Technology

AI-generated advertising disrupts digital marketing with new efficiencies and ethical challenges

Saturday, 1 November 2025 5:03AM UTC

Generative AI technologies are revolutionising advertising in 2024, enabling rapid, cost-effective content creation while raising key ethical and regulatory issues for brands and platforms alike.

The advent of AI-generated advertising marks a transformative chapter in the creative industries, fundamentally reshaping digital marketing dynamics as of 2024. Advances in generative AI technologies now allow the creation of entire video advertisements without traditional filming or human actors, accelerating production and reducing cost barriers. A notable example is Toys R Us’ AI-crafted commercial released in June 2024 which used OpenAI’s Sora model to deliver a nostalgic brand story featuring its founder Charles Lazarus. This breakthrough builds on OpenAI’s earlier launch of Sora—a text-to-video AI capable of producing realistic one-minute clips with complex scenes—highlighting the increasingly sophisticated capabilities of generative AI in advertising.

Industry analyses underscore the profound economic potential of this trend. A McKinsey report projects AI-driven marketing innovations could add up to $2.6 trillion in global value by 2030, while PwC estimates AI’s cumulative impact on the economy could reach $15.7 trillion, with marketing and sales benefiting from streamlined workflows and enhanced targeting. Importantly, generative AI drastically shortens time-to-market, replacing lengthy multi-week productions with rapid, iterative content creation. For example, AI platforms like Runway’s Gen-3 Alpha and Adobe’s Firefly video model, which entered beta in September 2024, enable hyper-realistic video generation from simple prompts, allowing brands to experiment freely with customisable campaigns.

Businesses large and small are already harnessing these advantages. Fintech firm Klarna has reported annual marketing cost savings of around $10 million by integrating generative AI tools including Midjourney, DALL-E, and Adobe Firefly, which have enabled frequent, event-specific content updates without reliance on external agencies. Klarna’s marketing image production cycle has shrunk from six weeks to just seven days, facilitating the creation of over a thousand images in early 2024 alone, reflecting AI’s operational efficiency. Similarly, consumer goods giant Mondelez is deploying a newly developed generative AI tool to cut marketing content production costs by 30 to 50%, preparing AI-powered TV ads for major events like the 2026 holiday season and the 2027 Super Bowl. Mondelez’s initiative also focuses on balancing innovation with ethical oversight, ensuring AI content avoids harmful stereotypes and is reviewed by humans before publication.

The technology's accessibility is notably democratizing quality advertising, empowering startups and smaller companies. A Ukrainian edtech startup documented a 40% rise in return on investment (ROI) for video ads while slashing production expenses by adopting AI tools like Midjourney and HeyGen, illustrating AI’s impact beyond large corporations. Additionally, IBM’s trial of Adobe Firefly revealed campaigns with AI-generated images achieving engagement rates 26 times higher than traditional benchmarks, emphasising personalised marketing’s compelling effectiveness at scale.

Tech giants continue to vie for dominance in this evolving marketplace. Meta Platforms has announced plans to fully automate ad creation and delivery by 2026, with AI managing everything from visual and textual content to optimal targeting and budget allocation across platforms like Instagram and Facebook. Meta’s system tailors ads dynamically based on user data such as geolocation, creating unique experiences for billions of users. Google’s AI video model Veo and OpenAI’s Sora also offer competitive alternatives, while ongoing technological advancements aim for multimodal AI integration that combines text, image, and audio for immersive, interactive ads—promising disruptive innovations in sectors like automotive marketing.

However, the rise of AI in advertising brings ethical and regulatory challenges. Concerns around deepfakes, misinformation, and brand safety have led to calls for transparency, such as mandatory disclosure labels for AI-created content in the European Union’s AI Act and guidelines from the U.S. Federal Trade Commission. Companies are adopting best practices including watermarking AI outputs and conducting bias audits to ensure diverse representation. Such safeguards seek to build consumer trust and maintain compliance amid fast-evolving technological capabilities.

Technically, AI-generated ads rely on diffusion models and transformer architectures, exemplified by Sora’s physics simulation and scene coherence capabilities achieved through training on vast libraries of licensed video data. Cloud computing platforms like AWS address high computational demands, enabling scalable integration via APIs. Market projections foresee the AI-advertising sector growing from $4.5 billion in 2023 to over $100 billion by 2032, driven by e-commerce leaders utilising AI for dynamic, personalised promotions.

Looking ahead, the marketing landscape is set for a paradigm shift. Gartner’s 2024 forecasts suggest that by 2027, 90% of digital content creation will be AI-assisted, redefining job roles to focus on AI ethics, prompt engineering, and human-AI collaboration. Businesses poised to capitalise on this trend will combine AI’s creative scalability with human oversight to craft innovative, ethical campaigns that resonate authentically with diverse audiences worldwide.

📌 Reference Map:

Paragraph 1 – ^[1] (Blockchain News)
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Paragraph 3 – ^[2] (Reuters), ^[5] (Reuters)
Paragraph 4 – ^[4] (Amraandelma), ^[6] (Axios)
Paragraph 5 – ^[3] (Reuters), ^[1] (Blockchain News)
Paragraph 6 – ^[1] (Blockchain News), ^[5] (Reuters)
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Paragraph 8 – ^[1] (Blockchain News), ^[3] (Reuters), ^[2] (Reuters)

Source: Noah Wire Services

More on this

https://blockchain.news/ainews/ai-generated-ad-campaigns-transforming-digital-marketing-in-2024 - Please view link - unable to able to access data
https://www.reuters.com/technology/klarna-using-genai-cut-marketing-costs-by-10-mln-annually-2024-05-28/ - Klarna, a fintech firm, has adopted generative AI (GenAI) to streamline its marketing operations, yielding annual savings of approximately $10 million. By incorporating AI tools such as Midjourney, DALL-E, and Firefly, Klarna has significantly reduced image production costs by $6 million. This technology allows for frequent updates to images on the company's app and website, tailored to various retail events like Valentine's Day and Mother's Day, without incurring high costs. In the first quarter, AI accounted for 37% of an 11% reduction in the sales and marketing budget while increasing campaign numbers. Additionally, the company has saved $4 million by reducing reliance on external marketing suppliers. Klarna's use of GenAI has expedited the image development cycle from six weeks to seven days, resulting in the creation of over 1,000 images in the initial three months of 2024. Klarna has also partnered with OpenAI for an AI customer service assistant capable of performing tasks equal to the workloads of 700 full-time agents. ([reuters.com](https://www.reuters.com/technology/klarna-using-genai-cut-marketing-costs-by-10-mln-annually-2024-05-28/?utm_source=openai))
https://www.reuters.com/business/media-telecom/meta-aims-fully-automate-advertising-with-ai-by-2026-wsj-reports-2025-06-02/ - Meta Platforms plans to fully automate its advertising process using artificial intelligence (AI) by the end of 2026, according to a report by the Wall Street Journal. The initiative will enable brands to generate complete ad campaigns—including images, videos, and text—by simply supplying a product image and budget. Meta's AI will then determine optimal ad targeting on platforms like Instagram and Facebook, while also offering budget recommendations. These tools will personalize ad content in real time based on user data such as geolocation, creating unique versions for each viewer. With over 3.43 billion active users, Meta's AI-driven advertising system is anticipated to be highly attractive to marketers. CEO Mark Zuckerberg emphasized the need for AI solutions that provide measurable outcomes at scale, envisioning a one-stop platform where businesses can set goals and budgets, leaving the AI to manage the execution. Competitors like Snap, Pinterest, and Reddit are also doubling down on AI investment in the competitive digital ad market, although concerns about brand safety and content quality persist among advertisers. Other companies, including Google and OpenAI, have released similar tools, but their adoption has been more cautious. ([reuters.com](https://www.reuters.com/business/media-telecom/meta-aims-fully-automate-advertising-with-ai-by-2026-wsj-reports-2025-06-02/?utm_source=openai))
https://www.amraandelma.com/ai-generated-ad-creative-performance-statistics/ - A Ukrainian edtech startup reported a 40% increase in ROI on video ads after adopting AI tools like Midjourney and HeyGen. Alongside this ROI growth, the company also saved significant production costs. Their experience highlights how AI can transform not just outcomes but also efficiency. For resource-constrained startups, this type of advantage can be game-changing. The stat proves that AI’s benefits extend across industries and company sizes. ([amraandelma.com](https://www.amraandelma.com/ai-generated-ad-creative-performance-statistics/?utm_source=openai))
https://www.reuters.com/business/media-telecom/oreo-maker-mondelez-use-new-generative-ai-tool-slash-marketing-costs-2025-10-24/ - Mondelez, the maker of popular snacks like Oreo and Cadbury, is implementing a new generative AI tool to reduce marketing content production costs by 30% to 50%. Developed in collaboration with IT firm Accenture, the AI tool aims to produce short TV ads in time for the 2026 holiday season and possibly the 2027 Super Bowl. Mondelez has already invested over $40 million in the project, with expectations of greater savings as the tool evolves to generate more sophisticated content. The AI is currently being used for digital content, including social media promotions for Chips Ahoy in the U.S. and Milka chocolate in Germany, where it personalizes visuals based on target audiences. By November, Mondelez plans to use the AI for Oreo product pages on e-commerce platforms like Amazon and Walmart, and expand its use to markets in Brazil and the UK. The initiative is part of Mondelez's broader strategy to counter rising costs and consumer budget pressures by reducing dependence on advertising agencies and speeding up marketing timelines. The company has set strict guidelines for AI-generated content, avoiding unhealthy behavior and offensive stereotypes, and ensuring all output is reviewed by humans. ([reuters.com](https://www.reuters.com/business/media-telecom/oreo-maker-mondelez-use-new-generative-ai-tool-slash-marketing-costs-2025-10-24/?utm_source=openai))
https://www.axios.com/2024/03/06/ibm-tests-adobes-firefly-for-personalized-marketing-at-scale - IBM has been testing Adobe's Firefly, an AI image generator, to create marketing materials, discovering that AI-generated campaigns garnered significantly higher engagement compared to traditional methods, according to a case study shared with Axios. Firefly generated 200 images with over 1,000 variations during the pilot test, resulting in 26 times higher engagement than IBM's benchmark for similar campaigns. This development highlights the business sector's keen interest in generative AI, though challenges around cost, effectiveness, and brand safety remain. Adobe addresses legal concerns by indemnifying businesses using its products, showcasing IBM's successful experience as a testament to the campaign’s effectiveness. IBM VP Ari Sheinkin points out that Firefly allows for more personalized marketing and liberates employees for creative tasks. ([axios.com](https://www.axios.com/2024/03/06/ibm-tests-adobes-firefly-for-personalized-marketing-at-scale?utm_source=openai))

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 7

Notes: The narrative references a Toys R Us AI-crafted commercial released in June 2024, which aligns with reports from June 2024 about Toys R Us's collaboration with OpenAI's Sora to produce a brand film titled 'The Origin of Toys R Us' that premiered at the 2024 Cannes Lions International Festival of Creativity. ([readaloudforme.com](https://readaloudforme.com/data/pdfs/A_Daily_chronicle_of_AI_Innovations_June_2024.pdf?utm_source=openai)) However, the specific details about Klarna's reported annual marketing cost savings of around $10 million by integrating generative AI tools, and Mondelez's deployment of a generative AI tool to cut marketing content production costs by 30 to 50%, are not corroborated by the provided sources. Additionally, the claim that IBM's trial of Adobe Firefly revealed campaigns with AI-generated images achieving engagement rates 26 times higher than traditional benchmarks is not supported by the available information. The absence of corroborating sources for these specific claims raises concerns about the freshness and originality of the content. The narrative also includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.

Quotes check

Score: 6

Notes: The narrative includes direct quotes attributed to various sources, such as McKinsey and PwC reports, as well as statements from companies like Klarna and Mondelez. However, the earliest known usage of these specific quotes cannot be verified with the available information, making it challenging to assess their originality. The lack of verifiable sources for these quotes raises concerns about their authenticity and potential reuse.

Source reliability

Score: 5

Notes: The narrative originates from Blockchain.News, which is not a widely recognized or reputable news outlet. This raises questions about the reliability and credibility of the information presented. The lack of verifiable sources for key claims further diminishes the trustworthiness of the report.

Plausability check

Score: 4

Notes: The narrative makes several specific claims, such as Klarna's reported annual marketing cost savings of around $10 million by integrating generative AI tools, and Mondelez's deployment of a generative AI tool to cut marketing content production costs by 30 to 50%. However, these claims are not corroborated by the provided sources, raising questions about their plausibility. The absence of supporting details from reputable outlets and the lack of specific factual anchors further diminish the credibility of the report. Additionally, the tone and language used in the narrative are inconsistent with typical corporate or official language, which may indicate a lack of authenticity.

Overall assessment

Verdict (FAIL, OPEN, PASS): FAIL

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative presents specific claims about AI-generated advertising campaigns, but the lack of corroborating sources, the use of unverifiable quotes, and the questionable reliability of the originating outlet raise significant concerns about its credibility. The absence of supporting details from reputable outlets and the lack of specific factual anchors further diminish the trustworthiness of the report. Given these issues, the overall assessment is a 'FAIL' with high confidence.

Artificial Intelligence
Digital Marketing
Creative Industries