AI transforming advertising models
Artificial intelligence is transforming advertising models driving hyper-personolised ads. Advertising spend will grow three times as fast (6.1%) as consumer spending of entertainment and media (2%). Global entertainment & media (E&M) industry was close to US$3 trillion in revenue in 2024 and is forecast to hit $3.5 trillion in 2029 as advertising spend surges across platforms, according to consultancy PwC’s Annual Global Entertainment & Media Outlook 2025-29.
“Non-digital categories – such as live music, cinema and events – continues to lead consumer sector revenue, accounting for 61% of sector spending in 2024.”
“Global cinema revenue expected to rise from $33 billion in 2024 to $42 billion in 2029, as international audiences continue to spend more on locally produced films.”
“Global video games revenue forecast to grow from $224 billion in 2024 to $300 billion in 2029 – exceeding movie and music industry revenues combined.”
The E&M industry is projected to grow at a compound annual growth rate (CAGR) of 3.7% until 2029 – a rate above the projected global economic growth average, but below pre-pandemic highs.
“As the E&M industry continues to be impacted by broader economic uncertainty and constrained consumer spending, advertising is emerging as the leading powerhouse of the global entertainment and media industry’s revenues – a transformation expected to continue as AI transforms delivery models, democratises content production, serves highly curated content experiences, and reduces barriers to entry”, says Bart Spiegel ,Global Entertainment and Media Leader, PwC US.
“The E&M industry has always been at the forefront of technological innovation, but companies will need to remain nimble and proactive to embrace the future and satisfy consumers in an ecosystem that rewards creativity and tailored content.”
According to the forecast, advertising will be a significant driver of revenue growth for the E&M industry at-large as growth for paid or subscription products slows amid heightened industry competition and constrained consumer spending – particularly in mature markets.
Of the three major E&M categories analysed (connectivity, advertising, consumer), advertising is expected to grow fastest – three times as fast (6.1% CAGR) as the consumer category (2%).
The fastest growing E& M revenue metrics over the next five years are all advertising driven – including retail advertising (15%), social and mobile on-stream video advertising (15%), and connected TV in-stream internet advertising (14%).
Digital formats, which account for 72% of overall ad revenue in 2024, will rise to 80% in 2029, with new technologies including AI and hyper-personalisation expected to drive this even further.
High growth areas include retail search advertising in e-shopping (rising from 32.7% in 2020 to 45.5% in 2029) and advertising in video games (rising from 32.8% in 2024 to 38.5% in 2029).
“AI is impacting the E&M industry in many ways. One of the areas in which it is likely to influence revenue growth is in connected TV (any television that connects to the internet to stream video content). In 2020, connected TV advertising revenue equated to just 5.9% of total traditional broadcast TV advertising. In 2024, this figure had jumped to 22%. But with the rise of digital engagement and the prospect of AI-assisted hyper-personalisation, which may lead to greater end-user uptake, connected TV ad revenues will rise to $51 billion in 2029 – equal to 45% of traditional broadcast TV advertising”, the forecast says.
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