Advertising & PR Agencies NAICS 541810, 541820

Nov 6, 2025 - AI Shifting Advertising Industry Power to Tech Platforms

• AI is reconfiguring the advertising ecosystem in favor of large digital platforms, according to marketing consultancy Madison & Wall (M&W). US ad spending is expected to rise more than 8.5% this year, largely driven by AI-enabled ad targeting, creative tools, and audience engagement. Facebook, Google, and Amazon are projected to capture over 56% of the US ad market this year, per M&W, a 4% increase from two years ago. AI-driven improvements, such as enhanced recommendation engines that boost time on-site (Facebook reported a 5% increase in time spent in Q3) and generative-AI ad-creation tools, are enabling technology companies to increase ad volume, optimize production costs, and improve demographic targeting. At the same time, smaller media players and independent ad agencies face the squeeze: when platforms become more efficient and attractive to advertisers, those tech firms pull more ad dollars in-house, reducing the role of traditional agencies.
• YouTube increased advertising revenue by about 15% year over year in Q2 2025, highlighting the platform’s accelerating growth as advertisers continue to shift budgets from traditional television to digital video. The site’s advertising revenue reached $10.3 billion, up from $8.9 billion in the same period last year and $9.8 billion in Q1. The surge reflects YouTube’s expanding influence in the broader TV advertising market, as brands increasingly recognize its ability to reach audiences across multiple screens, including living-room devices. Analysts note that YouTube is capturing a growing share of TV ad dollars, leveraging both its massive user base and advanced targeting capabilities, which allow advertisers to reach specific demographics more efficiently than broadcast television. The platform’s performance underscores the ongoing migration of ad spending toward digital channels, emphasizing the importance for brands to integrate YouTube into their broader media strategies.

• A recent survey by podcast advertising agency Oxford Road shows that nearly $1 billion in potential ad spending is being held back from the format due to inconsistent measurement metrics across platforms. According to the survey, 71% of advertisers find current analytics inadequate for assessing campaign performance, especially when integrating video and cross-platform strategies. More than half of respondents reported difficulty justifying ad budgets without reliable data. Additionally, 62% said they’re hesitant to increase spending on podcasts because of the lack of standardization. Despite podcasts’ popularity and effectiveness in reaching highly engaged niche audiences, advertisers remain cautious and commit only minimal budgets. The survey also found that 48% of brands are exploring podcast advertising but are waiting for better measurement tools. Industry experts emphasize that developing standardized, clearer analytics is critical to unlocking the full potential of podcast advertising and converting hesitant ad dollars into active spending.
• Employment was flat but wages climbed slightly in the advertising industry in the first half of 2025, reflecting industry consolidation, a growing adoption of AI, and stagnant hiring. Employment stayed the same year over year in August 2025 and wages for non-supervisory employees rose 1.8% in July to an average of $37.35 per hour. The massive merger between ad giants Omnicom and Interpublic Group, which will be the world’s largest advertising company, is expected to control about 30% of the dollars among all media-buying agencies. The combined firm plans about $750 million in cost cutting, which will include headcount. Omnicom had already cut its US workforce by 11% in 2024, a loss of about 2,800 industry jobs. In addition, AI is taking over more of the heavy-lifting of research and creative services, reducing the need for headcount, and the industry is hiring more pre-MBA graduates who have lower starting salaries.