TLDR: A new report from the Interactive Advertising Bureau (IAB) projects that generative artificial intelligence will be involved in nearly 40% of all digital advertisements by 2026. Currently, 30% of digital video ads are already utilizing or being enhanced by AI tools, a significant increase from 22% last year. The widespread adoption is driven by AI’s ability to reduce production costs, accelerate content creation, and enable greater personalization and efficiency for advertisers, particularly benefiting small and mid-tier brands.
The landscape of digital advertising is undergoing a rapid transformation, with generative artificial intelligence (AI) emerging as a pivotal force. According to the Interactive Advertising Bureau’s (IAB) “2025 Digital Video Ad Spend & Strategy Full Report,” released on July 15, 2025, a substantial shift towards AI-driven ad creation is underway. The report forecasts that by 2026, close to 40% of all digital advertisements will incorporate generative AI technologies.
This projection follows a notable increase in current AI adoption within the sector. The IAB report indicates that 30% of digital video ads are presently either created with or “enhanced by” generative AI tools, marking a significant rise from 22% in the previous year. The momentum is strong, with 86% of companies surveyed by the IAB confirming they are either already leveraging generative AI or have concrete plans to do so for their video ad creative.
The primary drivers behind this accelerated adoption are multifaceted. Advertisers are increasingly turning to AI for its capacity to generate diverse versions of the same ad, allowing for highly targeted campaigns tailored to specific audiences—a reason cited by 42% of respondents. Additionally, 38% are utilizing AI for visual and style modifications, while 36% value its ability to enhance contextual relevance. Beyond these specific applications, the overarching benefits include improved production speed and considerable cost savings, democratizing access to high-quality digital video ad creation for small and mid-tier brands (SMBs) that previously lacked the extensive resources of larger enterprises.
David Cohen, CEO of the IAB, emphasized the profound impact of this technological shift, stating, “The economics of advertising are being transformed. As the costs of production fall, the opportunities for advertisers multiply.” He further elaborated on the expanding possibilities, noting, “The pool of potential advertisers is growing, as it is easier than ever to plan, buy, optimize, and creatively connect with consumers utilizing new technologies across all forms of media. The democratization of advertising and marketing is entering an exciting new phase, and the outlines of a new future are coming into view fast.”
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Unlike previous digital trends such as cryptocurrency and NFTs, which saw limited mainstream adoption in content creation, generative AI has garnered significant endorsement from major platforms like YouTube and TikTok, solidifying its ubiquitous presence in the industry. This widespread acceptance underscores AI’s role not just as a fleeting trend, but as an integral and enduring component of modern advertising strategies.
