AI-powered ad tools are rapidly gaining market share.
Meta CEO Mark Zuckerberg memorably declared last year that its automated ad tools had become so powerful that brands could simply connect a bank account, set their campaign objectives, and let its artificial intelligence take over. New data suggests a growing number of advertisers are doing just that.
A report released this month by the Madison and Wall consulting and advisory firm estimated that AI-powered advertising revenue in the US will grow 63% to reach $57 billion in 2026, accounting for 12% of total advertising spending.
Madison and Wall said the 88% of advertising that doesn’t rely on AI-powered tools will grow by 5% in the same period.
“We think it’s a new dimension” of advertising growth, said Luke Stillman, managing director at Madison and Wall.
The firm defines AI-powered advertising as spend that flows through platforms where AI controls targeting, bidding, budget allocation, and campaign optimization with minimal human intervention.
The two biggest tools of this kind are Google’s Performance Max and Meta’s Advantage+, though many other platforms, from Amazon to TikTok, offer similar AI-powered advertising products. Search and social media are the dominant channels for AI-powered ads, Madison and Wall said.
Tech companies often cite these tools as a way for advertisers to speed up the time it takes to create and deliver ad campaigns, though some advertisers are wary about handing over the reins entirely to black box systems. Generative AI ad tools, in particular, can occasionally go rogue and produce bizarre ads if not closely monitored.
Stillman said that while use of AI-powered ad tools leans slightly more toward small advertisers, the spending figures are now so large that it’s clear big brands are adopting the tech as well.
“Every advertiser is going to say, ‘We really value control, and we want transparency to understand where every one of our dollars is spent,'” Stillman said.
That said, when Madison and Wall looked at where companies are deploying their budgets, the firm saw “little evidence that they are not willing to trade transparency and control in return for price and performance.”
If AI-powered tools help an advertiser hit their return on ad spend targets, “transparency is a nice-to-have, not a must-have,” Stillman said.
Madison and Wall estimated that AI-powered ad budgets will grow at a compound annual rate of around 29% through 2030.
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