MoffettNathanson Gives The U.S. Advertising Market An Upgrade.

MoffettNathanson Research is the latest firm making a revised — and increasingly charitable — reassessment of the U.S. advertising market.

The independent equity research publisher says U.S. advertising grew 11.6% in the first quarter, with online ad spend growing by 13.7% and AVOD posting strong growth of nearly 27%. Retail media grew 17%.

Traditional TV and audio both fell 1.8%.

Based on the stronger-than-expected Q1, MoffettNathanson says it is slightly increasing its full-year 2025 U.S. advertising growth rate from 5.8% to 6%.

The firm shared its findings on Monday in a new report entitled, “U.S. Advertising: The Funnel Has Collapsed Into One As Ad Growth Continues To Surprise To The Upside.”

“The growth of digital advertising continues to surprise even those of us who have tracked the industry for a long time,” MoffettNathanson says in a summary of the new report. “Just a decade ago, digital accounted for just 25% of U.S. advertising, now it makes up 75%. A remarkable shift driven by multiple factors, including the steady reallocation of media budgets from traditional brand awareness campaigns toward hypertargeted social media and intent-driven performance marketing via search and retail media.”

But, the firm says, there’s a shift in the dynamics of the contemporary ad market.

“While it remains true that mid- and bottom-funnel channels continue to grow faster than the overall market, the distribution of that growth is increasingly uneven. The largest tech platforms are not just benefiting, they are pulling away from the pack.”

MoffettNathanson says this year the top four U.S. digital ad platforms — Google (Alphabet), Meta, Amazon and TikTok — will command about 65% of total U.S. ad spend and more than three-quarters of the digital advertising bucket. Their gains are coming not only at the expense of top-of-funnel media but also from smaller players operating in the same mid- and bottom-funnel spaces.”

MoffettNathanson says the traditional marketing funnel is in the process of a collapse — turning into a full-funnel model, with platforms that integrate social, commerce, and entertainment in the best position to capture and retain ad dollars. The firm says it is adding a critical fourth pillar: scale.

The firm says it expects the funnel to continue its collapse toward performance channels, with middle and bottom-funnel (led by the top tech firms) advertising taking increasing share.