A few years into the AI revolution: how is the advertising industry adapting?

We are living through a period of significant change: AI’s role in business, and specifically advertising, is being both defined and regulated before our eyes.

Highlighting just how topical this is, the UK government launched a consultation in December 2024 to determine how copyright law should adapt to an AI future. The goal is to find a balance between the positives that AI offers while protecting the rights of creators and copyrighted material. The IPA responded with the view that there needs to be more transparency and protection for creators. They don’t agree to AI developers owning user-created outputs and believe that blanket AI labelling is unnecessary. Richard Lindsay, Director of Legal & Public Affairs at IPA said, “some of the proposals set out in this consultation seem simplistic” he goes on to say  “Advertising agencies (…) must know that the work they create using those tools will be protected. We urge Government to ensure that AI becomes a strategic growth-driver for the Creative Industries rather than the cause of their demise.”

In the advertising industry, we pride ourselves on being early adopters,

So what role is AI playing in our industry right now?

AI capabilities lend themselves seamlessly to the world of digital marketing. By using predictive analytics, agencies and clients worldwide are saving hours on tasks like data analysis and reporting. With the ability to analyse vast datasets and predict consumer trends, AI can help advertisers precisely target digital campaigns to maximise conversions. Where social teams may have spent hours analysing data from in-platform monitoring, AI reporting tools can now automatically suggest when an ad has collected enough data to be reviewed or whether it should be paused because it’s not performing effectively. Programmatic platforms, which have always been at the forefront of technology, can increase their intelligence using real-time data to automate ad placement and optimisation. This ensures that ads reach the right people at the right time.

Strategists and planners are also reaping the benefits of AI. Previously it may have taken days to trawl through documents looking for a specific report or statistic, but AI can accelerate the searching process to surface the most relevant data and simplifying large and complex reports for use in presentations. That said, AI does have its limitation for digital marketing. Forbes lists one of the challenges as a concern over the ethical use of AI when it comes to data privacy. Another challenge is the need for ever more sophisticated algorithms to handle more complex behaviour; or put it another way,  to interpret the nuance and complexity of human behaviour, that arguably can only be done effectively by a fellow human!

The use of AI in generating or executing creative advertising is perhaps the most difficult area for our industry to navigate at the moment.  Along with copyright issues, there is a fear that AI could increasingly replace creative roles, sparking ethical concerns around authenticity and human creativity, and the management of consumer and client expectations around AI vs human output. In December 2024, Nielsen stated that, “Brands and agencies are innovating at a rapid pace to leverage AI-generated video content in their advertising ( … ) The time and cost savings that AI-generated creative can provide during the development of an ad campaign are very attractive for brands. Why spend time and money to create an animatic or a storyboard if you can feed a text prompt and see a rough draft of your idea brought to life in a matter of moments?”

Digging deeper, Nielsen carried out a study where they evaluated AI-generated ads using System 1 methodologies. These included  EEG (electro-encephalogram), eye-tracking, and implicit response time testing, as well as more traditional survey methods. Interestingly, they found that consumers spontaneously flagged AI ads as annoying and confusing. The EEG results showed that AI video ads, even those rated as ‘high quality,’ had a weaker memory recall response than traditional ads. Message recall is obviously crucial to advertising and branding, which makes this a significant finding.

The use of AI is a complex and evolving area of debate, which spans far wider than our industry. We are in the midst of significant change, and while AI offers clear advantages in advertising, caution and nuance are needed in adopting its capabilities for our industry. We prioritise our clients’ opinions concerning AI integration and ensure that its strengths are evaluated against evolving ethical concerns about its use. It remains to be seen how we will fully adapt as an industry, but it’s my hope that we can integrate AI to enhance, rather than replace human creativity.