What the Latest Channel Data Shows About Where Marketing Dollars Are Working
TL;DR Social, connected TV, and commerce media are the fastest-growing advertising channels in 2026. Paid search is still the largest performance channel but is growing more slowly, with costs rising in legal, real estate, and auto. Organic search clicks are falling wherever Google shows AI answers, and email remains one of the strongest returns for businesses that measure it. The advantage is moving toward companies that pair good creative with clean measurement and that get cited by AI systems, not only ranked by them.
This article pulls together the most recent published data from IAB and PwC, WPP Media, Gartner, Alphabet, Meta, WordStream and LocaliQ, Pew Research Center, Seer Interactive, BrightEdge, and others. I name each source where its number appears. At the end of every section I add my own read on what the data means for the industries involved through the end of 2026 and into 2027. Those reads are opinion, and I label them that way.
The top-line numbers are strong. WPP Media’s midyear forecast projects global advertising revenue, excluding U.S. political spending, to grow 8.9% in 2026 to $1.3 trillion, up from the 7.1% it projected in December. In the United States, IAB raised its 2026 ad spend forecast in September to 12.3% growth, up from 9.5% in January, after a first half lifted by the Winter Olympics and the FIFA World Cup.
Company budgets are not keeping pace. Gartner’s 2026 CMO Spend Survey polled 401 marketing leaders, most at companies above $1 billion in revenue, and found marketing budgets at 7.8% of revenue, barely changed from 7.7% a year ago. Those leaders are putting an average of 15.3% of their budgets into AI initiatives, yet only 30% say their organizations are ready to expand those capabilities. Platforms are collecting more money while the businesses buying from them are asked to get more from budgets that are not growing. That tension explains most of what follows.
One caution before the channels. Forecasts get revised, vendor benchmarks reflect each vendor’s own accounts, and platform earnings report worldwide totals while IAB tracks U.S. buyer plans. Treat each number as a direction, not a promise.
Paid Search: Still the Largest Performance Channel, With Costs Moving Unevenly by Industry
Search remains the biggest single line in most performance budgets. The IAB and PwC full-year 2025 report put U.S. search advertising, which now includes AI search, at $114.2 billion, up 11%. That growth rate was down from 15.9% the year before, which is the clearest sign the channel is maturing. IAB’s September outlook projects paid search growth of 8.1% for 2026, well below social at 16.5% and connected TV at 15.6%. Alphabet’s second quarter looks stronger at the company level, with Google Search and other revenue up 17% to $63.3 billion, though that is a worldwide figure and not directly comparable to IAB’s U.S. buyer projections.
Cost data points to a calmer year than recent ones. The WordStream and LocaliQ 2026 benchmarks cover U.S. search campaigns from April 2025 through March 2026. Average cost per click was $5.42, up from $5.26. Average conversion rate rose to 8.18% from 7.52%, and average cost per lead fell to $66.69 from $70.11, which the report describes as the first decline in five years. Conversion rate improved in 87% of industries. Leads got cheaper because more clicks turned into customers, not because clicks got cheaper.
The industry detail matters more than the average. Attorneys and legal services remain the most expensive category at $9.87 per click and $131.63 per lead. Real estate saw the largest year-over-year jump in cost per click at 27.27%, and LocaliQ’s real estate breakdown shows cost per click for agent-listing searches up 78.9% while overall real estate conversion rates improved 12.8%. Health and fitness saw click-through rate fall 19.08% while cost per click rose about 23%, and personal services rose about 23% as well. On the other side, education and instruction saw click-through rate rise 31.71% and cost per click fall 22.79%. Beauty and personal care saw cost per click fall 18.95% while conversion rate climbed 32.34%. Finance and insurance click-through rate rose 18.01%, but its conversion rate of 2.64% is among the lowest in the report.
Automotive is its own story. LocaliQ’s automotive benchmarks report that franchised dealership advertising spending rose nearly 18% between the first half of 2025 and the first half of 2026. Cost per click for Toyota dealers rose 69.27%, and the conversion rate for Nissan dealers fell 55.62%. Spending is up, costs are up, and conversion is slipping at some brands.
A new paid surface is also forming. OpenAI began showing ads in ChatGPT to U.S. users in February, opened a self-serve Ads Manager on May 5, and announced on August 31 that the product had reached a $1 billion annualized revenue run rate. Google announced new ad formats built for AI Mode at Google Marketing Live in May. WPP Media projects generative search advertising growing from $5.1 billion in 2026 to more than $100 billion by 2030. For a deeper look at how these costs vary by trade, I covered it in our industry-by-industry Google Ads playbook.
My take for legal, home services, healthcare, real estate, auto, and education
I expect auction pressure to stay high through the end of the year in the categories that were already expensive. Legal, dental, and home improvement will not get cheaper going into the holidays. For those industries the fastest gain is rarely a better bid. It is a stronger landing page, faster follow-up on every lead, and tracking clean enough that a $131 lead is judged against what a signed case is worth.
Real estate and auto face a different problem, which is rising costs on top of conversion that is slipping at some brands. I would tighten the offer and the follow-up process before adding budget. Education and beauty are the opportunity. Costs are falling and conversion is rising, and I expect competitors to notice by the first quarter of 2027, so the window to take share is now. I would also set aside a small, measured test budget for ChatGPT ads and AI Mode placements before the year ends. The channel is young, and what you learn this quarter will be worth more than the dollars spent. This is where our paid ads work usually starts, with the conversion path before the bid.
Organic Search: Fewer Clicks and Higher Stakes for Being the Source AI Cites
The click data is consistent across studies. In a Pew Research Center analysis of the browsing behavior of 900 U.S. adults, users clicked a traditional result link in 8% of visits when an AI summary appeared, compared with 15% when it did not. Seer Interactive found a 61% decline in organic click-through rate and a 68% decline in paid ad engagement on queries with AI Overviews. An Ahrefs study found that as of December 2025, AI Overviews reduced click-through rate for the top-ranking page by 58%, up from 34.5% in its April 2025 study.
Seer also found the other side of the coin. Brands cited inside an AI Overview saw 35% higher organic click-through rates and 91% higher ad engagement than brands that were not cited. Ranking still matters, but being named in the answer now matters alongside it.
How much this affects you depends on your industry. BrightEdge tracking shows AI Overviews appearing on 88% of healthcare queries as of December 2025, up from 72% in May 2024, and on 93% of educational health queries. Finance sits at 21% overall, up from 6%, but educational finance queries such as tax, retirement, and mortgage topics have climbed to 67%, while real-time queries like stock prices stay low. A summary of AI Overview coverage puts B2B technology at 82% and education at 83%.
Buyers are adjusting. In IAB’s September study, 76% of media buyers named optimizing content for AI-generated answers as their top area of increased focus, 48% are measuring brand visibility and citations inside AI tools, and 44% called adapting to AI-driven search their biggest investment challenge.
My take for healthcare, finance, B2B technology, education, and local service businesses
Healthcare is close to saturation, so the question has shifted from whether a page ranks to whether a provider’s information is the one the AI answer draws from. I expect practices with clear, medically reviewed, locally specific pages to hold their ground. Finance is following healthcare’s path with a lag. I expect educational finance content to lose clicks over the next twelve months in the way health content already has, while pages tied to a specific local advisor, lender, or product should hold up better.
For B2B technology and education, the top-of-funnel blog traffic of 2022 is not coming back, and I would stop measuring success by it. Branded search, direct visits, demo requests, and appearances in AI answers are better signals. For local service businesses, maps, reviews, and phone calls are carrying more of the weight, and I expect them to keep doing so. Fewer clicks do not have to mean fewer customers. The visitors who do arrive increasingly come already knowing your name from an AI answer, a review, or someone they trust. Our answer engine optimization work is built around earning that mention.
Social Media and Creators: Growth Continues, With Rising Prices and a Warning Sign Ahead
Social was the standout of 2025. IAB and PwC measured U.S. social advertising revenue at $117.7 billion, up 32.6%, roughly 40% of all digital ad revenue, with creator advertising spend reaching $37 billion. IAB’s September outlook projects social growth of 16.5% in 2026, the fastest of any channel it tracks, and 54% of buyers report increased focus on creator and influencer partnerships.
Meta’s second quarter shows the engine running. Advertising revenue rose 27% to $59.4 billion, ad impressions rose 14%, and the average price per ad rose 12%. Meta said its Advantage+ automated campaign tools passed a $75 billion annual run rate, and nine million small businesses now use at least one of its AI creative tools. Meta also credits its AI ad matching with an 8% lift in clicks and 15.7% more conversions on Facebook, which are the company’s own figures.
The warning sign comes from WPP Media. Social remains the largest channel in its forecast, but it expects growth to decelerate toward low single digits from 2027 as time spent plateaus and AI chatbots absorb attention that would have gone to feeds. By industry, the Mediaocean 2026 Advertising Outlook shows financial services marketers leaning into influencer marketing and retail marketers investing heavily in social, search, and AI media.
My take for retail, financial services, professional services, and local businesses
When the average price per ad rises 12% and the tools to make ads are available to nine million small businesses, the targeting is no longer where the advantage sits. Creative is. The platforms are making it easier for everyone to produce acceptable ads, which means acceptable ads will blend together. I expect the businesses that stand out through the holiday season to be the ones showing real people, real work, and a recognizable point of view. For financial and professional services, creator partnerships carry more weight because trust is the hurdle. For local businesses, the same advice holds at a smaller size, with consistent, human content outperforming polished and generic. I would plan for strong results through year end and begin building owned audiences, such as email lists, ahead of the slowdown WPP Media expects. Our social media work is built on that principle.
Video: Connected TV and YouTube Climb While Linear Television Retreats
IAB’s September update lifted its 2026 connected TV growth projection to 15.6% from 13.8% in January. Digital video outside CTV is projected at 9.4%, and linear TV is projected to decline 1.5%. IAB and PwC measured total U.S. digital video revenue at $78 billion in 2025, up 25.4%. YouTube advertising revenue rose 13% in Alphabet’s second quarter to $11.1 billion, and Alphabet reported more than 1.7 billion unique viewers of World Cup-related videos on the platform. WPP Media describes streaming TV and gaming as continuing to grow while linear TV and audio plateau.
The industry split is visible in the Mediaocean outlook. Automotive marketers are doubling down on video and CTV, and pharmaceutical and healthcare marketers are prioritizing digital video and CTV to reach audiences in streaming and search-driven environments.
My take for automotive, healthcare, and local advertisers
Connected TV has become a realistic option for growing local businesses, not only national brands, because it can be targeted by area and measured against a lead or a visit. I expect the fourth quarter to be crowded. The first half was lifted by major live events, and the November 3 midterm elections tend to push political advertisers into local TV and streaming inventory, which raises prices. I would book holiday video early, or plan to run it in January and February when inventory loosens. Linear TV is not dead locally, but it is retreating, and I would only keep it where a business has clear evidence it produces customers. I wrote about pairing traditional media with digital tracking in our piece on why offline advertising performs better with a digital strategy behind it.
Email: The Quiet Channel With the Strongest Return for Businesses That Measure It
Email does not make headlines because it does not change much, and that is its strength. Litmus’s State of Email 2026 report, based on more than 500 marketing professionals, found that teams with advanced AI integration are 75% more likely to achieve an email ROI above 45 to 1. A summary of the Litmus data by Webtonic puts average return by industry at $53 per dollar spent in travel and hospitality, $45 in retail and ecommerce, $42 in marketing, PR, and advertising, $36 in software and technology, and $32 in media and publishing.
One caution on measurement. Benchmarks for email open rates vary by more than 20 points depending on the source, largely because Apple’s Mail Privacy Protection inflates opens, as this comparison of benchmark sources shows. I treat open rates as unreliable and look at clicks, replies, and revenue instead. IAB also notes that repeat purchases held at 24% of buyers’ top goals after nearly doubling as a priority since 2024, which is where email does its best work.
My take for retail, travel, software, and service businesses
As paid costs rise, the cheapest customer is the one you already have. I expect email to quietly outperform several paid channels for retail and travel through the holiday season, and for service businesses with repeat or referral revenue, a well-timed message to past customers is often the highest-return move available. The businesses that benefit most will be the ones that treat the list as an asset and write like a person. I would not spend the fourth quarter on more software. I would spend it on a clean list, three or four useful messages, and a way to track what they produce.
Commerce Media, Podcasts, and Out-of-Home: The Smaller Channels Worth Watching
IAB projects commerce media growth of 13.6% in 2026, third behind social and CTV, podcasts at 8.7%, and digital out-of-home at 7.0%. IAB and PwC measured U.S. commerce media at $63.4 billion in 2025, up 18%, and podcast advertising at $2.9 billion, up 17.6%. Commerce media is the channel to understand if you sell through retailers or marketplaces, since it places your product where the buying decision is made.
My take for retail, consumer goods, and local services
For product companies, commerce media is becoming a required line in the plan, not an experiment. For local service businesses, podcasts and out-of-home are quieter opportunities. They are less crowded than search or social, and a consistent presence can build the name recognition that makes every other channel work better. I would test one of them in the first quarter rather than spread a small budget across all three.
The Outlook by Channel Through the Start of 2027
Paid search
Expect steady single-digit growth in spending and continued cost pressure in legal, home services, dental, real estate, and auto. Education and beauty should stay favorable for a few more months. AI placements will begin taking a measurable share of test budgets.
Organic search and AI answers
Click loss will continue wherever AI summaries appear, and finance will move closer to healthcare’s pattern. Measuring citations inside AI tools, which 48% of IAB’s buyers already do, will become a standard report line for businesses that take search seriously.
Social and creators
IAB projects double-digit growth through year end. WPP Media expects deceleration from 2027. With prices per ad rising, creative differentiation will matter more than audience targeting.
Video
CTV should keep leading growth, linear television should keep declining about 1.5%, and holiday and election-season inventory will be expensive. Local advertisers have an opening in the weeks after the election.
Little will change in the channel itself, but its relative value rises as paid costs climb. Businesses with healthy lists will benefit most.
AI advertising and measurement
I expect ChatGPT advertising to keep expanding to new markets and Google’s AI Mode formats to move from testing toward wider availability over the next few months. IAB reports that 86% of buyers are already changing, or expect to change, how they measure media performance because of conversational AI in the next 12 months. Marketing is harder to read than it was five years ago, and it is easier to win than it looks for businesses willing to use judgment. Our data analytics and reporting practice exists for exactly that reason.
Seeing Through the Fog Is the Advantage That Is Hardest to Measure
Everything in this article comes from public sources. Anyone can read the IAB report or the WordStream benchmarks. The numbers are not what separate one company from another. Judgment is.
Consider water. The product is available everywhere, and according to Sacra’s research on Liquid Death, large brands sell it in bulk for as little as 20 cents a bottle. Liquid Death put the same product in a can, built a brand with a point of view, and reached a reported valuation of about $1.4 billion. A store-brand water on the same shelf had the same access to the same data and the same platforms. What it lacked was creative judgment and the willingness to test an unusual idea. The difference was never a report. It was a person who read the market and made a call.
The same pattern appears in established businesses. The fundamentals are solid: the website is fast, tracking is in place, the budget exists. What is often missing is someone who looks at the dashboard and says what it means, what a competitor is not doing, and what to stop. Creativity, data interpretation, and human expertise are what turn a sound program into a leading one, and they are the hardest things to evaluate when hiring an agency. Proposals look alike. Reports look alike. Certifications look alike. The better test is asking who will actually make the judgment calls on your account, and what they would stop doing on day one.
That is the reason we work the way we do at Brevard SEM. Once a month we run The Forge, a strategy and creative session where senior strategists and creatives pressure-test every account. Marxi, our proprietary AI trained on more than two decades of marketing performance data, handles the heavy processing so our people can spend their time on decisions. You work with the senior team, not a rotation of junior reps, and that is a large part of what separates us from the volume houses that run every client through one playbook. You can read more on our Why Brevard SEM page.
Frequently Asked Questions
Which digital marketing channels are growing fastest in 2026?
According to IAB’s September 2026 outlook, social media is projected to grow 16.5%, connected TV 15.6%, and commerce media 13.6% in the U.S. Paid search is projected at 8.1%, and linear TV is projected to decline 1.5%.
Is paid search still worth it as costs rise?
For most industries, yes. WordStream and LocaliQ’s 2026 benchmarks show average cost per lead falling to $66.69 as conversion rates improved in 87% of industries. The businesses that benefit are those with strong landing pages and fast lead follow-up, since costs remain high in legal, real estate, home services, and auto.
How do AI Overviews affect organic traffic?
Pew Research Center found users clicked a traditional result in 8% of visits when an AI summary appeared, compared with 15% without one. Seer Interactive found brands cited inside an AI Overview earned 35% higher organic click-through rates than brands that were not cited, which makes being a cited source a growing priority.
Where should a growing business put its budget before the end of the year?
In my view, start with the conversion path on your existing paid traffic, then email to past customers, then a small test in an AI advertising channel. Add connected TV only if you can book inventory early or plan to run it in January and February.
