European digital advertising expenditure reached €131.1 billion in 2025, marking a 10.5 percent increase over the previous year, according to the latest IAB Europe AdEx Benchmark report. The headline figure, however, tells only part of the story. Within the broader market, retail media emerged as a standout performer, surging 16.7 percent to €13.3 billion and, for the first time, capturing more than 10 percent of all digital ad spending across the continent. The milestone underscores a structural shift in how brands allocate budgets, with the walled gardens of online retailers and shopping platforms increasingly competing for dollars that once flowed overwhelmingly to social media and search.
The IAB Europe report, which covers 30 national markets, found that every single one of those markets recorded growth in 2025. That uniform expansion, even as the overall growth rate moderated, signals a maturing but resilient digital advertising ecosystem. The 10.5 percent increase is notably lower than the 16 percent growth recorded between 2023 and 2024 and far below the pandemic-era peak of 30.5 percent in 2021. The market appears to be settling into a rhythm that is slightly below its pre-pandemic long-run average, yet the composition of spending is changing in ways that carry significant implications for publishers, platforms, and advertisers alike.
Retail Media Crosses the 10 Percent Threshold for the First Time
Retail media, defined as advertising placed on the websites of online stores, shopping apps, and ecommerce platforms, grew to €13.3 billion in 2025. The 16.7 percent year-over-year increase outpaced the overall market by a wide margin, and the segment now accounts for just over 10 percent of total European digital ad expenditure. This is the first time the category has crossed that symbolic barrier.
The growth reflects a fundamental reorientation of digital advertising strategy. Retail media networks—operated by companies ranging from Amazon to regional grocery chains—offer brands the ability to reach consumers at the moment of purchase intent. Unlike social media or general display advertising, retail media ties ad spend directly to product availability and transaction data, making it easier for advertisers to measure return on investment. As measurement standards have improved and more retailers have launched their own media networks, the channel has attracted budgets that previously would have been allocated to search or affiliate marketing.
What is particularly striking is that retail media is not merely growing in absolute terms; it is gaining share in a market that itself is expanding. The fact that it now exceeds 10 percent of total spend suggests that the category has moved beyond an experimental line item and become a core component of the digital media mix for many advertisers.
Video and Social Media Continue to Drive Display Growth
Video advertising remains one of the most dynamic segments in European digital media. Total video ad spend increased 19.6 percent year over year, reaching €34 billion. For the first time, video accounts for more than half of all display advertising investment in Europe. The shift reflects both consumer behavior—audiences increasingly consume video content across platforms—and the continued expansion of inventory from connected television, streaming services, and social media feeds.
Social advertising, meanwhile, grew 19.2 percent to €35.5 billion. Within that category, social video was the fastest-growing format, rising 25.7 percent. The convergence of social and video is reshaping the competitive dynamics of the market. Platforms that can offer short-form, engaging video content alongside sophisticated targeting capabilities are capturing an outsized share of incremental spend. The numbers suggest that advertisers are prioritizing formats that combine high engagement with measurable outcomes, and video—particularly in social environments—delivers on both fronts.
Together, video and social media now represent a substantial majority of display investment, and their growth rates indicate that the shift is still accelerating. Retail media, while smaller in absolute terms, is growing at a comparable pace and occupies a distinct position in the advertising ecosystem because of its direct connection to commerce.
What Is Driving the Normalization of Growth Rates?
The 10.5 percent overall growth rate in 2025 represents a return toward historical norms after several years of exceptional volatility. The pandemic drove an extraordinary surge in digital ad spend as businesses rushed to shift their marketing online. In 2021, the market grew 30.5 percent compared to 2020, a figure that was always unsustainable. The subsequent deceleration—to 16 percent in 2023–2024 and now to 10.5 percent—reflects a market that is adjusting to a more stable baseline.
Several factors are contributing to this normalization. Economic uncertainty in parts of Europe has led some advertisers to tighten budgets, while others have become more disciplined about measuring campaign effectiveness. At the same time, the digital advertising market has matured to the point where incremental growth requires either new inventory sources or further penetration of existing channels. Retail media and social video represent two such sources, which is why they are growing faster than the market as a whole.
The fact that all 30 markets covered by the report grew in 2025 suggests that the drivers are broad-based rather than concentrated in a few large economies. Even smaller markets that have historically lagged in digital adoption are showing meaningful increases, helped by improving internet infrastructure, greater smartphone penetration, and the expansion of global ad platforms into local-language content.
United Kingdom, Germany, and France Dominate the European Market
Looking at absolute spending across the 30 markets, the United Kingdom remains the undisputed leader. UK advertisers spent €46.9 billion on digital ads in 2025, more than double the next-largest market. Germany followed at €21.6 billion, with France at €12.7 billion. Together, these three countries account for 62 percent of total European digital ad expenditure.
The concentration is not surprising given the size of these economies and the sophistication of their advertising ecosystems. The UK, in particular, benefits from a highly developed digital media landscape, a large and liquid advertising market, and the presence of major global agency and technology hubs. Germany and France also have strong domestic platforms and a high share of programmatic trading.
For advertisers and media owners, the dominance of these three markets means that European digital ad strategy must be tailored accordingly. What works in the UK may not translate directly to smaller markets, where retail media networks may be less developed or consumer behavior may favor different platforms. At the same time, the growth in smaller markets presents opportunities for first-mover advantage, particularly in retail media, where the competitive landscape is still taking shape.
Why Retail Media Is Growing Faster Than the Overall Market
Retail media’s above-market growth can be attributed to a combination of structural advantages and recent industry developments. First, retail media inherently captures high-intent audiences. A shopper browsing a product page or searching for a specific category on an ecommerce site is already in a purchasing mindset. Ads served in that context are less likely to be ignored and more likely to convert than ads served in a social feed or on a content site.
Second, the growth of first-party data strategies has made retail media more attractive in an environment where cookies are being phased out. Retailers have direct access to purchase data, loyalty program information, and browsing behavior that can be used to target ads with precision. For advertisers seeking alternatives to third-party cookies, retail media networks offer a privacy-compliant, performance-oriented channel.
Third, the number of retailers launching their own media networks has increased dramatically. Grocery chains, fashion retailers, electronics sellers, and even general merchandise platforms have recognized that their digital storefronts can function as advertising inventory. This expansion of supply has made it easier for advertisers to scale their retail media investments across multiple retailers and categories.
The IAB Europe data confirms that these dynamics are not temporary. Retail media has grown from a niche category to a significant and growing share of total digital ad spend, and the 10 percent threshold is likely to be the first of several milestones as the channel continues to mature.
Implications for Advertisers and Publishers
The shifting composition of European digital ad spend carries distinct implications for different stakeholders. For advertisers, the rise of retail media means that budgets need to be rebalanced. The channel offers strong measurable returns, but it also requires different creative and data strategies compared to traditional display or search advertising. Advertisers that treat retail media as an extension of their existing digital strategy rather than a distinct discipline are likely to underperform.
For publishers and content-driven media owners, the growth of retail media and social video represents both a challenge and an opportunity. The challenge is that retail media is pulling ad spend away from open-web display and into closed environments where publishers have no presence. The opportunity is that video inventory, particularly in premium contexts, remains in high demand. Publishers that can offer high-quality, brand-safe video environments at scale may be able to capture some of the spending that is flowing into the video category.
For retailers, the message is clear: the media network is no longer a side project. Retailers that invest in the technology, sales capability, and measurement infrastructure required to operate a competitive media network stand to generate significant incremental revenue. Those that treat retail media as an afterthought risk losing out to competitors that move more aggressively.
The European digital advertising market in 2025 is characterized by steady overall growth, but the composition of that growth reveals a clear direction of travel. Video and social media continue to dominate display spending, while retail media has become an established pillar of the digital advertising ecosystem. The next few years will likely see further consolidation of these trends, with retail media gaining additional share and video becoming even more central to how brands connect with consumers. For anyone involved in digital advertising in Europe, the message from the data is unambiguous: adapt to the new mix or risk being left behind.
