Spending on digital video ads is increasing as AI and retargeting techniques
Digital video is becoming a key area for AI, targeting, and accountability for results, according to the recently released “2026 IAB Digital Video Ad Spend & Strategy Report: Part One.” The report shows a rapidly growing market that is becoming more automated and demanding more precision than ever before.
Digital video ad spending in the US will grow 11% year over year and nearly 20% faster than the total ad market, according to the report. For the first time, digital video will account for more than 60% of total TV and video spending, strengthening its dominance of the structure.
Increased investment naturally leads to improved expectations. Marketers at this scale tend to prioritize automation, collaboration, and consistent impact measurement. The video is less about testing and more about supporting goals for ongoing performance.
CTV’s growth is shifting from access to profit
As CTV scales and attracts a broad mix of advertisers, its value is less about availability and more about its ability to deliver accuracy, efficiency, and measurable results. CTV remains one of the strongest growth engines, expected to increase by 11% by 2026, growth driven by three factors:
- The migration of live content, including big games and marquee events, from linear TV to broadcast outlets.
- In-depth structured access to creativity.
- Developing evidence of business outcomes.
At the same time, broadcasting is no longer just for big advertisers. Small and medium-sized advertisers are entering at significant rates, with adoption jumping from 60% by 2024 to 85% by 2026, driven by self-service platforms and ease of activation.
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Targeting is more important than content quality for consumers
The ability to fine-tune targeting is now more important than content quality when it comes to ad usage.
The importance of targeting increased by 10 points year over year, with small and medium advertisers driving a 23 point increase. These marketers often operate without the benefit of large, proprietary data sets, making reliable targeting in confusing areas extremely important. Strong ownership, better data integration, and AI-supported audience modeling are now as important as traditional accessibility and content considerations.
Agent AI moves from concept to operational layer
Two-thirds of digital video consumers already have, are exploring, or plan to use agent AI by 2026. In addition, most of the remaining buyers are actively evaluating agent solutions.
Agent AI is primarily used in areas that reduce friction before dollars are made. Current and planned AI use cases include:
- Recommendations for planning and buying media.
- Inventory acquisition and testing.
- Creative testing and optimization.
- Pre-planning and brief analysis.
- Performance analysis and results details.
Small marketers are using AI to augment limited internal infrastructure for workflow-related tasks. Major marketers are prioritizing AI in sourcing to manage the divide between PMPs, direct deals, and open auctions. AI uses regression when it comes to making externally-facing and financially responsible decisions, showing that human judgment still underpins ultimate commitments.
Social video leads strengthen the effect of AI
Social video surpassed CTV’s total revenue in 2025 and is expected to increase that lead in 2026. That’s tied to AI-enabled personalization, creative optimization, and measurement capabilities integrated into native platform stacks.
While social video benefits from the ability to evaluate and adjust creative, targeting, and delivery quickly using AI, it is increasingly being paired with CTV and considered a complementary engine rather than a stand-alone video strategy.
Bottom line
The report identifies three key trends in the industry. The first is to align AI investments with workflow needs. Agent AI is already providing value in areas where teams face scale, complexity, or resource limitations. Next, change the video success metrics to put more emphasis on ensuring results. Finally, due to the signaled nature, marketers are prioritizing partners who can provide reliable and transparent targeting.
The full report can be found here.
