The video advertising landscape is undergoing a rapid transformation, with half of advertisers already using generative AI (GenAI) to produce video ads, according to Part Two of IAB’s 2025 Digital Video Ad Spend & Strategy Report.
Developed in collaboration with Advertiser Perceptions and Guideline, the report highlights how GenAI, connected TV (CTV), and a growing emphasis on business outcomes are reshaping digital video strategy. The first part of the report was released in April.
“The economics of advertising are being transformed. As the costs of production fall, the opportunities for advertisers multiply,” said David Cohen, the CEO of IAB. “The pool of potential advertisers is growing, as it is easier than ever to plan, buy, optimize, and creatively connect with consumers utilizing new technologies across all forms of media. The democratization of advertising and marketing is entering an exciting new phase, and the outlines of a new future are coming into view fast.”
GenAI is emerging as a foundational tool for video ad creation. According to the report, 86 percent of buyers are using or plan to use GenAI to develop ad creative. Buyers expect GenAI-driven content will account for 40 percent of all video ads by 2026, with small and mid-sized businesses (SMBs) leading the charge due to GenAI’s low-cost, high-efficiency capabilities. Advertisers are leveraging GenAI for audience-specific versions (42 percent), visual style adaptation (38 percent), and contextual relevance (36 percent).
“Marketers are increasingly looking for partners that not only provide access to GenAI solutions but also help them unlock its full strategic and creative potential,” Cohen added.
CTV continues to expand its role, with buyers expecting 47 percent of CTV inventory to be biddable this year, up from 34 percent in 2024. Seventy-four percent of buyers have already built or are planning to build in-house teams to manage self-serve CTV activation. But automation is not a cure-all: Buyers still demand greater transparency, inventory control, and enhanced experiences, especially for live content.
“Buyers are excited about sports and other live content coming to streaming,” said Chris Bruderle, Vice President, Industry Insights & Content Strategy, IAB. “They expect to see new and better capabilities than they can get in linear.”
Human involvement remains key, with more than 80 percent of digital video buyers seeking assistance from sell-side partners during CTV programmatic activation.
“Being available programmatically is table stakes. Being a strategic partner who delivers ideas and results is becoming what’s vital to win ad spend,” said Jamie Finstein, the Vice President of the Media Center at IAB.
As the economic environment remains uncertain, buyers are placing greater importance on measurable business outcomes, including sales, store visits, and other performance metrics, particularly from CTV.
“Driving bottom-funnel business outcomes is now far and away the most important KPI for video buyers. Deliver, or you’ll get cut,” Bruderle said.
Failure to meet performance expectations is now the top reason advertisers reduce or eliminate spend with streaming partners, the report concludes.
