Looking Ahead: 2025 Predictions and End-of-Year Outlook in Digital Advertising in Canada

Written By: Jon Finnie, Head of International Sales, Yahoo Ads

The Cookieless Conversation Isn’t Going Anywhere Anytime Soon

With Google’s decision to keep cookies but allow consumers to opt-in or out, marketing on the open web will need to adapt. This shift mirrors trends seen on iOS, where 77% of Canadian users opt-out (1), suggesting that third-party cookies may phase out through consumer choice. Depending on opt-out rates, marketers will need to replace or supplement cookies with privacy-centric options to support audience targeting, activation, and understand the impact on measurement.

Without investing in strong identity partners, advertiser dollars could shift away from the open web. This is crucial for marketers, as the open web remains the most cost-effective avenues for reaching and engaging customers, with impression costs falling in direct relation to decreasing demand. To stay competitive, advertisers must prioritize obtaining consumer consent through transparency, trust, and offering a clear value exchange for their data.

Contextual advertising, which leverages the content of the webpage to deliver relevant ads ensuring that irrelevant or intrusive advertisements do not disrupt the user experience, will remain an important element once cookies have been phased out. This approach not only respects user privacy but also enhances the overall effectiveness of ad campaigns by aligning ads with the context in which they are displayed.

To Diversify Ad Spend Across Platforms, Start Spreading Bets

Just as advertisers are devoting spend to post-cookie alternatives, brands are also testing other ad channels in light of current litigations with the likes of Google and the unknown future of TikTok in Canada. Advertisers want to diversify their ad spend and will turn to many platforms to fill the void—whether traditional behemoths or smaller, but more transparent ones. Additionally, 44% of Canadian marketers are investing over 20% of their budgets into innovation, suggesting a willingness to explore new channels (2). This diversification is not just about spreading risk, it’s about finding new opportunities to engage with audiences in more meaningful and targeted ways.

When advertisers explore alternative platforms, they can tap into diverse markets and communities, thereby increasing the relevance and impact of their campaigns. Diversifying ad spend allows brands to experiment with innovative ad formats and technologies that may not be available on more established platforms. This can lead to more creative and engaging ad experiences, which can drive higher user engagement and better campaign performance.

As the digital advertising landscape continues to evolve, brands that are agile and open to exploring new platforms will be better positioned to capitalize on emerging trends and stay ahead of the competition.

Digital Advertising Is Going to Rely on Retail Media as a Growth Engine

Retail Media is growing rapidly as an alternative to established media channels but is still in theearly stages of development. By 2026, Retail Media Ads are forecasted to account for 1 in 4 digital ad dollars in Canada (3). This shift toward Retail Media, now increasingly reframed as “Commerce Media” is driven by non-retail companies joining the movement, leveraging audience data in new ways that empower advertisers.

Market dynamics are facilitating this diversification, offering unprecedented opportunities for data measurement and syncing across platforms. As measurement capabilities expand, advertisers are gaining greater control over targeting, personalization, and attribution. The market is helping facilitate this diversification by making measurement and data syncing across partners better than ever, moving the power into the hands of advertisers.

However, the maturing landscape brings pressing questions. Is traditional media planning still feasible in a landscape of proliferating and mutually exclusive walled gardens? How are reach and frequency managed in this environment? What issues exist around measurement standards, comparing retail media networks (RMNs), whether their premium pricing can be justified, and how they can be integrated with other channels?

Addressing these challenges will be crucial for advertisers to effectively navigate the evolving digital advertising ecosystem.

There Is No Stopping Connected TV (CTV)

As consumers increasingly shift from linear TV to streaming, CTV advertising has become essential for reaching on-demand audiences. Enhanced advertiser control over reach, frequency, targeting, and measurement makes CTV especially attractive, despite market fragmentation. This combination of consumer demand and advanced data capabilities positions CTV for continued growth.

More than 80% Canadian households subscribe to one or more streaming services (4). Forty-six per cent of Canadians who stream content, used at least one ad-supported subscription service in 2024, up from 31% in 2023 (5). These numbers are expected to have grown in 2024 due to more audiences shifting away from linear TV to streaming services like Netflix, Crave and Disney+. With many of these platforms launching new ad-supported tiers, we are seeing a shift to ad-supported subscribers.

By the end of 2024, CTV will account for over a quarter of total TV ad spend in Canada and CTV ad spend is projected to grow 10%, reaching $1.31 billion in Canada by 2025. 6 This trend signifies the growing importance of CTV as a key channel for advertisers looking to diversify their spending and reach new audiences. It will become increasingly important to align contextual targeting and creative to the content genre. A Yahoo study shows that creative that is contextually relevant on CTV drives greater attention (eyes on screen, on ad) and is better received by consumers.

AI Will Continue To Be Advertising’s Creative Catalyst

AI will play a pivotal role in shaping the advertising industry in 2025. More agencies are seeking AI-driven solutions to reduce costs and increase the speed of output. In Canada, 81% of advertisers say they are experimenting with AI tools (7).

AI pushes media mix modeling and measurement to become more efficient and sophisticated. AI will have a material impact on business models, with agencies using it as a differentiator, and as ad tech companies incur costs to build and maintain models. Creative, Insights & Optimization, and Ad Fraud Detection are the top tasks where advertisers will see the biggest impact from AI soon.

And bear in mind: not all AI is created alike. We’ll see an increase in usage of AI tools, but also an increase in scrutiny over what these tools do and how they are built.

Advertisers Need Choices To Take Back Control

Given the changing and increasingly complex landscape, it will be more important than ever to give advertisers the tools they need to succeed—and to put control back in their hands when it comes to deciding the best path forward. Long gone are the days of being the arbiters of truth for a brand—giving them a wide array of guiding principles and solutions will allow them to take back control and choose the path that works best for their brand.

As we step into 2025, the digital advertising landscape in Canada is poised for major changes. From the consumer-driven privacy revolution to the rise of contextual advertising and the diversification of ad spend, the industry is evolving rapidly. Retail Media and CTV will continue to grow, while AI will revolutionize how we approach advertising strategies.

When advertisers have choices and controls, we can navigate this complex landscape together, ensuring that brands thrive in the new era of digital advertising. Let’s welcome the changes ahead and make 2025 a year of innovation and success.

References

(1) Adjust 2023 Opt in Rates, July 2023
(2) Dentsu Creative’s CMO Report, 2024
(3) IAB Canada, Retail Media in Canada Survey, 2024
(4) Convergence Research Annual Couch Potato report, March 2024
(5) Roku Canada, Video on Demand Evolution study, October 2024
(6) eMarketer, Canada Digital Ad Spending, 2024
(7) Salesforce AI Study, May 2024