Coming Soon: The Advertising Industry, New and Improved With Artificial Intelligence

Artificial intelligence has already begun to transform the advertising business and bigger changes are on the way, according to a new report from the IAB.

The report, IAB’s State of Data 2025: The Now, the Near and the Next Evolution of AI for Media Campaigns, says that at this point, while 90% of agencies, brands and publishers are using some AI tools, just 30% have fully integrated AI across “the media campaign lifecycle” of planning, executing and evaluating ad campaigns.

For these early adopters–agencies and publishers have moved more quickly than brands–the key goal is driving efficiency.

Publishers are using AI chiefly to manage supply and analyze audience engagement, the report said.

On the buy side, the top uses for AI included segmenting audiences, making predictive and real-time bid adjustments, automated data collection and integration and tracing and optimizing ad delivery and conversions.

Among those who haven’t fully integrated AI into their operations, about half expect to achieve that by 2026.

The IAB’s point of view is that the industry is moving slower than it should, with 70% of agencies, publishers and brands not yet fully scaling AI usage across the campaign building process.

“The industry isn’t taking full advantage of what AI can do now. It can build media plans, generate audience segments, select media partners, forecast performance, and even use synthetic or “fake” data to enhance marketing mix modeling and sales attribution” said Angelina Eng, VP Measurement, Addressability & Data Center, IAB. “This will transform how media campaigns are conceived, executed, and managed from start to finish. It will happen fast, and laggards are at risk of being left behind.”

The issues that are slowing down adoption of AI, according to the report, include the quality of the data being used and produced by AI, protecting that data and a lack of consensus on which tools to use to harness AI to produce the goals of effectiveness and efficiency. General purpose tools, like ChatGPT, Perplexity and Meta AI are available, as are AI features within certain platforms, like The Trade Desk’s KOA, Google Smart Bidding and Merkle’s GenCX are already fairly widely used. But fewer are employing custom or proprietary tools that can be integrated across their entire organizations.

Transparency of AI is another concern. The report found that 51% of brands represented said they don’t have enough transparency about how agencies and publishers use AI on their behalf. Similarly, 52% of the agencies said they worry about brands bringing their AI capabilities in house, reducing their reliance on the agencies.

Interestingly, the IAB report downplays worries about how AI might replace humans at the office. The report says that just 37% of respondents said that job security is a concern when it comes to the increasing integration of AI into the ad business. People will still be needed (at least until the robots are ready to take over). “The industry recognizes that AI requires a strong foundation before it can take on human tasks and realize its potential,” the report says.

At this juncture, the IAB warns that AI technology means big changes for the industry, and that planning and strategizing is necessary.

“While AI has long been used for yield management, optimization, and automation, the explosion of generative and agentic AI solutions will radically alter the entire digital media ecosystem. AI will soon power every aspect of media campaigns, not to mention its impact on the creative process.” said IAB CEO David Cohen. “We must fundamentally rethink how agencies, brands, platforms and publishers work — which is both incredibly exciting and challenging at the same time.”

The report found that agencies are working to automate campaign management and leverage advanced analytics to make smarter media investments, while brands are piloting opportunities to detect issues faster and integrate data seamlessly, improving agility. Publishers will be focusing on measuring campaign impact and optimizing inventory to maximize revenue and audience engagement.

But right now, respondents said that AI excels at precision and data consolidation but falls short today where human judgment and strategy are needed.

The study asked about different solutions to the issues slowing adoption, ranging from clear use cases, formal training, defined KPIs specifically for AI solutions, formal assessment of workflows, to governance boards to address concerns and challenges, but at most, only 49% are using or planning to use any one of them.

“The study suggests that agencies, brands, and publishers need to take a phased approach to AI adoption, ensuring that data inputs and outputs are secure and of high quality,” said Eng. “They also need to train teams on best practices, collaborate with the industry to develop standards, and prioritize key use cases to establish a strong foundation for full-scale adoption. There is already a lot of catching up to do, and AI capabilities are leaping even further ahead almost daily. There’s no time to waste.”

No one asked me, but while technology is probably inevitable, if you look at the way traditional media and advertising have been decimated by digital, the power of AI should make people in the business pretty nervous.

The IAB created the report working with BWG Global and Transparent Partners. They said more than 500 subject matter experts on the buy and sell sides of the industry were surveyed.

In addition to its report, the IAB is releasing a series of four webinars about how AI will impact the advertising business.