TLDR: A new report by the Interactive Advertising Bureau (IAB) reveals that nearly 90% of advertisers are either currently using or planning to integrate generative AI (GenAI) into their video ad creation processes. This shift is democratizing high-quality video production, making it accessible and affordable for small and mid-tier brands, and is projected to account for 40% of all ads by 2026. Marketers are leveraging GenAI for audience-specific versions, visual style changes, and contextual relevance, fundamentally altering the economics of advertising.
The advertising industry is undergoing a significant transformation, with generative artificial intelligence (GenAI) emerging as a pivotal force in video ad creation. According to the ‘2025 Digital Video Ad Spend & Strategy Full Report’ by the Interactive Advertising Bureau (IAB), a staggering 86% of digital video buyers are already utilizing or intend to use GenAI to develop their video ad creative. This widespread adoption underscores GenAI’s essential role in modern advertising, with projections indicating that GenAI-created content will constitute 40% of all ads by 2026.
This revolutionary technology is not only streamlining campaign development, testing, and scaling but also democratizing the creation of high-quality digital video advertisements. Small and mid-tier brands (SMBs) are particularly quick to embrace GenAI, leveraging its capabilities to produce sophisticated video ads quickly, affordably, and at scale. This bypasses the traditional need for extensive teams or costly production, capabilities that were once exclusive to larger enterprises.
David Cohen, CEO of IAB, emphasized this paradigm shift, stating, ‘The economics of advertising are being transformed. As the costs of production fall, the opportunities for advertisers multiply.’ He added that ‘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.’
Beyond mere production, marketers are actively employing GenAI for advanced customization. The report highlights that 42% of advertisers are using GenAI to create distinct versions of ads tailored for different audiences, while 38% are applying it for visual and style modifications. Additionally, 36% are utilizing the technology to enhance contextual relevance. These capabilities enable marketers to refine storytelling based on immediate feedback and test strategic ideas with synthetic audiences, significantly reducing research time and risk.
However, industry experts caution against merely using GenAI for speed and cost reduction. A recent report from Incubeta on August 20, 2025, points out that while half of surveyed companies use GenAI for content creation and 45% for brainstorming, many marketing leaders are ‘missing out on the opportunity to move from reactive optimisation to a quality, proactive orchestration, and a much more profitable output.’ The true value lies in leveraging AI as a ‘creative partner’ to surface insights and guide decision-making even before production commences.
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The impact of GenAI extends to the broader digital video landscape. In 2025, digital video ad spend (encompassing CTV, social video, and online video) is expected to grow by 14% to reach $72 billion, making up 58% of the total TV and video ad spend. CTV spend alone is projected to increase by 13% to $26.6 billion, with buyers expecting 47% of CTV inventory to be biddable, up from 34% last year. This indicates a strong move towards more automated and data-driven advertising strategies, further propelled by GenAI’s transformative potential.
