Digital advertising spend rose 27% to €830m last year, according to a report by IAB Ireland and PwC.
According to their 2021 Online Adspend report, advertising on social media accounted for €375m of that total - up 41% year-on-year - while spending on search ads grew 10% to €288m.
Video adverts were the fastest growing category, with spending there up 53% to €245m.
The increase comes as consumers spend more time on digital platforms, with the pandemic pushing many professional and social interactions online.
IAB Ireland says the jump in e-commerce since the start of the pandemic has had a direct impact on digital ad spending, with more businesses turning to digital advertising as a result.
"2021 saw a dramatic take off in eCommerce as businesses increasingly adopted digital channels to recruit, engage and fulfil consumers during the pandemic," said IAB Ireland CEO Suzanne McElligott.
"The strong 27% digital adspend growth recorded in 2021 reflects digital moving centre stage for Irish advertisers from SMEs to large local and global brands," she added.
The report predicts a 15% growth in digital adspend this year, as the economy continues to recovery from the pandemic and more business shifts online.
It says one specific area that could see significant growth is digital audio advertising, due to the ever-growing popularity of podcasts, as well as streaming music and radio.
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"One area to watch is Digital Audio," said David Monaghan, chairman of IAB Ireland Board and head of commercial News UK and Ireland.
"With 71% of Irish adults now listening per week* it is not surprising that the digital audio adspend of €11m in 2021 is highlighted by adspend participants for further growth in the year ahead," he added.