What’s really driving Europe’s €131 billion ad boom

Digital now soaks up around 70% of that spend, and while Europe’s market is still barely half the size of the U.S. in absolute terms, it’s growing faster.

The driver isn’t exactly new. Video, in all its forms, from CTV to social video, is hoovering up ad dollars for media owners, now accounting for more than half of all display investment in Europe. Social video, in particular, did the heavy lifting, up 25% last year, which helped push social advertising overall to €35.5 billion, a 19.2% climb.

Smaller advertisers have been pivotal to this. Despite the platforms themselves being anything but new — Meta, TikTok and Snap are all comfortably mature businesses at this point — Knapp pointed to self-serve tools as a key growth engine, with SMB advertising doing a disproportionate share of the lifting. It’s a reminder that social’s growth ceiling keeps moving not because the walled gardens are winning new giant accounts, but because the on-ramp for a small business to start spending has gotten so frictionless that volume keeps arriving from the long tail. 

“A lot of players in our space have advertised themselves as, in a sense, captains of managing complexity,” said Knapp during a panel discussion of the report yesterday (July 7). “I think that narrative is where it has really ended. It’s for many about simplification. Those who can facilitate that are going to win in that SME space.”

The more this has happened, the more display — stripped of video and social — has contracted. Standard display units, the banners, native newsletters and affiliate placements that used to define the category, actually shrank in 2025, down around 0.8% year over year, per the report. 

Retail media, meanwhile, keeps muscling its way further onto media plans, growing 16.7% to €13.3 billion, per the report. Crucially, most of that money isn’t new, it’s old trade and shopper marketing budgets getting mediafied, not fresh ad dollars entering the system. That’s starting to shift, though, as the category matures.

“We see lots of money still locked in trade relationships, so it’s money that hasn’t been mediafied yet, but that is done as part of supplier discounts and vendor agreements between a retailer and a manufacturer,” said Knapp. 

Bigger picture 

These are just the latest chapters in a story that’s been unfolding since the coronavirus first hit in 2020. It fast-forwarded the future at breakneck speed: more people streaming, shopping and living online, and advertisers following the attention there, with the added advantage that spend in those channels could be dialed up or down at will, making it far easier to scale investment as the market lurched. The wars, economic turbulence and geopolitical instability since have only added momentum to the shift.

Look at some of the forecasts already published this year. Social video ad spending is set to outpace CTV in growth rate this year. AI search ads are on track to become advertising’s fastest-growing channel before the decade is out. And by 2027, spending on paid amplification and creator production fees will be running neck and neck. 

Add it all up and it’s clear that the money isn’t just moving faster than the economy, it’s moving toward whatever channel promises the most attention for the least commitment. 

Programmatic is arguably the progenitor of all this. It was built to chase efficiencies at scale above everything else, and the IAB Europe numbers show that instinct hasn’t gone anywhere. The programmatic market hit €15.7 billion in 2025, growing at nearly twice the rate of overall display. And the same video land-grab playing out across the rest of the report shows up here too: video is now the bigger, faster-growing half of programmatic spend, outpacing static display. The only snag is that video inventory is supply-constrained in a way display never was, which raises the obvious question of how long this growth can keep compounding before buyers run out of premium video to bid on — and whether categories like retail media start opening up to more widely to programmatic buying to relieve the pressure.

Bottom line: European ad spend keeps compounding at rates well above GDP growth, but the composition is shifting hard. 

“We’re seeing increasing financialization within the advertising community, where quick, rapid metrics that demonstrate whether advertising is affecting top- and bottom-line growth are becoming pivotal,” said Knapp.