IAB UK, a trady body for digital advertising, is urging government ministers to “seize opportunities” relating to the use of AI in the digital advertising industry, with IAB UK research suggesting that 95 percent of businesses in the sector now use the technology.
IAB UK released the findings in a new white paper, ‘Powering Growth: The UK’s Hidden AI Engine’. The research points to the government’s ambition to “win the AI race”, following the Chancellor’s plans to pump £2.5 billion into AI and quantum technologies. But the trade body says the strategy risks overlooking the real-world adoption already being driven by digital advertising, which it says is “already delivering artificial intelligence at scale across the economy.”
While just 16 percent of UK businesses overall report using AI, adoption in digital advertising has reached “near-universal levels”, according to the industry body, with 72 percent of digital advertising businesses having used AI for over a year. “This is not early adoption,” says the white paper. “It is mainstream deployment at scale.”
“Artificial intelligence sits at the centre of the government’s plans to drive productivity, unlock growth, and shape the country’s economic future,” adds the report. “But one of the UK’s most advanced AI sectors is largely missing from this conversation.”
“Spillover effects”
The white paper breaks down the economic impact already being delivered by the sector’s AI deployment. According to the research, the UK’s digital advertising market is worth £40 billion, and AI-powered advertising has the potential to unlock a further £12 billion in value for UK businesses each year through improved efficiency, targeting and performance.
IAB UK says the sector’s deployment of AI at scale has “spillover effects” into other industries, “effectively acting as a delivery mechanism for AI across the wider economy.” AI-driven enhacements in customer targeting, creative effectiveness and campaign performance translate into practical business outcomes in other sectors, according to the report.
In the white paper, Sam Coates, Global Director of Insight & Analytics at Captify, provides insight on how manual processes can now be automated using AI. “Where we previously relied on manual workflows, we can now talk in natural language to our database via an AI model that turns requests into code, runs analysis and generates outputs,” he says. “That creates huge automation opportunities and allows us to deliver faster, higher quality insights to clients.”
The report also characterises the sector as leading on the responsible use of AI, with 57 percent of digital advertising businesses already having governance or ethics frameworks in place, rising to 76 percent among larger firms. These include internal review processes, clear policies on AI deployment, and ongoing investment in staff training.
The £2 billion question
But the trade group warns that the sector’s economic contribution is not guaranteed. IAB UK argues that disproportionate regulation that does not fully consider the real-world applications of AI in digital advertising could put up to £2 billion of market value at risk.
“Disproportionate and poorly targeted regulation could reduce market size and weaken competitiveness,” IAB UK says in the report. “Conversely, a supportive, pro-innovation framework could accelerate growth and strengthen the UK’s global position.”
The organisation is therefore pushing for government policy that recognises and supports the digital advertising industry in its ongoing adoption and application of AI. To safeguard the benefits outlined in the report, the trade body urges the government to provide regulatory clarity, support investment, and align policy with real-world deployment.
“The core story is simple: the UK already has a sector commercialising AI at scale and driving growth across the economy, but it is not being recognised as part of the national AI narrative,” says IAB UK.
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