Pure-Play AI Ad Spending Accelerating 07/17/2024
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AI's Impact on Advertising Industry
In a new, comprehensive nearly 200-page report, analysts at New Street Research outline how AI is influencing almost every facet of the ad industry -- from creative to ideation to media and marketing analytics.
While the initially bullish estimates for ad-supported AI agents have been downgraded, the report suggests that pure-play AI enabled experiences will surge to billions of dollars over the next few years. This surge is primarily attributed to its impact on search, especially Google's AI Overview ads.
"We expect AI Overview advertising to generate $17 billion by 2027," the New Street Research analysts forecast in the just-published report, "The ROI on Gen AI Primer."
The analysts further estimate that Google AI Overview advertising revenue will reach $1.7 billion in 2025, $6.7 billion in 2026, and $16.9 billion in 2027.
Market Projections
While the report focuses on Google, it does not provide specific search ad-spending estimates for other generative AI players. However, it mentions advertising and/or hybrid advertising/subscription models for Bing Copilot, Snap, and Perplexity. Meta AI's model is described as "not available."
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The only significant downgrade in AI ad spending expectations is for ad-supported AI agents developed by Snap and Meta, which were initially projected to generate billions by 2025.
Despite the nascent stage of pure-play AI experience ad spending, the report underlines the industry sentiment that the technology is accelerating the transformation of almost every aspect of the advertising business.
GroupM's estimate suggests that 70% of all advertising is already influenced by AI, with projections indicating that nearly 100% will be impacted by the end of the decade.
