State of Digital Advertising Report
Advertising and marketing insights for digital marketers.
We analyzed data from tens of thousands of online businesses to help marketers understand overall digital advertising trends and recommend strategies to further improve marketing ROAS and ROI.
Table of Contents
2025 Q2 Report Highlights
- Display prospecting CPMs fell 27% year-over-year in Q1, while retargeting CPMs declined just 8%. This suggests upper-funnel campaigns are more sensitive to economic uncertainty than lower-funnel efforts, such as retargeting.
- TikTok CPMs began to rebound in March and reached their 2025 high in April, just 6% below 2024 levels. However, its future in the U.S. remains uncertain due to the ongoing U.S.-China trade tensions.
- How to prepare for Q3 2025:
- Marketers should focus on optimizing campaign ROI across both lower and upper funnel goals, as U.S. consumer sentiment recently hit its lowest point in almost 3 years.
- Google’s decision to pause the phase-out of third-party cookies eases short-term ROI concerns. However, with growing consumer privacy expectations and cookie restrictions already in place on other browsers, marketers who adopt a mix of cookie-based and privacy-forward solutions will be better positioned for long-term success.
- The rollout of Google Search’s AI Mode in the U.S. and ads in AI Overviews and AI Mode underscores the need for integrated strategies that span both paid and organic channels to effectively reach target audiences.
Advertising CPM (Cost-per-Mille) Trends
What does the CPM trend reveal?
CPM, or cost per mille, is an advertising metric that measures the average cost of showing an ad one thousand times. CPM, similar to the cost of goods, is determined by supply and demand. In the digital advertising world, publishers serve as the suppliers; the websites or mobile apps that host and deliver ads to advertisers’ target audiences.
The selling and buying of digital ads on the web is typically conducted in an auction format that can be handled programmatically by two types of platforms: the supply-side platform (SSP), representing the publishers, and the demand-side platform (DSP), representing the advertisers. Since the amount of advertising space offered by the publishers doesn't typically fluctuate, changes in CPM are mostly driven by advertisers’ demand for ads.
Note: CPM varies by industries, geographies, and channels. CPM of specific campaigns may experience different patterns.
Display Retargeting CPM Trend
Display retargeting costs decreased 8% year-over-year in Q1, as indicated by the average CPM. While the average CPM is lower this year, the trend in the first four months of 2025 has mirrored that of the previous year.
Display Prospecting CPM Trend
Display prospecting costs decreased by 27% year-over-year in Q1, as indicated by the average CPM. The average CPM in 2025 hasn’t experienced the same uptick in March and April as was seen the previous year. Since prospecting campaigns are designed to build brand awareness by targeting upper-funnel audiences, they typically have a longer return period. When companies anticipate business uncertainty, these campaigns are often the first to face budget cuts.
Social Advertising CPM Trend
TikTok's average CPM began to recover in March after a decline at the end of 2024. This rebound coincided with the extension of the U.S. ban deadline to June 19, which is likely to be extended again. However, TikTok's future in the U.S. remains uncertain pending an agreement between the U.S. and China.
Since social media advertising primarily targets upper-funnel audiences, it tends to be more vulnerable to economic downturns. eMarketer projects that tariff-related economic slowdowns could reduce social media ad spending by up to $10 billion this year.
The Economic Outlook – Risk Heightened
Driven by uncertainty of the administration’s tariff and trade policies, the U.S. consumer sentiment index lost more than 20 points in the first five months of 2025, reaching the lowest point on record in nearly 3 years. The 12-month inflation expectation also increased, hitting an all-time high of 6.6%.
US Consumer Sentiment Index
On the flip side, the U.S. inflation rate eased to 2.3% in April, reaching the lowest level in more than four years. However, some economists worry that low inflation may stem from reduced consumer demand rather than increased supply.
US Inflation Rate
How Marketers Can Prepare for Q3 2025
Optimize Campaign ROI for both Lower and Upper Funnel Goals
Given the uncertain economic outlook for the second half of 2025, marketers should focus on maximizing campaign ROI by optimizing lower-funnel conversions and using lower CPMs to drive brand awareness among upper-funnel audiences.
Lower-funnel campaigns, especially when paired with conversion rate optimization (CRO) strategies, are effective at converting high-intent visitors into customers. Retargeting ads, which target users who have already shown interest by visiting your website, typically deliver higher ROI and a shorter return cycle. These campaigns can help offset the impact of economic headwinds and reduced consumer spending.
Upper funnel campaigns, by contrast, have a longer return timeline. While it’s important to think about short-term results during uncertain times, continued investment in upper funnel activities is equally essential. Prospecting ads on web and social media platforms often experience CPM fluctuations based on consumer sentiment. Marketers should capitalize on lower CPMs to maintain brand awareness among target customers. Connected TV (CTV), in particular, has proven to be a valuable full-funnel marketing channel, with research indicating that integrating CTV with other tactics can increase purchase intent by 11%.
“While lower-funnel campaigns like retargeting can offer immediate ROI and quick wins, it's crucial not to overlook upper-funnel brand-building efforts. In times of economic uncertainty, maintaining and investing in brand awareness ensures that when consumers are ready to make purchasing decisions, your brand is top of mind.”
Courtney Herb Sr. Director, Brand Marketing and Public Relations
Third-Party Cookie Phase-out No More
In April, Google announced it will no longer roll out the standalone third-party cookie opt-out prompt for Chrome users and will continue supporting third-party cookies on the browser.
This decision is a short-term win for advertisers who rely on third-party cookies for audience targeting and retargeting, easing concerns about immediate ROI disruptions. However, marketers should remain cautious about overreliance on third-party cookies, as consumer demand for privacy continues and other browsers, such as Safari and Firefox, have already moved to restrict them.
With third-party cookies sticking around longer than expected, privacy-friendly advertising technologies will continue to evolve. At AdRoll, we believe the future of digital advertising lies in a mix of strategies, including zero- and first-party data, contextual targeting, and emerging universal ID solutions.
Marketing leaders who embrace both cookie-based and privacy-forward technologies will be best positioned for long-term success.
Search Will No Longer Be The Same
In May, Google began rolling out AI Mode, a new search experience that allows users to interact with search results in a conversational, chatbot-like manner, to all users in the U.S. Described as “going beyond information to intelligence,” AI Mode builds on the foundation from AI Overviews, which uses generative AI to summarize search results using content from multiple sources.
According to the SEO toolset provider, Ahrefs, AI Overviews already reduce average click-through rates (CTR) on search engine result pages by 34.5%. AI Mode is likely to push CTRs even lower. For brands that rely heavily on organic search for acquisition, adapting strategies to align with these evolving AI-driven experiences is critical.
With the addition of ads to AI Overviews and AI Mode, marketers should explore emerging ad formats to offset potential drops in organic traffic. It is also wise to diversify media mix beyond walled gardens like Google. Leveraging a cross-channel programmatic platform to reach audiences across the open web, mobile, and Connected TV (CTV) can help sustain performance.
To stay competitive, marketing leaders must break down channel silos and build integrated strategies that ensure consistent reach and engagement across the entire customer journey.
FAQ
What is the AdRoll State of Digital Advertising Report?
The AdRoll State of Digital Advertising Report offers marketers insights into business and advertising trends. The report is based on AdRoll’s performance statistics of more than 20,000 online businesses across finance, beauty and fashion, fitness, technology, travel, and other industries.
What are the key performance indicators (KPI) reported in the AdRoll State of Digital Advertising Report?
The AdRoll State of Digital Advertising Report provides the average CPM (cost-per-mille) trend on the following advertising media:
- Display Ads
- Meta Ads
- TikTok Ads
- Pinterest Ads
How often will the information in the AdRoll State of Digital Advertising Report be updated?
The information in the AdRoll State of Digital Advertising Report will be updated on a quarterly basis.