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Inside the surprising AI Advertising opportunity 

October 16, 2023 | By Todd Krizelman, CEO – MediaRadar @ToddKrizelman

Generative AI, the latest evolution of Artificial intelligence (AI), is captivating the public imagination, and new products and applications are emerging in just about every industry. This revolutionary technology holds the promise of automating routine tasks, surfacing insights from mountains of data, and advancing entire fields through innovation. 

As AI becomes more advanced, there is a growing need to advertise this new technology to the marketplace. This creates a new and robust advertising segment for media companies. Below are three key insights MediaRadar is observing among the recent burst of ad campaigns for AI offerings.

1. AI ad spending skyrockets in 2023

Our latest advertising intelligence reveals that AI advertising has expanded tremendously in 2023. In the first eight months of this year alone, over $9 million was invested toward digital, print, and TV ads surrounding AR promotion. This marks a noteworthy 9% increase from the $8.3 million spent during the same period in 2022.

Clearly, AI has solidified its place as an integral part of marketing strategies and budgets. The data shows that out of 192 AI advertisers analyzed, 93% invested less than $100k each in AI ads. While these smaller investments contributed $2 million cumulatively, the real acceleration is being propelled by a select group of brands making massive spends.

The remaining 7% of advertisers put over $100k each into their AI-powered campaigns, accounting for a substantial $7 million in AI ad spending. This indicates that the brands leading the adoption have fully embraced the capabilities of AI to transform their marketing efforts.

2. AI ads surged from June to August 2023

The period from June to August 2023 is when AI advertising began to take off, skyrocketing to nearly $6.8 million in spend. This staggering 60% surge compared to the $4.2 million spent in the same period in 2022 signifies that AI is rapidly transitioning from an emerging technology to a core component of digital strategies.

Dialpad, IBM Watson, Salesforce Slack, and YourHana.AI were among the brands making substantial investments during this period, which led to the overall increase. The number of active AI advertisers also expanded by over 1.5x, jumping from 70 in June-August 2022 up to 120 in 2023.

July 2023 represented the peak, witnessing a momentous 200% month-over-month increase in spend to reach $2.9 million. While August cooled off slightly with 2% year-over-year growth, the pace is clearly accelerating.

3. Most AI advertising is placed via digital channels

Digital advertising in this segment has received the most investment thus far in 2023. Digital comprised 58% of the total $10.7 million AI ad spend, while TV, print, events, and other channels split the remaining budget.

Within digital, paid social and digital display stood out as the top placements for AI advertising investment. Together, these two high-performing formats accounted for 42% of all digital AI investments made in 2023.

What does the future hold for AI advertising Investment?

While current AI ad spend may seem modest, make no mistake – enormous growth is on the horizon. In the last year alone, we tracked over 270 distinct AI advertisers. There were more than double the number of AI advertisers this summer versus last year. 

The surge in AI advertising presents a significant opportunity to capitalize on a fast-growing ad category. As investment in AI promotions ramps up, proactive steps should be taken to capture this spend:

  • Identify AI advertisers and brands in your pipeline to actively pitch. Look for companies launching new AI products or touting AI capabilities. Offer tailored AI-focused packages, partnerships, and placements.
  • Make sure sales teams are educated on the AI advertising landscape and key players. Equip them to have informed conversations with AI brands.
  • Develop premium advertising products to showcase AI campaigns. For example, interactive displays, augmented reality, and connected TV integrations: provide immersive environments to demonstrate AI tech.
  • Analyze viewer data and inventory to identify audience segments highly engaged with AI content. Craft high-value AI-specific audience targets for buyers.
  • Promote your audience reach, contextual alignments, and first-party data to AI brands. Position your properties as ideal platforms for AI product marketing.

By taking a proactive stance, you can become the go-to AI advertising destination before this category gets oversaturated. Seize the growing ad dollars from AI promotions now before competitors beat you to it. The AI advertising wave is here, and publishers should ride it to success.

While average monthly budgets are around $25k now, this will soon look minuscule as AI capabilities advance. Keep this growing segment on your radar, as we expect to see continued growth–and opportunity–from advertising AI technology throughout 2024.

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