The Rise of Generative AI in Digital Video Advertising: Insights from the IAB Report
Generative AI: Transforming Digital Video Creation
According to recent insights from the Interactive Advertising Bureau (IAB), the landscape of digital video advertising is rapidly evolving, largely due to the rise of generative artificial intelligence (AI). A significant majority of advertising buyers are now leveraging this innovative technology in the creation and enhancement of digital video content. Data reveals that currently, 30% of digital video ads are crafted from the ground up or improved using generative AI techniques. This figure is projected to climb to 39% by 2026, indicating a growing reliance on AI for video production within the marketing community.
Embracing Technology: Small and Mid-Tier Brands Lead the Charge
Interestingly, the adoption of generative AI isn’t uniform across all business sizes. Smaller and mid-tier brands are at the forefront of this technological transition. By 2026, it is expected that 45% of digital video content from smaller brands will utilize generative AI, while 42% of midsize brands anticipate a similar commitment. In contrast, larger brands are forecasting a more conservative estimate of 36%. This divergence suggests that smaller companies are eager to optimize their advertising capabilities and create engaging content through innovative means, thereby gaining a competitive edge.
Insights from the IAB’s Recent Report
The IAB’s “2025 Digital Video Ad Spend & Strategy Report,” which has just published the second part of its findings, delves into the pivotal role of generative AI in reshaping the digital video landscape. Produced in collaboration with Advertiser Perceptions and Guideline, the report showcases the growing significance of this technology, particularly among smaller and midsize firms.
A notable trend highlighted in the report is the use of generative AI to produce multiple variations of the same advertisement. In fact, 42% of respondents utilizing or planning to employ this technology aim to create tailored video versions for different audience segments. Other significant use cases include making visual and stylistic adaptations (38%) and enhancing contextual relevance (36%).
Connected TV: A Compelling Player in Advertising Strategy
The report also sheds light on the burgeoning role of Connected TV (CTV) within the digital video ecosystem. As CTV continues to gain prominence, it is increasingly viewed as a "must-buy" channel for marketers, evolving from a supplementary option to a central element in ad strategies. Expectations are rising; buyers anticipate that 47% of CTV inventory will be biddable in the coming year, a marked increase from 34% in 2024. This trend outlines the significance of programmatic buying, which accounts for a whopping 85% of CTV transactions—up 10 percentage points from the previous year.
Programmatic Transactions and ROI: The New Norm
When it comes to the efficiency of programmatic transactions, the data suggests optimism among buyers. Approximately 41% believe that purchasing CTV inventory programmatically will lead to improved return on investment (ROI), while 35% see it as an opportunity to achieve greater scale. Jamie Finstein, Vice President of Media Center at the IAB, succinctly states, "Being available programmatically is table stakes. Being a strategic partner who delivers ideas and results is becoming what’s vital to win ad spend.” This highlights a shift in focus towards cultivating strategic partnerships rather than merely transactional relationships in the advertising sphere.
Navigating Challenges: The Small Spender Dilemma
Despite the exciting advancements in CTV, challenges remain, especially for smaller advertisers. The IAB’s report points out that smaller spenders face a disproportionate rate of measurement issues compared to their mid-tier and larger counterparts. For instance, 38% of smaller brands report experiencing difficulties in measurement, whereas only 27% of mid-tier and 31% of larger companies report the same. This adds another layer of complexity for smaller entities trying to measure the effectiveness of their video ad spends in a rapidly evolving landscape.
The Changing Dynamics of Media Buyer and Seller Relationships
As CTV continues to grow, so does the relationship between media buyers and sellers. The report notes that an astonishing 83% of buyers feel that human involvement is crucial for customizing CTV deals. Furthermore, 74% are planning to invest in in-house resources to navigate self-service CTV platforms more effectively. This shift underscores the need for a more tailored approach to advertising partnerships, emphasizing the role of human expertise even in an increasingly automated world.
Final Thoughts
The integration of generative AI and the rise of CTV mark a transformative era in digital video advertising. As brands, especially smaller and mid-tier ones, harness these tools to create dynamic, engaging content, the advertising landscape is set to become more competitive and innovative. Whether it’s through crafting personalized video experiences or navigating the intricacies of programmatic buying, the journey ahead presents both opportunities and challenges for marketers. As they adapt to these changes, staying informed and agile will be paramount in reaping the benefits of these emerging technologies.