March 24, 2026SAN FRANCISCO, CA – March 24, 2026 – A stark divide is cleaving the digital advertising landscape in two. Advertisers are aggressively bidding up the price of reaching high-intent consumers while simultaneously pulling back from traditional web-based awareness campaigns, signaling a profound re-evaluation of where and how to spend their marketing dollars.
A new Q1 2026 report from AI-powered advertising platform AdRoll reveals that the cost for display retargeting ads—those shown to users who have already visited a brand's website—surged 18% in the first two months of the year compared to 2025. In stark contrast, the cost for display prospecting ads, used for broad audience awareness, tumbled 11%, extending a downward trend that began in late 2025. This widening gap points to a structural shift: in an increasingly complex digital world, marketers are prioritizing measurable, bottom-funnel performance over the once-dominant strategy of blanketing the open web with banners.
The Search Engine's Shadow
The diminishing appeal of upper-funnel web display advertising is not happening in a vacuum. It is a direct casualty of the artificial intelligence revolution reshaping the internet itself. The rise of AI-powered answer engines and the proliferation of “zero-click” search results are fundamentally altering user behavior and starving publishers of traffic.
Industry data reveals the dramatic scale of this impact, with some publishers reporting traffic declines ranging from 20% to as much as 90% throughout 2025. With Google’s AI Overviews now reportedly appearing in 60% of U.S. search queries, users are finding answers, product summaries, and information directly on the search results page, negating the need to click through to an external website. This erosion of publisher traffic directly weakens the scale and effectiveness of upper-funnel display strategies that rely on a vast and accessible audience browsing the open web. For advertisers, paying for ads on pages that fewer people are visiting becomes a far less attractive proposition.
From Web Banners to Living Room Screens
While investment in traditional web-based awareness is softening, advertisers are not abandoning the top of the funnel. Instead, they are migrating those budgets to a new generation of connected screens that command greater attention: Connected TV (CTV) and Digital Out-of-Home (DOOH). These channels are rapidly shedding their status as niche, experimental buys and becoming central pillars of modern media strategy.
Fueling this migration is the programmatic evolution of these environments. The same real-time bidding (RTB) mechanisms that power web advertising are now being applied to television and digital billboards, allowing advertisers to purchase inventory with unprecedented flexibility and data-driven precision. This technological leap has opened the floodgates for spending. Market projections show U.S. CTV ad spend on a trajectory to hit $26 billion by 2026, with programmatic DOOH expected to exceed $1.2 billion in the same year. According to the Interactive Advertising Bureau (IAB), CTV is one of the fastest-growing channels, with a projected growth of 13.8% in 2026. This allows brands to place high-impact, big-screen creative while maintaining the targeting and measurement capabilities they’ve come to expect from digital.
The High Price of High Intent
The 18% surge in retargeting CPMs is the other side of the strategic coin. It reflects a market-wide pivot towards accountability and immediate return on investment. In a global economic climate that remains stable but cautious, marketers are under pressure to prove the value of every dollar spent. Retargeting, which focuses on converting users who have already demonstrated interest, offers one of the clearest paths to measurable sales and leads.
This intense focus on performance is creating a premium for high-intent ad inventory, driving up competition and prices. Even major platforms like Meta are seeing their average CPMs climb, with a reported 20% increase in 2026, positioning the platform as a more “premium” channel where advertisers pay more for access to its vast, data-rich ecosystem.
“The widening gap between retargeting and prospecting costs signals a structural shift in how advertisers build demand,” said Vibhor Kapoor, chief executive officer of AdRoll, in the company's report. “Digital advertising is moving beyond the browser and into a multi-screen environment where awareness and performance tactics must work together. As programmatic access expands across connected TV and digital out-of-home channels, marketers have new opportunities to build reach while maintaining the precision and accountability they expect from digital campaigns.”
A Unified Strategy for a Divided World
To navigate this fragmented landscape, the most successful marketers are abandoning siloed channel planning in favor of a coordinated, full-funnel approach. The new playbook often begins with broad-reach awareness campaigns on high-impact channels like CTV or DOOH to build initial interest. This is followed by a sequence of lower-funnel tactics, such as web and social media retargeting, designed to guide engaged consumers toward a final purchase.
This integrated strategy demands a more sophisticated approach to measurement. With the phasing out of third-party cookies and the rise of channels that resist individual-level tracking, advertisers are increasingly turning to aggregate statistical methods like Marketing Mix Modeling (MMM) to understand the holistic impact of their campaigns. The era of relying on a single, simple attribution model is over. Success now depends on how effectively marketers can align their audience targeting, creative execution, and measurement frameworks across a diverse and ever-expanding ecosystem of consumer touchpoints. The challenge for brands is no longer just about being present on digital channels, but about orchestrating a seamless and effective journey across all of them.
