AI is boosting ad revenue growth

AI truthers have a new arrow in their quiver when participating in debates over the technology’s usefulness.

Analysts have widely expected companies’ advertising budgets to tighten in recent months, following US tariff battles and waning purchasing power among consumers.

But giants like Meta, Google, and Amazon have instead seen a boost in ad spending and revenue growth, largely due to AI’s ability to improve ad targeting and enhance platform engagement.

How they’re doing it: Google and Meta have both rolled out AI ad-creation tools that automate some of the process of launching ad campaigns, saving companies money on production costs.

Other examples:

• Meta’s recommendation algorithms, now powered by AI, boosted time spent on Facebook by ~5% last quarter, equating to that many more ads presented to users.
• On a recent earnings call, Alphabet said AI summaries are driving more Google Search queries, including commercial ones, which bolster shopping and ads.

Efforts are paying off

US ad spending, including political ads, is projected to increase by 8.5% this year, with that figure rising as high as 10% if current trends in tech-ad growth persist, per advisory firm Madison & Wall. For the top-three ad giants in particular—Meta, Google, and Amazon—their market share is projected to reach 56+% this year, up from 51% in 2023.

AI is boosting the industry in other ways, too. Along with improving existing campaigns, the tech is also helping boost overall ad spending by making it easier to launch and scale new businesses, which then need to pitch themselves to customers.

Bottom line: Showing gains from AI is crucial for many tech giants, as they start to feel pressure from investors over a recent string of massive spending commitments on AI infrastructure.