AdRoll, an AI-powered multi-channel advertising platform, today released the Q1 2026 edition of its State of Digital Advertising Report, revealing a widening gap between retargeting and prospecting cost per mille (CPM). Display retargeting CPMs surged 18% in January and February compared with the same period last year, signaling sustained demand for high-intent inventory. By contrast, display prospecting CPMs declined 11% year over year, extending the downward trend that began in late 2025 and indicating softening demand for upper-funnel web display campaigns.
The divergence suggests that advertisers are relying less on web display for awareness initiatives while maintaining or increasing investment in lower-funnel tactics such as retargeting and conversion-focused campaigns. One contributing factor is declining publisher traffic. The rise of zero-click search and AI-powered answer engines is reducing site visits, weakening the scale and effectiveness of many upper-funnel display strategies.
At the same time, CPM patterns suggest that upper-funnel investment is not disappearing, but shifting to connected-screen environments such as CTV and digital out-of-home (DOOH). As more televisions and billboards become internet-connected, these channels are increasingly traded programmatically through real-time bidding (RTB) mechanisms similar to those used for web and mobile display advertising.
“The widening gap between retargeting and prospecting costs signals a structural shift in how advertisers build demand,” said Vibhor Kapoor, chief executive officer of AdRoll. “Digital advertising is moving beyond the browser and into a multi-screen environment where awareness and performance tactics must work together. As programmatic access expands across connected TV and digital out-of-home channels, marketers have new opportunities to build reach while maintaining the precision and accountability they expect from digital campaigns.”
Programmatic CTV and DOOH enable advertisers of all sizes to run high-impact creative while maintaining the targeting, measurement, and optimization capabilities associated with digital media. As a result, these channels are increasingly incorporated into integrated marketing strategies rather than executed as standalone awareness tactics.
To compete effectively in this environment, marketers must move beyond siloed channel planning and adopt a coordinated full-funnel approach. Campaigns can begin with broad awareness on CTV or DOOH and progress to lower-funnel engagement through retargeting and other performance channels.
As web traffic patterns become less predictable and connected-screen inventory continues to expand, campaign success will depend on how effectively marketers align audience targeting, measurement frameworks, and creative execution across the customer journey.
For more information and actionable insights, visit https://www.adroll.com/state-of-digital-advertising-report.
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