Global Digital Advertising: Robust Growth in '26, with Some Deceleration Ahead

Research evidence excerpt

Global Digital Advertising: Robust Growth in '26, with Some Deceleration Ahead

Barclays | Global Digital Advertising

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AI recommendation system improvements remain a key driver of growth in the industry, with

platforms like META and GOOGL investing heavily in next-gen ranking models. As these models

are continuously deployed, they're driving better conversion and ROAS, thus unlocking

incremental ad spend. Based on our checks, we are still in the middle innings of AI model ROAS

improvements. Streamlined ad production using AI tools is also evolving, especially on the

creative side, allowing more dollars to flow into media buying, supporting further growth.

Despite the very early days for native AI placements, Google is starting to scale up ads in AI

Mode and other new AI infused surfaces (Universal Carts, etc.) and is seeing search queries

reaccelerate from AI. OpenAI (private, not covered) has officially introduced advertising on

ChatGPT, albeit a small base. We think ad-supported AI applications could be a rapidly growing

new channel over the coming year, and we've for the first time layered this dynamic (and

OpenAI's estimated ad revenue) into our industry model. Several companies have noted

positive data points indicating that AI traffic converts at higher rates than traditional search,

hence when the ad plumbing catches up we could see significant dollars allocated to native

AI. We'd expect this to impact advertiser allocations and further pressure public market equity

prices for those seeing cuts.

27 May 2026 2