A $1.3 trillion question: the rise of AI media

0:09Debra Aho Williamson: Hello and welcome to The Work Podcast. I'm Anne-Marie Kerwin, America's Editor, and today I'm going to be talking to the editors of a new report out from work that's looking at how AI media is changing ad investment. Now, artificial intelligence is set to have a huge impact on the global advertising market. The$1.3 trillion question is how? For all the hype, the future of AI media still feels uncertain. It's a gold rush where no one knows where to dig or even what the treasure should look like. How do you map what you can't yet see? Well, to better understand the likely effect of AI on ad investment, Wark Media has created this brand new report called Sightlines, and it's in collaboration with Deborah Aja-Williamson, who is founder and chief analyst at Sonata Insights, and she is also the writer of the AI Ad Economy newsletter.

1:00Debra Aho Williamson: And I'm delighted to say that Deborah joins us now along with Alex Brownswell, head of content at Wark Media. But before we get started, here's a quick word from our sponsor.

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1:52Debra Aho Williamson: Okay, we're back. Hello both. Hi, Debbie. Hello, Anne-Marie.

1:57Alex Brownsell: Hi, Marie. So good

1:58Debra Aho Williamson: to see you. Hi, Alex. Thanks both for being here. So let's just start, Alex, with you. Why don't you just tell us why was it important to look at this topic now? What made it so urgent that we needed to do this report now?

2:12Alex Brownsell: It's a really good question. I think from a walk standpoint across the sort of the breadth of walks content, I think we've extensively looked at how AI is moving the dial in creative, creative development, creative effectiveness. Then we've looked at strategy a lot on the impact that AI is having on strategy. We maybe haven't done so much in media. And that's for a couple of really good reasons. We all know that AI is rising up the agenda in media. It's becoming more important to the discussion, but it's quite tricky to approach from a market sizing perspective, which is obviously something that we do a walk media.

2:50Alex Brownsell: It's one of our core kind of offerings so at the same time when you have open ai for instance um publicly projecting ad revenues of 100 billion dollars a year by the end of the decade i think there was a sort of imperative maybe that we needed to to start taking a look at taking a look at this and and finding a way in and the way in we thought was to use walk media's treasure trove of you know ad market data that goes back 40, 50 years as this sort of vantage point to understand how we've got here and maybe then to sort of give us a clue about what might come next.

3:30Debra Aho Williamson: That's great. Yeah. And then, Debbie, can you just give us a little background on what we mean when we're talking about AI media? What's the scope that we use for this report? Yeah, that's a super great question. So AI media is a term that I coined. It's kind of a shorthand to reference the idea, not AI to create advertising or optimize campaigns, but the idea of AI platforms and AI native digital experiences becoming a media channel, just like you'd think of social media or retail media or search as a place to put advertising. I've coined the term AI media. And what that means and what that consists of is AI platforms like ChatGPT, where people are increasingly going to find information, to discover products, to compare brands or make decisions.

4:23Debra Aho Williamson: But people are also using AI features within established platforms like Google and Amazon. And all of these platforms and AI features are becoming new opportunities for advertisers to reach consumers. So ChatGPT may be probably the most widely known of these new media properties because it's been selling advertising for since February. So it's about seven, eight months. But there are also ads in Google's AI features and in Amazon's AI features and probably many more to come. So that's kind of a nutshell of what I mean by AI media. And let's talk about the second part of the title. The name of the report is Sightlines, but the second part is Fragmented Attention, Concentrated Value.

5:08Debra Aho Williamson: So what do we mean by that? So that one was a really fun one to come up with. So, I mean, the genesis of the report, Alex, you phrased it so well, was, you know, we had this, with work, we had this wonderful treasure trove of data looking back decades at media spend and how it's changed. And we also have access to a lot of different data sets that looked at consumer behavior with digital media over time. And one of the things that we hit on once we started putting those data sets together is that there's really a paradox at the heart of digital media. Over the past 25 years, consumer attention has become increasingly fragmented, right?

5:50Debra Aho Williamson: There are thousands, if not, you know, hundreds of thousands, or maybe even millions, you know, depending on how you've set the divide it up of places for people to put their attention. I mean, you just think about the number of creators there are on YouTube is just one example. The number of creators there are on Instagram is another example. All the websites, all the properties you can go to, that's a really different environment. And that has created a situation where consumers are everywhere, right? It's really hard to find them in a lot of ways. So that's the fragmented attention part, but something different is really happening with advertising investment.

6:30Debra Aho Williamson: Advertising investment, instead of fragmenting in the same way that I think consumer attention has fragmented, advertising dollars have over the past 25 years become really concentrated in a small number of platforms. In search, it's Google. In social, it's meta. And in Amazon, in retail media, it's Amazon. I gave away the punchline there, but you probably already got it. Each of those properties represent the lion's share, the vast majority in some cases, of advertising spending within those markets. And so that's what we mean by concentrated value. This is the paradox where lots of people are people are everywhere, but advertisers are tending to just put their money in a very small number of places that stand out as, you know, media properties where, you know, you want to be you don't want to spend all your money, it seems like.

7:23Debra Aho Williamson: And is that because those are the ones who got the best at like measuring and showing like the impact of your advertising or at least making it the easiest to spend on? Is that what is driving it? Very good. Yes. Both of those things. You know, I mean, obviously, all of those companies attract audiences, right? I mean, they have huge numbers of people, billions of people using their platforms. But they also develop these advertising systems that really made it easy for marketers to spend money and to demonstrate results. And what's interesting, you know, we have a really cool chart in the report deck that talks about this, but this kind of recreates a reinforcing cycle where better advertising of performance attracts more advertisers, which generates more investment in the platforms.

8:09Debra Aho Williamson: And so once this starts happening, it becomes a situation where advertisers are just, you

8:23Debra Aho Williamson: markets started developing, nobody really knew exactly which platform was going to become dominant. Think about search. I mean, there were lots of companies that were in search, you know, before Google came on, you know, names like Ask Jeeves and then Bing still exists and multiple others. Same in social media. I mean, MySpace was a dominant platform before Facebook came on as an example. So there was a lot of experimentation and nobody knew until a few years later, which platform was ultimately going to become dominant. It was definitely not obvious at the start.

8:57Alex Brownsell: Yeah, just to come in on that, really, I think the fragmentation of audiences, the concentration of monetization were two things that I guess we knew that we've reported on a hell of a lot at WALK. I don't think we'd necessarily stitch the two and really kind of explain the causality that they're related. One begets the other. because in a sense it feels counterintuitive, but we have this, Debbie kind of found these links between marketers that have concerns about fragmentation, that have concerns about performance, so funnel their investment in a narrower and narrower kind of field towards a smaller and smaller number of recipients because they think that's going to work better.

9:45Alex Brownsell: And I think just spelling it out was a bit of a sort of light bulb moment, a bit of a eureka moment when we were doing the planning for the report.

9:53Debra Aho Williamson: Yeah, I love the digital advertising sequence map that you guys put together for this that really shows the progression of how the investment gets more and more and more and why it happens. I was also really struck by the one chart that showed the amount of advertising investment in social outpaces the amount of consumer usage for social. So showing a little bit of how out of whack it's gotten that like we're advertisers think they're following consumers, but maybe they're spending too much time following a smaller set of consumers, I guess, is what I took away from that. Yeah, absolutely. I mean, I think that that was a really interesting finding.

10:37Debra Aho Williamson: But, you know, at the end of the day, yes, I mean, you know, social platforms, particularly Meta, are concentrated, you know, they do have concentrated audiences in some ways. And I think that that's a big factor to why advertisers continue to stay there.

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11:41Debra Aho Williamson: So, Alex, how did you go about trying to identify the potential impact of AI on the media market?

11:49Alex Brownsell: I think the key point that we make in the report is that no one knows what the future will hold for AI. As much as some people will very confidently proclaim this is going to happen or that's going to happen, I think we're still in the foothills of how that technology will rewrite our industry. So what we wanted to do is use existing data that's available, that looks at things like advertising spend, consumer behavior for instance and identify three potential scenarios um for what may happen um and then to kind of let people know the signals that they should be following to understand if if one or or the other may come true um so for instance the first um scenario that we identified was that ai media may strengthen the incumbent platform so this is the existing digital leaders the alphabets, the metas of this world, actually, we may see them increase their dominance by adding AI capabilities.

12:50Alex Brownsell: And the way that we did this was to look at, for instance, consumer behavior data. So there is data from Datos SEMrush that shows that the usage of Gemini, for instance, in the US and Europe is growing faster than the usage of ChatGPT, a newer platform. And also look to the ad spend side of things so WPP media we work with often on on some of our advertising spend reports they forecast that 158 billion they believe will be spent on but generative search ads globally by 2031 and Kate Scott Dawkins the author of their this year next year reports Kate's assuming that Google maintains our quote majority share of that so So these are two potential signals to keep an eye on to understand if the existing digital leaders, the incumbent, will actually just be kind of made more mighty by AI.

13:49Alex Brownsell: So that was one path that we looked at.

13:51Debra Aho Williamson: And then you really identified three possible paths going forward that where AI, based on past patterns, where AI media may end up. And Debbie, did you want to talk through any of the other scenarios? Yeah, yeah. So I'd love to talk through the second scenario, which is kind of the one that's getting the most attention, at least in my world, when I think about AI media, which is, does this actually create new advertising leaders? Does a company like OpenAI actually become a dominant player as an AI native platform and a major destination for both consumer attention and advertising investment? And so that one is an interesting scenario because obviously we're seeing OpenAI putting lots of resources into marketing itself as an advertising platform and bringing on new features, opening up new markets.

14:48Debra Aho Williamson: I think they've already established something like 50 to 60 markets globally, and they've only been selling advertising since February. So, you know, there's a compelling case to be made that, you know, that company could emerge as yet another digital advertising leader to challenge the incumbents, to challenge Google for ad revenue, to challenge Meta for social ad revenue, you know, takes the revenue from Meta, to challenge platforms like Amazon to take retail media revenue. And so the factors that we looked at as signals for whether this might happen and what to pay attention to if you're a marketer, if you're somebody in the advertising community, is whether AI starts to take attention from existing digital activities.

15:34Debra Aho Williamson: Do people increasingly use AI platforms or AI media to search more than they do on Google, for example? And the other factor would be, how is the ad revenue growing? I think going into, you know, we're in Q4, you know, big retail and holiday season, and then planning is happening for 2027. So looking at our advertisers actually, you know, making platforms like ChatGPT a line item in their budgets as opposed to just continuing to experiment. So those were two factors that I thought were really relevant to pay attention to. And then the final possible scenario is that AI media just ends up expanding the digital ad ecosystem.

16:21Debra Aho Williamson: What do we mean by that?

16:23Alex Brownsell: Well, I think, yeah, that's the sort of rising tide lifts all boats metaphor, I suppose, and probably the one that the majority of people listening to this podcast will hope happens. And for that, we looked at a couple of different signals. The first is that consumers at the moment are, obviously, there is increasing usage of AI platforms at the discovery phase, but they seem to be being used alongside other existing channels. So that could be search, could be social, could be old fashioned things like word of mouth. And it seemed to be complementary. And it's so not necessarily yet replacing those kind of previous touch points or existing touch points.

17:08Alex Brownsell: And a really smart way that this was kind of brought to life in the report, so this was a real live customer journey that we borrowed from a report from Datos SEMrush, was a consumer buying a new smart TV, I believe it was. And it went through every single touchpoint on the path of making that purchase and after the purchase. And what I thought was really interesting is AI platforms cropped up kind of two, three, four times, but alongside more than a dozen other touchpoints. So, you know, things like Reddit and Google for discovery. You've got brand.com, retailer.com when you're getting into the sort of sharp end of conversion.

17:54Alex Brownsell: um so again it's it's following that as a signal suggests that at the moment ai is is is augmenting it's adding something to the purchase journey but it's not necessarily replacing other things and and yeah as i said other platforms will be hoping that that's kind of what happens so i think we need to look at the the financial results for um for for smaller platforms back but perhaps you know we we mentioned in the report that that reddit has seen a 150 percent year-on-year revenue spike in the most recent quarter from Reddit Max. Snapchat's saying that it's seeing about a 9 % rise in ad revenues driven by AI-enabled products.

18:34Alex Brownsell: So it's something to keep an eye on across the spectrum.

18:38Debra Aho Williamson: And so, Debbie, given your long career in watching digital advertising develop from the very first report you did on Facebook, when it first appeared as the Facebook through to today, what do you think is the most likely scenario out of those three for AI media to follow? Well, you know, this is what I love about being an analyst working at the early stages of shift in digital marketing, digital media. Any of these scenarios could be likely, which is why we, in this research and in this report, wanted to present all of these scenarios as options and things to pay attention to because I think the answer will emerge over the next months and years.

19:27Debra Aho Williamson: If you had to pin me down right now, and I emphasize right now, because, you know, as you know, with social media, things change. My first report on social media was focused mostly on MySpace because that was the platform that everybody was paying attention to. And, you know, We, of course, know what happened in social media. So I preface that all by saying if I had to choose one scenario, I would say that the first scenario, strengthening the incumbent platforms, is probably the most likely outcome, at least in the near term. Companies like Google, Meta, and Amazon, I mean, they do have enormous advantages.

20:11Debra Aho Williamson: They have these established relationships with advertisers, well-used, well-appreciated advertising technology, lots of data, and the ability to just integrate AI and AI experiences, chat into what people already do with those platforms. Google's a really great example because if you look at what Google's doing, it's not segregated. Again, yes, it has Gemini, but there's AI overviews and AI mode, and they're all very integrated now with the search experience. I mean, I don't know. My experience lately when I've been using Google search is I'm starting with a search, and then it's presenting me an AI overview, and then it's saying, do you want to learn more?

20:58Debra Aho Williamson: And it's plopping me into AI mode to learn more, and then eventually I'm going back to search. So it's becoming kind of a unified experience that's integrated rather than separate. And I think that actually could put Google in a dominant position because it could just say, you know, hey, you know, this AI off these AI ad offerings that we have are just part of the normal package of things that you do on Google. So that's where I'm at right now. I do think the incumbents have the advantage today, but, you know, I wouldn't rule out a new advertising leader emerging. Open AI is moving really, really quickly.

21:38Debra Aho Williamson: So you can't look away from what they're doing and how they're changing and shaking up advertising. And since I've followed a lot of your work through the years, I know it's always look at what the consumers are doing. So we have to watch and see what behaviors consumers end up adopting, right, as they start. Absolutely. Yes. I mean, good point. I mean, my research for social media started because I was paying attention to what young consumers, particularly college students, were doing and how they were changing the way they were communicating. And the way that I look at AI is from the lens of the consumer.

22:18Debra Aho Williamson: Like, are they actually doing more search? Are they actually purchasing? Are they getting more information? Are they abandoning other things? It's all still developing, but that is the foundation. And that's super important to pay attention to if you're a marketer or an agency or a media property in this world. Oh, that's great. Right. So, Alex, we took a different approach to this report than our usual WALK reports. Explain why we changed our format a little bit for this report and what that does for portraying what we found.

22:55Alex Brownsell: Yeah, it was a really interesting experience, actually. So WALK subscribers will be very familiar with the usual report style. There's a lot of data visualization, should I say, a lot of commentary alongside it. And, you know, for Walk Media, that very much is our approach with global ad trends, platform insights, retail media radar, these report series that we put out each quarter. With sight lines, we wanted to try something completely, not completely different, but fairly different. We wanted to strip it back and really focus on visual storytelling and let the data and the graphics tell the narrative.

23:37Alex Brownsell: and I'd be absolutely lying if I didn't say we were a bit inspired by the kind of decks you see produced by people like Benedict Evans these are sort of these page turning kind of decks where you can really quickly absorb the narrative flicking through and if you want to stop and look at the data to kind of verify that claim then you can do and it was definitely a new experience it was learning some new muscles that we didn't maybe have and I want to give a shout out to our lead uh our lead designer Xiaochuan Zhu who is um yeah he was fabulous to work on on this work with on this project because he kind of took it in a whole new direction and I mean I think it's the best looking report we've ever done and I'm biased but I'm really happy with how it

24:21Debra Aho Williamson: came out well I would 100 % agree and I would just say on a personal note um I was an English major in college, I wrote 40-page research theses, and I wrote long research papers about social media over the years. I write a sub stack. I'm a writer, and when Alex presented this idea of creating a report that was very visual, I was like, oh, that's an interesting challenge, and it was great. It was a really fun experience. I think one of the things that I took away from it is just the importance of of using the headlines to move the story along. We spent a lot of time thinking about how each page or each slide moves into the next and how it all supports the narrative and is eventually a very deliberately analytical report that moves the reader, you know, moves you as readers along towards a conclusion and an action, right?

25:20Debra Aho Williamson: Because we do end with five questions that marketers should monitor as the market evolves. And so that framework is really valuable, I think, because what we've done to establish it through all the visual storytelling is it helps, I think, you know, give people a little bit of grounding amid all of this uncertainty rather than a prediction of a single outcome. Exactly. Yeah. And also, chart alert, lots of people for your slides we have lots of beautiful visuals for you to pop into your slides yes

25:54Alex Brownsell: definitely there's lots there's lots of stealable material in there please do stealable stuff um so alex how can people get their hands on sight lines so yeah different way of presenting the the content and and designing the report and there was a different way actually of launching this this was a first for us we we basically um pushed out a sort of secret exclusive drop for walk media subscribers over the last few weeks. You may have seen an email come into your inbox from me giving you a link to the report. It was sort of slightly hidden on the website, but from this week, we are going to be opening the report up to non-subscribers.

26:34Alex Brownsell: So you can go onto the website and take a look. I will, for those based in London or flying into London, I will also be presenting the report at the Future of Media London conference in early November. And I think that's one thing that we really wanted this report to be, to be something that can live and breathe as a sort of real life kind of piece of content as well. So if you have a marketing or media conference coming up soon and, you know, on either side of the pond and you'd be interested in us presenting, then reach out to me or Debbie, I'm sure we'd be happy to oblige.

27:07Debra Aho Williamson: Oh, well, great. Thanks so much for coming on today. And this was a really fun report to talk about. So thank you. Thank you, Alex. And thank you, Debbie. But I'm afraid that's all the time we have today. So the sightlines report is available for work media subscribers to read on the work website. And if you're not a work subscriber, you can go just give us some details and we'll make sure you can see it as well. Remember, you can subscribe to the work podcast on your favorite podcast platform. And if you really liked it, go and leave us a review. Until next time. Thanks for listening.

27:43Thank you.