AI is set to transform advertising models and drive hyper-personalisation, PwC predicts, forecasting advertising spend to grow three times as fast as entertainment and media consumer spending.

As growth for paid or subscription products slows amid heightened industry competition and constrained consumer spending, particularly in mature markets, advertising is forecast to represent a significant driver of revenue growth for the E&M industry at-large.

The fastest growing E&M revenue metrics over the next five years are all advertising driven – including retail advertising (15%), social and mobile on-stream video advertising (15%), and connected TV in-stream internet advertising (14%).

Digital formats, which account for 72% of overall ad revenue in 2024, will rise to 80% in 2029, with new technologies including AI and hyper-personalisation expected to drive this even further.

High growth areas include retail search advertising in e-shopping (rising from 32.7% in 2020 to 45.5% in 2029) and advertising in video games (rising from 32.8% in 2024 to 38.5% in 2029).

AI is impacting the E&M industry in many ways. One of the areas in which it is likely to influence revenue growth is in connected TV. In 2020, connected TV advertising revenue equated to just 5.9% of total traditional broadcast TV advertising.

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In 2024, this figure had jumped to 22%. But with the rise of digital engagement and the prospect of AI-assisted hyper-personalisation, which may lead to greater end-user uptake, connected TV ad revenues will rise to $51bn in 2029, equal to 45% of traditional broadcast TV advertising.

“As the E&M industry continues to be impacted by broader economic uncertainty and constrained consumer spending, advertising is emerging as the leading powerhouse of the global entertainment and media industry’s revenues – a transformation expected to continue as AI transforms delivery models, democratises content production, serves highly curated content experiences, and reduces barriers to entry,” Bart Spiegel, global entertainment and media leader, PwC US, said.

“The E&M industry has always been at the forefront of technological innovation, but companies will need to remain nimble and proactive to embrace the future and satisfy consumers in an ecosystem that rewards creativity and tailored content.”