reality tech, and influencer marketing to drive higher engagement and conversions.
  • Generative AI is optimizing various advertising elements through insight-driven idea generation, personalized content, and real-time optimization. Leading companies are aggressively adopting AI to replace the lost signals that power personalization and measurement, like Google’s Performance Max and Meta’s Advantage+. The challenge now for advertisers and publishers is to find and hire the right talent to thrive in a fast-paced future.

Advertising is undergoing a rapid transformation, the report said, “driven by channels that offer addressable audiences at scale and personalized messaging in privacy-compliant ways. These channels, equipped with large first-party data sets, sophisticated contextual models, and native measurement capabilities, have gained a competitive edge in the industry.”

Jack Koch, IAB SVP, research and insights, said:Looking ahead, while there are no shortage of challenges, there are also strong opportunities in sports streaming, creator-based marketing, retail media networks, and beyond. 2023 is proof that the industry can stay resilient in the face of change.”

You can view the full report, “IAB Internet Advertising Revenue Report: Full Year 2023” here. Experts from IAB, PwC, and MAGNA Global will discuss key findings and trends from the report during a webinar today, April 16, at 2 p.m. ET. Register here.

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