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The focus on AI will have an impact on the ad business.

AI’s impact on the advertising business

The focus on artificial intelligence will have an impact both on search advertising and rationality in the advertising business, forecasts and surveys show. Ad revenue growth should return to some kind of normality during the second half of the year but is still dealing with high inflation and adjustment to consumer behaviour after the pandemic, advertising giant M forecasts.

WARC Media says search advertising is set for unprecedented disruption from artificial intelligence, retail media and social media. Another aspect of AI in advertising is that marketers estimate generative AI will save them over a month of work per year, according to a survey by customer management firm Salesforece. 

The global advertising business is facing a new wave of challenges and concerns, including the climate challenge and the rise of artificial intelligence, says Stephan Loerke, CEO of World Federation of Advertisers. 

Global advertising will grow 6% in 2024 and 5.9% in 2023, Group M forecasts. Global advertising 2023 is expected to total USD 874.5 billion, excluding US political advertising. 

“Halfway through 2023, we’re still dealing with rising inflation and adjustments to consumer behaviours brought on by the pandemic. As we look ahead to the rest of the year, we should expect a return to some kind of normalcy in terms of advertising revenue growth.”

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Key forecasts from Group M:: 

  • Connected TV adoption, among consumers and advertisers, is growing rapidly, adding 10.4% in ad revenue between 2023 and 2028 on a compound annual basis. Consumer spending on subscription video on demand (SVOD) represents between just one-fifth and one-third of total video spending in major markets, leaving plenty of room for streaming providers to grow subscriptions.
  • Retail media is the third-fastest growing advertising channel in 2023 (behind digital OOH and CTV, although those channels are a fraction of the size). Retail media, defined as including ad revenue from last mile delivery services, will grow 9.9% to reach USD 125.7 billion in 2023, and is forecast to exceed TV revenue (including CTV) in 2028. 
  • Artificial intelligence is likely to inform, or touch in some way, at least half of all advertising revenue by the end of 2023. 

 Search advertising, forecast to be worth USD 350.4 billion in 2023, is set for unprecedented disruption from retail media, social media and AI, according to a forecast from WARC Media.

“Retail media – encompassing Amazon, Walmart, Alibaba and others – is set to draw over a quarter (USD 93.8 billion) of all search advertising spend this year.”

“The search market is on the cusp of an era of innovation. Google’s long-standing market dominance is set to come under unprecedented pressure as consumers pivot away from text-based search towards discovery on social, generative AI reinvents the search experience, and the explosive growth of retail media, the majority of which is search-orientated, continues”, says Alex Brownsell, Head of Content at WARC Media.

Marketers estimate generative AI will save them over five hours of work per week – the equivalent of over a month per year. However, 39% say they don’t know how to safely use generative AI. according to a survey of more than 1 000 marketers made by customer management firm Salesforce in partnership with YouGov.

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51% of marketers are currently using generative AI. An additional 22% plan to use it very soon, totalling nearly three-quarters of marketers. 

“However, 39% also say they don’t know how to safely use generative AI. They raise concerns about its accuracy and report a need for human oversight, as well as proper training and trusted customer data, to leverage the technology effectively at work”, Salesforce says. 

“Marketers using generative AI are already targeting the basics, like content creation (76%) and writing copy (76%). But many see a wholesale overhaul of their work on the horizon, with 53% saying generative AI is a ‘game changer.” 

Top concerns about using AI:

  • 31% mention accuracy and quality
  • 20% trust
  • 19% skills
  • 18% job safety
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