Market Overview

The rapid evolution of generative AI is significantly reshaping digital advertising workflows and the competitive landscape. Beyond simple automation, innovations in text, image, and video generation—coupled with advanced data analytics and precision targeting—have shifted AI from a basic productivity tool to a strategic infrastructure. When segmented by two-axis analysis with AI usage level on one axis and advertising budget size on the other, advertisers fall into either “Aggressive AI Adopter/Active Advertiser”, “No AI/Defensive Advertiser”, or “General Advertiser (adopts AI largely for efficiency)”. Aggressive Adopters are frontrunners that leverage AI to maximize efficiency, then reinvest those gains into new growth initiatives to pull ahead. Defensive segment remains hesitant to adopt AI, running the risk of losing their competitive edge. The digital advertising market is shifting from traditional 'channel vs. channel' competition toward a total restructuring centered on AI integration. Consequently, the 'AI gap' will soon dictate who wins and who loses in digital advertising.

Noteworthy Topics

Advertising Budget Allocation by Ad Type (Past/Present/Future Outlook)

In terms of budget allocation, the advertising market is not experiencing a major structural shift. Instead, it is undergoing a gradual realignment within a stable framework centered on search advertising. Search advertising accounted for 34.9% of the budget in the past, 33.7% currently, and is projected to account for 33.6% in the future. Representing approximately one-third of the total, its status as a core medium is expected to remain largely unchanged. Meanwhile, allocation for social media ads has risen from 14.3% to 16.2% and is expected to remain at a high level, increasing its presence with short videos and direct conversion path (content-to-commerce). Demand for video ads is also expected to rise, driven by production efficiencies improved by generative AI, the proliferation of CTV (Connected TV), and the growth of short video. In contrast, display ads are showing a relative decline. Overall, the market appears to maintain a search-centric, multi-layered structure, while strengthening investment in top-of-funnel tools like social media ads and video ads.

Future Outlook

The proliferation of generative AI and AI Overviews is expected to drive industry restructuring rather than expand the overall digital advertising market. Going forward, AI will enable automated optimization, large-scale creative production, and more advanced data utilization. As a result, advertisers are expected to concentrate their investments on ROI-measurable media, such as search advertising, social media advertising, and advertising on video-sharing and streaming platforms. Retail media is also likely to see strong growth, particularly among advertisers with advanced data utilization capabilities. Conversely, conventional formats such as display advertising and native advertising are expected to experience a relative decline. Competition in the digital advertising market is shifting from “channel vs. channel” rivalry to competition among media platforms that can be optimized through AI. As a result, the widening “AI gap” is expected to become a key determinant of competitiveness in digital advertising.

Research Outline