The IAB’s latest report reveals that while AI is reshaping the advertising industry, both advertisers and consumers remain cautious.
AI-driven adspend it projected to hit £18bn by 2030 in the UK, making up a third (32%) of digital spend, according to IAB UK’s State of Advertising report.
Artificial intelligence (AI), since its introduction in 2023, has changed the way the advertising landscape in a transformative way – with a complete “upheaval to the information ecosystem, brand discovery, and performance marketing” infrastructure.
The marketing industry is optimistic with 73% of advertisers believing that AI will transform the industry for the better – although this figure sits at just 50% among IAB UK members.
Around three-quarters (74%) of survey respondents are at least ‘experimenting’ with agentic AI, with 12% scaling and integrating agents into their infrastructure. Just 4% categorise themselves as ‘agent-first’ – defined as using agents to autonomously plan, negotiate, optimise entire campaigns – the report revealed.
Some categories are expected to be given a competitive advantage by AI, with tech companies, adtechs, advertisers, and brands all seen as the biggest beneficiaries – with fewer than 5% of IAB UK members believe these groups are likely to be the ‘losers’ of AI usage.
The sentiment among advertisers is much more positive than among IAB members – more than half of advertisers believe every role in the industry will be positively affected. While IAB members said publishers (71%), advertising agencies (76%), and content creators (83%) will be neutrally or negatively affected.
Evolving AI ad models
AI ad models are being introduced at an accelerated rate, but advertisers are not yet comfortable with the majority of cases, with concerns around reliability and transparency at the fore.
Almost half (47%) of advertisers said they don’t trust AI agents due to a ‘lack of transparency in decision-making’. Among IAB UK members, this rises to 67%.
The report also found advertisers are reluctant to delegate all control for outputs such as AI-generated assets, with trust falling by more than half when human oversight is removed from the creative process. It’s the same for AI-driven media buying, with high or complete trust falling from 68% with human review to 26% without it.
In addition, several key structural barriers continue to limit the pace and scale of AI adoption, the study highlighted.
A third (33%) of IAB UK members and 27% of all advertisers raised concerns around data privacy and compliance being a key barrier to adopting AI. Other challenges included the high cost of tools, lack of trust in AI and brand safety or content quality. A lack of internal skills is another big barrier, highlighting the education that’s needed in the industry.
Consumer trust is growing
On the consumer side, it’s a more nuanced picture. Many are using AI at scale with 73% having used it in the past three months. More than half (58%) said they use ChatGPT, closely followed by Gemini (45%). Around 44% reported using a brand or retailer chatbot, and 43% said Alexa.
Half (49%) said the primarily use for AI is researching products before buying, as well as, comparing prices and deals (42%), and content creation (38%). This represents a huge opportunity for advertisers, as consumers are now gathering information about products and services through LLMs.
Todd Parsons, chief product officer at Criteo, said: “There’s still a whole lot of room for advertisers to help consumers through AI… whether that’s to find products more effectively or discover new brands that might not have been found otherwise with search. There are opportunities to influence the way that models interact with us as consumers and guide us through discovery.”
The report highlighted that consumers remain cautious when it comes to AI-generated content. Around 60% were found to be either neutral or uncomfortable with being shown AI-generated content in advertising, rising to 67% in social media, and 71% by virtual influencers or creators.
Less than a quarter (23%) are currently comfortable with an AI assistant making a purchase on their behalf, managing their subscriptions (39%), or building a shopping basket (47%).
This is significant given the acceleration of the zero-click environment, as AI becomes one of the most important routes of discovery that advertisers will need to utilise.
