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 Q4 Report Highlights
- Display retargeting CPMs surged significantly from September to November, up 11% from last year’s level of the same period.
- Display prospecting CPMs followed the retargeting’s surge in September and October, as brands competed for attention before the peak holiday shopping season; then dipped in November as advertising budget shifted toward retargeting. On average, prospecting CPMs in the past three months were up 2% from last year.
- ABM campaign CPMs also recovered from the August low, narrowing the year over year decline to just 10% in November from 23% in August.
- The strong surge of CPMs in September and October is driven by two factors:
- This year’s holiday shopping season, as predicted, started early, almost two months earlier than usual amid economic concerns. Businesses, on one hand, started holiday promotion early to mitigate the economic uncertainty, while consumers tried to take advantage of deals before inflation worsens.
- There is currently a “K-shaped” economy in the U.S. Consumer spending is mainly driven by a small group of higher income households while lower income households pull back, which increases competition among advertisers and pushes CPMs higher.
- Looking toward 2026, here are the top predictions for the year ahead:
- Economic uncertainty is here to stay.
- AI agents will get in between you and your customers.
- Marketing success takes a village.
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, as indicated by the average CPM, experienced a sharp turnaround in early Q4. After narrowing the year-over-year gap through the summer, CPMs surged significantly from September to November, surpassing last year’s level by an average 11%. This aggressive upward trend in the past three months confirms intense demand for retargeting inventory, driven by the early and highly competitive start to the holiday spending season.
Display Prospecting CPM Trend
Display prospecting followed suit. After months of narrowing the year-over-year gap, prospecting CPMs surged in September and October, surpassing last year's level by 6%. This marks a strong recovery and signals that advertisers are aggressively building top-of-funnel audiences early, driving up acquisition costs as they vie for consumer attention. Then, as brands allocated budgets toward retargeting in November, prospecting CPMs dropped. On average, prospecting CPMs in the past three months were up 2% from last year.
Account Based Marketing CPM Trend
Account-based marketing, also known as ABM, is a business-to-business (B2B) marketing strategy that targets a specific group of high-value accounts through personalized advertising and sales outreach.
ABM advertising CPMs also saw a strong recovery, narrowing the year-over-year decline to just 10% in November from 23% in August. This rebound suggests that B2B marketers, after a typical summer slowdown, are investing again to fill pipelines and capture year-end budget cycles.
The Economic Outlook – Likely Getting Worse Before Getting Better
Inflation Rate
The U.S. inflation rate rose to 3% in September, reaching the highest level of 2025.
Consumer Sentiment
As seen in previous quarters, consumer sentiment continued to decline as the outlook of the economy worsened, especially amid prolonged Federal government shutdown. In November, the U.S. consumer sentiment index dropped to its lowest level in more than three years and is only slightly above its worst level on record.
Consumer Spending
On the flip side, U.S. consumer spending showed strong year-over-year growth since July, according to the Bank of America Consumer Checkpoint report. The growth trend is likely to continue into November and December, as early holiday spending data from Adobe and Salesforce show.
* The extra day in February 2024, a leap year, was the reason behind February's unusual fluctuation.
The Drivers Behind the CPM Surge
The aggressive surge in CPMs across Display Retargeting and Prospecting channels in September and October was not random; it was driven by a fundamental shift in market behavior and underlying economic realities.
The Early Start to the Holiday Shopping Season
As predicted by BazaarVoice, this year’s holiday shopping season started early — almost two months earlier than usual — amid ongoing economic concerns. This early start was fueled by a dual push from both businesses and consumers:
- Business Mitigation: Businesses accelerated holiday promotions in effort to capture consumer spending before potential downturns or budgeting freezes.
- Consumer Action: Consumers also began shopping earlier to take advantage of deals and spread out their spending to offset anticipated price hikes caused by worsening inflation. This condensed and accelerated spending cycle intensified competition in September and October, driving CPMs above last year's levels.
Increased Competition in a K-shaped Economy
The K-shaped economy in the U.S., where consumer spending is primarily driven by higher-income households while lower-income households pull back, has increased competition among advertisers.
- Targeting Affluence: Businesses are increasingly targeting a smaller, more affluent group of high earners who have more disposable income to spend.
- Inventory Scarcity: This focus on a premium, highly desirable demographic increases competition due to limited advertising inventory, which pushes CPMs higher.
We examined our CPM data across verticals and noticed diverse trends in certain verticals. For example, verticals that are geared toward higher income households and are less sensitive to economic outlook, such as Pets Services, saw a strong increase in average CPM in September and October. On the other hand, verticals with a wider customer base that are more sensitive to economic downturns, such as Hobbies & Interests, saw their average CPM stagnant or in decline.
Looking Ahead to 2026 - The New Marketing Landscape
Amid the economic challenges and shifting consumer behavior, marketers must evolve their approach across technology, strategy, and organizational structure to succeed.
“Marketers are heading into one of the trickiest holiday seasons we've seen in a while. With economic uncertainty making people shop earlier and AI changing how they find products, brands can't just throw money at the problem last minute or stick to one channel. To actually win this season, marketers need to see what's working throughout the entire funnel, be willing to test new things, and make sure every team that interacts with customers is working together.”
Vibhor Kapoor Chief Business Officer
Economic Uncertainty is Here to Stay
The economic volatility seen in 2025 driven by trade policy uncertainty, inflation fears and job growth worries, suggests that cost conscious consumer behaviors will persist. Successful marketers need to be agile, focused on campaign efficiency, and ready to pivot strategies faster than ever to manage fluid consumer confidence and economic forecasts.
AI Agents Will Get in Between You and Your Customers
The adoption of generative AI continues to grow, and in 2026, AI agents, not search engines or social feeds, will increasingly handle product discovery, comparison, and recommendations for consumers and business buyers. This inserts a new layer between brands and their customers, obscuring traditional conversion paths. Marketing success will require:
- Full-Funnel Awareness: Invest in brand awareness channels (like CTV, podcasts, and premium display ads) to ensure brand awareness and affinity among target customers. Particularly for B2B marketers, full-funnel ABM means going beyond acquisition to cover retention and upsell strategies.
- AI Optimization (AEO/GEO): Monitor how various AI platforms interpret brand information and how often they recommend it. Adapting content and product data to be easily digested, indexed, and cited by generative AI models.
Marketing Success Takes a Village
In a complex, multi-channel world defined by AI and changing consumer behavior, siloed teams are destined to fail. Marketing success takes a village. Achieving optimal ROAS and ROI will require deep coordination across all channels (web, mobile, social, CTV) and teams (marketing, sales, product). Marketers must break down organizational silos to ensure:
- Coordinated Targeting: A unified view of the customer across all platforms.
- Budget Synchronization: Bidding and budget allocation optimized dynamically across the organization's entire media portfolio.
- Sales Alignment: ABM campaigns must be perfectly synchronized with B2B sales outreach to deliver a consistent narrative to target audiences.
To learn more about how the changing marketing landscape may affect you in the coming year, download our 2026 Marketing and Advertising Trends guide.
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 Retargeting
- Display Prospecting
- Account Based Marketing
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.
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