AI, the «Big Tech» potion to expand its dominance in the advertising ecosystem
The tumultuous entry of AI onto the scene is accelerating (even more so) the dominance of «Big Tech» in the advertising market.
Big Tech companies are investing heavily in AI, and their commitment to this technology is further accelerating their already colossal dominance in the advertising industry.
Over the past decade, thousands of advertisers of all sizes have sought refuge in digital platforms like Facebook, Amazon, and YouTube, aiming to connect more precisely and with near-perfect accuracy with their target audience (thanks to the valuable data stored within these platforms).
The explosive arrival of AI, which expands Big Tech’s «superpowers» in terms of segmentation, is further accelerating the dominance of major digital platforms in the advertising market. And the expansion of its reach in the advertising industry is ultimately having a positive effect on investment, which was initially expected to contract in an increasingly uncertain environment marked by the impact of tariffs and growing consumer spending restraint.
In the United States, advertising investment growth was initially projected at 8.5% by 2025, but the growing influence of Big Tech in the advertising market could boost that growth to 10%, according to Brian Wieser, an analyst at Madison & Wall, in an interview with The Wall Street Journal.
With the invaluable help of AI (which significantly improves content recommendation systems), Meta and Google are managing to increase the average time users spend on platforms like Instagram and YouTube, which is naturally excellent news for advertisers.
AI is helping to strengthen Big Tech’s dominance in the advertising industry.
Meta, for example, claims that its AI-powered content recommendation systems have led to a 5% increase in user time spent on Facebook during the third quarter of the year. This data is absolutely crucial, because the more time people spend on digital platforms, the more ads can ultimately be shown there.
By 2025, Meta, Google, and Amazon will alone control more than 56% of the advertising market in the United States. Two years ago, this proportion was only 51%.
«Even though we are still in the early stages of AI, we are seeing this technology significantly accelerate Big Tech’s dominance in advertising,» emphasizes Michael Nathanson, media analyst at MoffettNathanson.
During the presentation of its latest quarterly results, Alphabet, Google’s parent company, emphasized that its investment in AI-generated summaries in Google Search was resulting in more searches, including commercial searches (crucial for boosting advertising).
Meta, for its part, also insists that the convergence of advertising and AI is leading to a considerable increase in advertising effectiveness.
Both Google and Meta have launched AI tools in recent months that automate a large part of the processes involved in launching advertising campaigns and significantly reduce their cost.
Google intends to continue investing in AI to help advertisers accelerate creative processes, and Meta has set a goal of fully automating campaign creation and segmentation with artificial intelligence by the end of next year.
However, the combination of AI and advertising is not necessarily fruitful and is sometimes prone to resounding missteps. Meta has, in fact, recently found itself in the eye of the storm for producing completely absurd ads with the support of AI (without advertisers even noticing).
However, despite the setbacks, the fusion of AI and advertising seems destined to remain ubiquitous in the coming months in an environment governed by uncertainty, where advertisers have limited budgets and are looking to maximize their spending. In the current advertising landscape (fraught with uncertainty), Big Tech companies definitely have an advantage when it comes to winning over advertisers, and AI only amplifies that advantage.
Source: www.marketingdirecto.com
