The Robot in the Room: What AI Means for Advertising

AI is coming to the advertising industry. In truth, it has been part of the advertising industry for a decade or more, it is just that recently the impact is easier to see. Here are a couple of articles to give you some background for a lecture or class discussion.

• “The Ad Industry’s A.I. Reckoning” (New York Times, June 14, 2025). The advertising industry is facing a major turning point as AI tools developed by tech platforms (like Meta, Google, Amazon, Snap, and Pinterest) are increasingly capable of creating entire ad campaigns—raising existential questions for traditional ad agencies. Platforms like Meta are rolling out tools that allow advertisers to create AI-generated ads with no agency involvement. This threatens the traditional role of agencies in ad production. If AI can generate the ad, what is the going rate for an original idea? This philosophical and economic question looms large over the industry’s future.
• “The ad agencies are staring down the barrel of AI,” (Sherwood News, June 9, 2025). Artificial intelligence is disrupting the traditional ad agency model, and WPP’s CEO Mark Read is stepping down as the company faces a steep decline in stock price—down more than 34% in 2025—highlighting the industry’s crisis. All six major ad holding companies are having a bad year, but WPP is the worst off. Its CEO resigned after stock plummeted more than 30% YTD. 

Lecture/discussion ideas

In the context of Chapter 15 (our advertising chapter), ask your students what aspects of advertising are most affected by AI? Here are some initial thoughts. Some of these are reflected in the articles and/or the textbook. Others are ideas that I am currently adding to the next edition of Essentials of Marketing. Either way, they give you some talking points when you cover advertising.

1. Creative Development by Agencies. AI now generates ad copy, headlines, images, video, and even campaign concepts automatically. Essentials of Marketing emphasizes the role of ad agencies in generating the copy thrust (message planning) and creative execution. With AI tools (e.g., Meta’s ad generator), brands can skip the agency and go directly to platforms for AI-produced content.
2. Media Planning and Buying. AI excels at optimizing ad placements in real-time based on data—what is referred to as programmatic delivery in the chapter. This automates the traditional media planner’s job (e.g., selecting magazines, websites, or TV channels), threatening the human expertise traditionally required to match media to target markets. We have seen this happening for a decade or more.
3. Measurement of Effectiveness. systems can instantly analyze A/B tests, engagement rates, click-throughs, and even emotion recognition from facial cues in video views. The chapter describes the challenges in measuring ad effectiveness and the need for pretesting and tracking against objectives. AI makes much of this faster and more precise, reducing the need for manual methods.
4. Sales Promotions with Mass Appeal. Traditional “blast” promotions can now be outperformed by AI-generated personalized offers based on behavior, time, and location. Domino’s, for example, uses customer data to time texts and customize discounts—a form of AI-powered sales promotion.
5. Precision Targeting and Retargeting. AI enhances targeting by processing first-party data, behavioral signals, and context to deliver the right ad at the right time. Essentials of Marketing discusses geographic targeting, behavioral retargeting, and mobile personalization—all of which are AI-enabled at scale.
6. A/B Testing and Optimization. AI continuously tests creative elements and optimizes campaigns in real time—something that was once slow and manual. The chapter notes the need for pretesting and lab/field testing of ads. AI automates this, improving speed and accuracy.
7. Customer Data Analysis and Micro-Segmentation. AI rapidly processes massive datasets to uncover patterns in purchase behavior, preferences, and response triggers. Domino’s use of third-party data and AI to tailor promotions to individuals like “Cheryl” or “John” is a perfect example.
8. Message Personalization and Dynamic Creative. AI enables real-time changes in imagery, copy, or tone depending on the viewer’s profile, intent, or mood. While the chapter emphasizes crafting a strong message through AIDA (Attention, Interest, Desire, Action), AI allows different versions of that message to be tested and delivered dynamically—especially in digital formats.

Implications for Students and Instructors

This changing landscape could fuel:

• Debates: Should ad students focus more on prompt engineering than storyboarding?
• Skills shifts: From creative ideation to supervising AI or validating ethical outputs.
• Ethics discussions: More relevance for native ads, retargeting, privacy, and DE&I in AI-generated campaigns.

ChatGPT was used to generate ideas for this blog post.