Outlook: U.S. Ad Spending To Rise 7.6% As Streaming Ads Surge.

The U.S. advertising market is finishing 2025 in a stronger position than it began the year, driven largely by better-than-expected digital spending and continued gains by the largest technology platforms, according to a new report from MoffettNathanson.

The firm raised its U.S. ad growth forecast to 7.6% for 2025, up from a revised 5.8% in March and above the 6.9% estimate issued at the start of the year. Analysts said the improvement stems from outsized performance at Meta, Alphabet, Microsoft and Amazon — and increasingly Walmart — as advanced AI tools enhance ad targeting, creative production and measurement.

“At first glance, the U.S. advertising industry appears healthy and strong,” the report said, projecting ad spending to reach 1.43% of GDP by 2027, the highest level since 2000. But the authors warned that “a look under the hood paints a far less uniform picture especially for anyone not named Meta, Alphabet, Microsoft and Amazon.”

Digital now accounts for more than 80% of U.S. advertising, up from roughly 30% in 2015. But the report shows most of that growth is consolidating around the four largest platforms. Those companies represented about 20% of U.S. ad spending in 2015; today they control about 68%, a share MoffettNathanson expects will climb to nearly 75% of the entire market by 2027.

The analysts singled out the Open Internet — which includes CTV, digital audio, display, mobile and web video outside search, social and retail media — as the clearest area of weakening.

“Open Internet growth over the past decade has been entirely a CTV and digital audio story,” the report found. When CTV and audio are excluded, the “Open Web” (display, mobile and web video) has declined an average of 1% per year over the past decade. The firm sees the erosion speeding up to about 3% annually as AI-driven changes at Google Search and platforms such as ChatGPT reduce referral traffic.

Digital audio, while still growing, “continues to underwhelm,” the analysts said, calling the pace of expansion modest for a category once viewed as a breakout segment.

The divide between digital and traditional media is widening. MoffettNathanson estimates linear TV and other traditional channels will lose $10 billion in ad revenue this year, offset by a projected $37 billion gain in online and retail media and a $2 billion increase in ad-supported video on demand.

In the third quarter, total U.S. advertising grew 10%, entirely due to digital gains. Traditional media fell 16%, with linear TV down 23% excluding AVOD. National and local broadcast each tumbled nearly 30%, and national cable fell 15%, pressured by declining ratings and tough comparisons with last year’s political and Olympic advertising.

AVOD grew 8% during the quarter — or 17% excluding roughly $300 million in Olympics-related ads at Peacock a year earlier. Netflix doubled its quarterly ad revenue to an estimated $520 million, while Disney+ increased its ad take nearly 40%. FAST services Tubi and The Roku Channel posted gains of 27% and 25%, respectively.

The firm now expects AVOD to grow 16% in 2025 after a 30% surge in 2024, driven by Amazon Prime, Netflix and Disney+ expanding their ad tiers.

Overall, the report forecasts an 8% compound annual growth rate for the U.S. ad market through 2027, supported by a 12% CAGR in online advertising and 16% growth in retail media.