Pharma’s Digital Video Ad Spend Is Surging, Driven by Audience Targeting, Reach: IAB Report

A new report from the Interactive Advertising Bureau found that digital video ad spend is on the rise across industries, and that even more important than business outcomes in choosing where to spend those dollars are factors like audience targeting and delivery.

According to the report, total ad spending on digital video—comprising connected TV, social video and online video—is expected to reach nearly $82 billion this year, more than double where it was just five years ago.

The category is growing particularly aggressively in the U.S. pharma industry, with an estimated 2026 total of $7.4 billion, placing it behind only consumer packaged goods, retail and tech in the IAB’s analysis of 12 U.S. industries. That would represent year-over-year growth of 16%, the second-highest rate on the list, following the 24% growth forecasted in the wellness industry.

Amid the uptick in digital video ad spend, the criteria guiding that investment are shifting. When media buyers are assessing potential partners, factors like overall reach, guaranteed business outcomes and price efficiency are now far outweighed by a seller’s target capabilities and content quality, according to the IAB’s survey of 360 marketing leaders.

In that vein, when asked about their top reasons for reducing or completely cutting spending with a specific CTV partner, the marketers’ most common answers were audience delivery, cost and targeting capabilities, each of which increased by at least a few percentage points year over year.

Elsewhere in the report, the survey showed that artificial intelligence is playing a growing role in the digital video ad space. More than 60% of the marketers, for example, said they use generative AI to build and enhance ads, with around a third of their digital video ads this year using GenAI. That’s up from the 51% of marketers that were using GenAI for digital video creative last year, when less than a quarter of their combined ad assets leveraged the technology.

And the marketers were nearly unanimous in their agreement that there is a role for agentic AI to play in real-time bidding and programmatic buying—though there was significantly less agreement on what, exactly, that role is. Popular ideas include using it as an optimization layer to improve bidding, as a way to cut intermediaries and simplify the supply chain or even as an entirely new replacement for the current auction-based model.

Finding agentic AI’s ideal role in programmatic will require greater trust in the technology, according to the report, which suggested that media buyers will need to be able to monitor agents’ real-time actions, keep humans in the approval loop and see measurable proof of the technology’s value, among other crucial pieces of the trust puzzle.

solli’s Final Thoughts

The takeaway for pharma media is that digital video is no longer an experimental add-on. It’s now a core channel, and one where brands are expected to prove both reach and precision.

As more pharma dollars move into digital video, media buyers are increasingly looking for partners that can offer high-quality audience data, delivery verification and transparency around where ads actually run.

With that in mind, agencies, publishers and adtech partners may look to build more pharma-specific capabilities around compliant targeting, clean measurement and explainable optimization. AI will undoubtedly be a key piece of these offerings, but strict governance will be a must to ensure that automation is improving outcomes without compromising brand safety or compliance.