by Joe Mandese @mp_joemandese
Source: www.mediapost.com, July 2024
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. And while they downgraded initially bullish estimates for ad-supported AI agents, they estimate pure-play AI enabled experiences will surge to billions of dollars over the next few years — at least initially due primarily 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 estimate Google AI Overview ad revenue will be $1.7 billion in 2025, $6.7 billion in 2026 and $16.9 billion in 2027.
While the report does not provide search ad spending estimates for other generative AI players, it does cite advertising and/or hybrid advertising/subscription models for Bing Copilot, Snap and Perplexity, and describes Meta AI’s model as “not available.”
The only significant downgrade in AI ad spending expectations is for ad-supported AI agents developed by Snap and Meta, which New Street originally earmarked would take in billions by 2025 (see chart above).
While the pure-play AI experience ad spending still is nascent, the report reaffirms broad ad industry sentiment that the technology is accelerating the transformation of almost every facet of the ad business. It even cites GroupM’s recently released estimate that 70% of all advertising already is influenced by AI, and that nearly 100% will be by the end of the decade.
