Display advertising remains big business in the U.S. and its growth shows no signs of stopping. In 2024, digital display ad spending in the U.S. totaled $74.3 billion, up 12% from $66.1 billion the year prior, according to Statista.

Similarly, Digiday’s first-quarter 2025 survey of marketing professionals found that a larger percentage of respondents (79%) said that they currently use display ads compared with those who said they used display ads at the same time last year (75% of respondents) — an increase of 4 percentage points. Overall, display ads were marketers’ second-most used marketing channel as of Q1 2025, with social media taking first place.

“We had this kind of hypothesis,” said Luke Kim, founder and CEO of Liner, a South Korean AI search engine that has been testing ads in the U.S. “In digital ads, there are search ads and display ads. Search ads are a good business because the conversion rate is high. Display ads are a good business because it has a lot of impressions and a lot of views because you can put banners anywhere.”

But, despite its consistency as an ad channel, change is afoot in the display ad space. This year, for the first time, marketers are using email display ads and sponsorships more than they are using programmatic site display ads — making email ads marketers’ top choice among display ad options. In fact, the percentage of marketers who said they use email display ads and sponsorships has increased each of the past two years, according to Digiday’s surveys.

Just shy of two-thirds of marketers (64%) said that they were using email newsletter sponsorships or ads as of first-quarter 2025, an increase of 13 percentage points from the 51% of marketers who said the same in Q1 2024. In Q1 2023, 50% of marketers said they used email ads, which put the ad channel squarely in third place for marketer usage only two years ago. 

In Digiday’s survey analysis, email newsletter sponsorships refer to marketers buying display ad placements in existing content-based email newsletters sent out by publishers and other parties. In these cases, a publisher is generally responsible for providing an email’s subject matter, but the email is structured so that an advertiser can complement it with their own content.

In interviews with marketing executives conducted for this report, many brought up their own email programs and campaigns, so we’ve included their comments for context about the importance of email data reserves and email’s ability to connect directly with a consumer.

“It is alive and well, and we see high engagement in our email,” said Kelly Mahoney, CMO at Ulta Beauty. “That is partly because we’re very targeted and highly personalized that we see strong metrics around engagement with email, and it continues to grow.” 

Rather than advertising on popular sites with the hope of landing in front of the right audiences or relying on third-party data to serve their ads to the right audiences, marketers can tap into existing email lists to reach consumers who have already shown interest in a brand and have voluntarily subscribed to receive content from them. 

“Email and CRM continue to be one of our most powerful channels, because it enables us to tell a very personalized story in a long-form format, which is important in various stages of the journey,” said Allison Stransky, CMO at Samsung Electronics America.

Generative AI can further help marketers analyze large email datasets and identify consumer preferences and patterns for ad targeting. News UK, The New York Times and The Wall Street Journal all debuted proprietary AI-based advertising tools in 2024 that aim to more effectively deliver advertisers’ campaigns to the publishers’ audiences, such as by having the AI tools determine which inventory is brand-safe or which audience segments are best suited to a campaign.

“We’re leaning in even more in the email space because the tools powered by AI are advancing to the point where we can achieve this next vision of hyper-personalization,” Stransky added. “We’re seeing this opportunity to have more segments with more custom creative so that we can have more personal conversations. … So, yes, email is going to continue to be a great channel for us to invest in now and, I hope, for very many years.”

Laura Knebusch, svp of CPG marketing and consumer experience at Georgia-Pacific, said that email ads have a unique role to play in the marketing mix compared to programmatic and direct-sold display ads, but she doesn’t expect email to ever become the company’s dominant display ad choice. 

“Our email program and first-party database is a foundational element for our marketing plan, but it’s still one element of our total investment,” Knebusch said. “It by no means is going to overtake display or some of the other areas we’re investing in, but we believe it’s important to have that one-on-one engagement opportunity and to be able to deepen our relationship and our knowledge. Then also build that database so we can use that first-party data to help us make smarter choices for our programmatic or other digital buying.”

After email newsletter sponsorships or ads, programmatic display ads were marketers’ second-most used type of display ads this year, followed by direct-sold display ads in third place. Sixty-two percent of marketers said that they were using programmatic display ads as of Q1 2025, down 15 percentage points from the 77% of marketers who said the same in Q1 2024. Marketers’ use of direct-sold display ads dropped by only 1 percentage point in Q1 2025 versus Q1 2024, with 45% of marketers saying they use direct-sold display ads this year compared with 46% of marketers last year. 

While email display ads or sponsorships is the display ad format marketers told Digiday they use the most, when we asked agencies how much of their clients’ display ad budgets go to the various ad formats, email ads came in second place after programmatic ads. Programmatic display ads had a weighted average score of 2.2 for clients’ display ad budget allocation, while email ads or sponsorships had a weighted average of 1.7.

Across all display ad formats, the indexed average of clients’ ad budgets allocated to each format went down year over year. Furthermore, exactly one-third of agencies (33%) said that clients did not increase their overall display ad budgets in 2025 compared to last year. This may signal that marketers are looking to disperse their ad budgets across other marketing channels, including social media, retail media and ad-supported streaming, according to Digiday’s analysis.

Looking more closely at clients’ budget shifts across the three types of display ads considered for this report, nearly one-third of agencies (32%) said that clients increased their programmatic ad spending as of Q1 2025 versus last year. Thirty percent said that clients increased their email ad budgets this year. 

“Pretty much everything we do is programmatic because we have an in-house team,” Georgia-Pacific’s Knebusch said. “We’ve got great resources. We build out our strategies and we’ve got the data and flexibility to optimize and make changes on a more frequent basis. So, we have seen great benefit, not just to effectiveness, but also to efficiencies.”

When Digiday asked marketers about the biggest challenge they face with display ads, their most common response was cost of media. The largest group of respondents (34%) said cost of media is the biggest challenge for direct-sold advertising. Twenty-seven percent of marketers selected cost as the largest challenge they face with programmatic ads — the largest group of respondents for this category, as well. Sixteen percent of marketers selected cost of media as their biggest challenge within email ads or sponsorships, after their top pick for email ads — lack of scale.

In what may be good news for advertisers but bad news for publishers, the cost of buying programmatic ads has been coming down this year. That’s according to several publishing executives who spoke to Digiday on the condition of anonymity. 

“There’s still quite a lot of softness in money coming from the open auction,” said the revenue lead of a publisher in North America. “We’re talking double-digit CPM decreases across the board so far this year.” 

A second executive told Digiday that CPMs for online display ads bought through those auctions during fall 2024 were down as much as 30% compared to the previous year’s fourth quarter. And they hadn’t seen anything to suggest the first quarter of 2025 would be any better. If anything, the past few months have reinforced their view that the open market is, at least for now, in a rut.

“Q1 thus far has been an extension of what we saw in November and December — a soft open web market, particularly with video,” the executive continued.

For their part, marketers are wary of current economic conditions, and, in some cases, are even canceling project work, delaying major campaigns and redirecting media spend toward performance channels, according to European media agency executives Digiday spoke with in March.

“The market has again become quite nervous,” said Erwin Bossers, vp of creative and media at Dept, an agency network that is headquartered in the Netherlands.

Global research firm WARC and the Advertising Association on April 30 cut their U.K. ad spend forecast in the face of stagnant economic growth and President Donald Trump’s tariff policies. Ad spend in the U.K. is expected to rise by 6.3% in 2025 to reach £45.2 billion ($60 billion), 0.6% less than January predictions had suggested.

WARC’s latest figures show reduced spending on search and online display ads. Year on year, projected investment in search and digital display slowed from previous double-digit rates to 8.2% and 9.1% growth, respectively. 

According to James McDonald, director of data, intelligence and forecasting at WARC, that’s likely a sign of early marketing budget cuts showing up in channels that can be turned on and off faster. “Money tends to move into performance media during times of economic uncertainty,” McDonald said.

Dude Wipes CMO Ryan Meegan said the disposable wipes manufacturer tests various ad channels by making smaller buys initially, a conservative approach he expects the company will continue throughout 2025. 

“These days, there are so many options, it’s just trying to home in on where you can effectively get in front of a demographic that makes sense and learning how all these new toys work,” Meegan said. “It’s not getting lost in opportunity and getting too crazy … not throwing major budgets at it, but dipping a toe in the water, seeing how things work. Then, if you see good results, keep upping those budgets.” 

While cost of media was marketers’ top challenge across programmatic and direct-sold display ads, lack of scale was their largest concern for email display ads or sponsorships. Slightly more than one-fifth (21%) of survey respondents selected lack of scale as their top concern in email, followed by 16% who selected cost of media. 

Samsung’s Stransky said another obstacle to advertising with email ads or sponsorships is timing and whether a consumer is receptive to an email when the email is sent. “We are exploring various tools to help us stand out in that environment, such as tools to help us with send-time optimization, so that we can reach you when you are most interested,” Stransky said. “It’s a constant test and learn. For every single email that goes out, we are learning to optimize, and what it comes down to is we need to find what is most relevant for each individual.” 

Another common concern regarding display ads that came up during Digiday’s interviews with marketing executives is the lack of lasting impact the ads can have on audiences. Due to the static environments in which display ads are placed, viewers often scroll past or ignore display ads. This can result in “banner blindness” from viewers who have become accustomed to seeing online ad campaigns as they casually scroll through sites or crowded email inboxes.

“Most of those challenges are that display ads are easy to ignore,” said Kelly Mahoney, CMO at Ulta Beauty. “You’re bombarded with a lot of display ads when you’re searching, and some of the creative isn’t as eye-catching. Because we understand who and where we want to place those ads, we’re able to overcome some of the traditional challenges in display ads. We have a thriving business around display ads.”

When Digiday asked marketers how they evaluate display ads’ performance, marketers’ main success metrics were the same for both programmatic and direct-sold display ads. The top two success metrics they selected for both ad formats were click-through rates and commerce or sales. 

Almost one-third of marketers (31%) said click-through rates is their top success metric for programmatic ads, while 30% said the same of direct-sold display ads. Exactly one-quarter of marketers (25%) said commerce or sales is their main performance measurement for programmatic ads, and slightly more than a quarter (27%) said commerce or sales is their top success metric for direct-sold display ads.

When it comes to email ads or sponsorships, conversions tied with commerce or sales as marketers’ No. 1 success metric for the ad format. Twenty-seven percent of advertisers selected both conversions and commerce or sales as their top metric for email ads Click-through rates is marketers’ third-most important success metric for email ads, with nearly one-quarter of marketers (24%) selecting this metric. 

Michael Peroutka, head of ads and partnerships at Gopuff, said the consumer goods and grocery delivery company’s main goal when it comes to display ads is to engage consumers throughout the marketing funnel, regardless of where the ads appear. “Brands are still trying to get stronger media mix modeling and understanding frequency across all these various ad buys that they’re doing,” Peroutka said. “Nobody’s there yet, but what we do know is that these moments of inspiration — it might take you [the consumer] two video ads, two display ads and a social ad to get you to convert. … When you do have that person, we want to make sure that we can capitalize and make a sale and move the product.” 

To ensure Gopuff maximizes its sales through display ads, the company, in September 2024, launched a new display ad format in partnership with mobile ad platform AdAdapted. The customizable pages, called Brand Shops, within Gopuff’s app allow customers to add products to their Gopuff cart when shopping anywhere online, without having to leave the site they’re on. 

According to Peroutka, the Brand Shops can be built and launched in less than 72 hours and increase a brand’s average order value by 20%. Peroutka added that the main reason Gopuff built Brand Shops was to reduce the number of clicks it takes a consumer to make a purchase.

“That moment of inspiration to convert a consumer could strike at any time, but the more clicks you put in front of them to get that product in the cart, the more drop-off you’re going to see,” Peroutka said. “So, why not enable them from the very first click to add to their cart? We’ve seen from testing with a couple of our initial partners these campaigns are performing much better from a sales attribution perspective than the standard display [ad] that’s driving people in the first click into the Gopuff experience.”