AI, Streaming, Sports Reshape Growing U.S. Ad Market.

The U.S. advertising market is on pace for another year of strong growth, with the expansion being driven increasingly by online advertising, retail media and ad-supported streaming as artificial intelligence reshapes how brands reach consumers and how agencies buy media.

MoffettNathanson forecasts the U.S. advertising market will grow 15% in 2026 to $471.4 billion, up from its previous 14% forecast. Online advertising is expected to account for $359.6 billion, a 20% year-over-year increase and 76% of the total U.S. market. The firm said improved television expectations, helped by the World Cup, also contributed to the higher overall forecast.

The projections were included in MoffettNathanson’s Sept. 30 report, “U.S. Advertising: Rage Against the Machines?” following the firm’s ninth annual Future of Advertising Day. Generative AI was a central topic, with discussions ranging from product discovery and marketing to advertising agencies and media buying.

The report said AI is changing the way consumers discover products and the way marketers try to influence those decisions. One strategy discussed by conference participants was to “flood the zone,” with brands creating product information and recommendation websites designed for machine consumption while also using influencers and social media to build brand recognition that can be picked up by AI-driven search and agents.

The report said one speaker estimated AI applications account for about 20% of first-touch product discovery, although advertisers may be undercounting the activity because of tagging and attribution gaps.

The shift is also putting pressure on advertising agencies. MoffettNathanson said media buying and planning are becoming more automated and transparent, with compensation moving away from fees based on employee hours and toward payment for outputs and outcomes. The report said proprietary trading, rebates, undisclosed discounts and other layers of the traditional media-buying system are coming under pressure.

That could result in job losses in agency media-buying divisions as companies reduce fixed costs and prepare for lower upfront fees and greater back-end compensation, according to the report.

At the same time, the largest digital platforms are continuing to capture a growing share of advertising budgets. MoffettNathanson said Google, Meta, Amazon and TikTok together account for more than half of all advertising spending and more than two-thirds of digital advertising. One conference participant described their data advantages as “practically insurmountable.”

The report also identified live sports as a particularly valuable form of advertising inventory. General entertainment programming faces pricing pressure, while sports continues to command premium rates because it can reach large audiences simultaneously. One participant called sports the last “monoculture.”

MoffettNathanson’s second-quarter Ad Tracker showed the market’s digital shift accelerating. Total U.S. advertising grew 21% in the quarter vs. 18% in the first quarter. Digital advertising, including retail media and ad-supported video, grew 25%, while traditional media excluding online and AVOD increased 4%.

Online advertising accounted for 77% of total advertising growth in the quarter, while retail media contributed another 16% and AVOD 5%. Broadcast television also benefited from the World Cup, with broadcast network advertising up 39% year over year.

Looking ahead, MoffettNathanson forecasts online advertising will grow at a 15% compound annual rate from 2025 through 2028, while AVOD is projected to grow 16%. Traditional linear television excluding political advertising and the Olympics is expected to decline 6% annually over the same period. Audio is projected to decline 2% annually, newspapers 6% and magazines 5%.

Overall, the firm expects the U.S. advertising market to reach $571.8 billion by 2028. Advertising’s share of gross domestic product is forecast to rise from 1.33% in 2025 to 1.45% in 2026 and 1.61% by 2028, which would be 18 basis points above the previous high recorded in 2000.