Earlier this year, Ralph Schackart, CFA, spoke with an advertising industry participant that monitors $800 million in annual spending across roughly 200 companies on all major platforms and tracks data across Canada, the U.K., and the U.S. The advertising participant shared their thoughts on the current macro environment for digital advertising, the impact of generative artificial intelligence (GenAI) advancements, and more. Schackart highlights key takeaways from the discussion in a recent report.
When the team last spoke with the industry participant in September 2024, the participant pointed to a stabilizing macroeconomic environment. Since then, the participant has called out improved sentiment among chief marketing officers following the Federal Reserve’s latest rate cuts. Regarding verticals, consumer packaged goods’ budgets improved significantly during the fourth quarter of 2024. However, leisure, bars and restaurants, dating apps, and concerts remain weaker verticals for advertisers. The participant noted some “jitters” in early 2025, due to potential trade wars and how that might impact sales.
The participant also notes that some companies have increased advertising performance, partly driven by GenAI improvements. More specifically, one company has allowed advertisers to integrate their customer relationship management (CRM) systems into its platform and is seeing improving advertising performance as a result. This also enables ads to be dynamic and allows them to respond to change instantaneously. In theory, GenAI could create hundreds or thousands of permutations of ads per person. The participant estimates that CRM and GenAI integration will scale significantly over the next five years and may lead to at least 50% to 100% improvements in ad pricing (CPMs), due to the robust nature of GenAI conversion and targeting.
Other topics noted in the report include specific GenAI product enhancements, budget expectation updates, and how GenAI may drive more advertisement engagement.
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