AI and The Future of Ad Spend: Social Media
AI is shaking up the economics of search, but its effect on social media is more nuanced and, in many ways, more favourable.
While major search and social media players alike are using AI to improve the effectiveness of paid advertising, the social companies have deeply ingrained consumer engagement and sophisticated ad targeting capabilities that will be difficult for AI platforms to replicate.
Companies like Meta, TikTok and Snap also benefit from the fact that paid social media is foundational to most digital advertising media plans. It’s a nearly $300bn industry worldwide in 2025, according to WARC Media, up 12% compared to 2024. Next year’s trend will be similar: 11% growth, bringing total social media ad spend to more than $330bn.
Here are the three most impactful ways social media companies are tapping AI now to keep these platforms a must-buy for advertisers.
1. Make social ad campaigns more efficient and effective
This is already well under way, especially at Meta. It continues to improve Advantage+, its suite of AI-driven ad products to automate audience selection, ad placement, budget and creative for campaigns aimed at sales, app downloads or lead generation. TikTok’s GMV Max is another example; it automates aspects of TikTok Shop ad campaigns, such as optimizing ad budget and simplifying campaign creation.
Advantage+ has already been a boon to Meta’s revenue. As of Q4 2024, it was on a $20bn annual run rate, growing 70% year over year. In another example of AI’s impact on Meta ad spending, a Q2 2025 analysis of client spending patterns by ad agency Tinuiti found that 35% of retail and commerce ad spending on Meta went toward Advantage+ shopping campaigns, up from 23% in Q2 2024.
Ad creative is another area where social companies are increasingly integrating AI. Here too, Meta has been the most aggressive, announcing in June 2025 that it will soon provide an extensive set of AI tools to simplify the process of creating ads for Facebook or Instagram. During the Q2 2025 earnings call, Zuckerberg highlighted the impact of generative AI tools on ad revenue growth, saying that “a meaningful percent of our ad revenue [is] now coming from campaigns using one of our generative AI features.”
Creator campaigns could also become more efficient via AI tools that make it easier to repurpose creator content into paid advertising. New AI-driven formats could include shoppable ads that seamlessly integrate creator content or dynamic ads that automatically adjust or resize creator content to fit multiple placements.
2. Launch consumer-facing AI products
Social media companies are also rolling out AI features for their users, such as standalone AI platforms (Grok, Meta AI) and generative AI enhancements to existing features (AI Lenses and AI Snaps on Snapchat, generative enhancements to Pinterest’s visual search capabilities).
There is also speculation Meta may be getting ready to launch an AI search product.
These features can help increase time spent, which in turn creates more opportunities for people to see advertising. In addition, AI features can provide additional behavioural data that is valuable for ad targeting systems.
However, Meta and other social companies still have work to do to create a safe environment for users who dabble with AI. In just the past few months, AI chats from Meta AI and xAI’s Grok have appeared in Google searches, sparking privacy concerns.
Meta’s standalone AI site is also underperforming relative to other consumer-facing AI services. According to a ranking of generative AI apps by VC firm Andreessen Horowitz, Meta AI came in 46th based on worldwide monthly web visits in August 2025 (ChatGPT ranked first).
3. Develop new ad formats and placements within AI experiences
Finally, the social platforms will no doubt start to embed paid ads more deeply into their consumer-facing AI features, creating new opportunities for advertisers. Snapchat was an early mover, launching sponsored AI Lenses in April 2025. Elon Musk has also indicated that ads will appear in Grok responses, though there’s no solid timeframe.
Meta is the most logical big mover here; its work in AI search has led some industry executives to speculate that an AI search ad product isn’t far behind. But Meta doesn’t really need to rush this; it recently launched ads on Threads and WhatsApp, giving it plenty of new inventory to offer.
Overall, advertisers will be eager for new formats that feel native within AI chat and lens experiences, following in the footsteps of the in-feed ads that became the backbone of social advertising.
Here’s what could change the picture
If AI companies successfully launch social media-like features. There’s been speculation that OpenAI wants to launch a social network, and CEO Sam Altman recently fanned the flames in a conversation with reporters, where he mused that he wanted to build a “much cooler” social experience with AI.
A full-blown competitor to an existing social app is unlikely, but using AI to re-imagine what it means to be “social” could be a compelling opportunity for brands looking to marry their success in social with their rising interest in being present in AI platforms.
If AI-based discovery and shopping continue to grow. Discovery via search is an important feature of platforms like Instagram and TikTok, where creator-led content serves as a source of inspiration. But AI interfaces are also becoming more important places for brand discovery, product inspiration and commerce.
As consumers gravitate more definitively toward getting recommendations from AI, advertisers will be more likely to invest in sponsored listings or shopping-related ads on AI platforms.
Right now, social platforms have two huge advantages – consumer engagement and sophisticated ad targeting systems – that make it difficult to envision ad budgets shifting away anytime soon. It’s possible the cracks won’t come from replicating what the social platforms already do well, but from inventing new ways to be social.
Credit: WARC