In recent years, the entertainment sector has undergone a profound transformation—and at the heart of that change lies the rise of AI-powered advertising. The phrase may sound technical, but its impact is very real: from streaming platforms tailoring ads to individual viewers, to movie studios using predictive analytics to optimise campaigns, artificial intelligence is quietly becoming the backbone of how entertainment gets funded, distributed and discovered. In this blog post we’ll explore how AI-powered advertising is taking centre stage in the entertainment industry, why it matters, and how brands and media companies can seize its potential.

We’ll cover ten major headings, each with deeper sub-sections, unpacking everything from trends and use-cases to ethics and future directions. Throughout you’ll see how primary keywords such as AI-powered advertising, entertainment industry, and digital ad formats tie together with secondary keywords like personalisation, connected TV, data-driven marketing, ad tech, and consumer engagement.
 

The Rising Tide: Why AI-Powered Advertising Is Taking Off
 

The economics behind the shift

In the current media landscape, the economics of the entertainment industry are under pressure. Consumers face subscription fatigue, inflation is hitting discretionary spending and traditional advertising models are being challenged. Reports from PwC note that advertising is increasingly becoming a pivotal driver of revenue growth in the entertainment and media sector—with digital ad formats already making up 72 % of ad revenue in 2024 and projected to rise to 80 % by 2029. 
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In such a climate, media companies cannot rely solely on content sales or subscriptions. They must optimise ad spend, targeting and formats—and that’s where AI-powered advertising comes into play.

What AI brings to advertising economics

Artificial intelligence enables far deeper segmentation, real-time optimisation, and dynamic ad creatives. As a result, advertisers and media owners can deliver more relevant ads, reduce waste, and boost return on ad spend (ROAS). For example, in the marketing domain generally, AI is helping marketers automate routine tasks, derive insights from large data sets, and personalise experiences. 
Harvard DCE

In the entertainment industry, this means more efficient ad campaigns, better audience discovery, and new revenue streams tied to ad tech.

The growth potential for entertainment

According to market research from Grand View Research, the global AI in media & entertainment market was estimated at USD 25.98 billion in 2024 and is projected to reach about USD 99.48 billion by 2030, at a compound annual growth rate (CAGR) of roughly 24.2%. 
Grand View Research

These numbers highlight how AI-powered advertising isn’t just a niche play—it’s becoming foundational to the business model of entertainment.
 

Personalisation at Scale: Delivering the Right Ad to the Right Viewer
 

From mass media to micro-targeting

Traditional entertainment advertising often relied on broad demographics—male/female, age 18-49, etc. AI flips that model. By analysing vast consumer data—viewing behaviour, device usage, purchase patterns—advertisers can build individualised profiles and deliver ads tailored to individual viewers. This means more relevant messaging, greater engagement, and less waste.

Real-time optimisation and dynamic creatives

With AI, creatives can adapt in near real time: image, copy, call-to-action can shift depending on who’s viewing, when, and on what device. A streaming platform might show a different ad variant for a 20-year-old mobile user than it would to a 50-year-old connected TV viewer. This dynamic adaption drives higher click-through and higher conversion rates.

Enhancing viewer experience and loyalty

When viewers see ads that resonate—reflecting their tastes, preferences, device habits—they’re less likely to feel irritated or tune out. In the entertainment industry context, where viewer retention and engagement are vital, this kind of ad personalisation helps keep audiences around, view more content, and build loyalty to the platform or brand.
 

The shift to digital and connected platforms

Digital ad formats are overtaking traditional ones. PwC predicts digital formats will rise to 80 % of ad revenue in entertainment by 2029. 
Reuters
 Connected TV (CTV) is a key piece of this: as viewers shift from linear TV to streaming services, advertisers want to reach them in those environments.

How AI enhances CTV advertising

In CTV contexts, AI can:

Analyse viewing habits to determine optimal ad break placement

Select ad creatives based on viewer profile and device context

Optimise frequency and frequency caps to avoid viewer fatigue

Measure conversion and refine future targeting

These capabilities make CTV a highly fertile ground for AI-powered advertising within the broader entertainment ecosystem.

Opportunities for platforms and creators

Streaming platforms and media companies that adopt AI ad tech can monetise content better: they can offer more personalised ads, higher yield for advertisers, and better user experience for viewers. For content creators, this means the ad-funded model becomes more viable—enabling more investment in content, since ad revenue becomes more efficient.

Data & Insights: The Intelligence Behind the Ads
 

Building the data engine

AI-powered advertising in the entertainment industry relies on data—lots of it. Media companies are partnering with ad-tech firms, aggregating first-party, second-party and third-party data, and leveraging machine learning to identify patterns in viewing, engagement and ad response. According to a report by Salesforce, 90 % of media & entertainment organisations plan increased AI investments over the next 24 months, and 61 % say advertising revenue will be most impacted by AI. 
Salesforce

This underscores the importance of data strategy for ad success.

Predictive analytics and campaign optimisation

Rather than running a campaign and hoping for results, AI can forecast how different segments will respond, optimise spend across channels, and suggest creative elements likely to succeed. In entertainment, this might mean predicting which viewer cluster is most likely to engage with a film trailer or a gaming ad, and then tailoring the ad delivery accordingly.

Integrating audience feedback loops

AI systems can continuously learn from ad performance: clicks, conversions, viewing retention, social responses. That feedback refines targeting, creative, placement and bid strategies. Over time the system becomes better at matching the right ad to the right person at the right moment.
 

Generative AI and creative production

AI is not just about data and targeting—it’s also about creative production. Generative AI can now help produce visuals, video edits, voice overs, script snippets and more. In entertainment advertising contexts, this means faster turnaround of ad assets, higher volume of creative variants, and the ability to test what works. For example, one research article explores how generative AI models are being used for media generation, advertising and entertainment industries. 
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This allows media companies and advertisers in entertainment to scale creative testing.

Benefits for speed and cost-efficiency

By automating parts of creative development, studios and ad departments can reduce production time and cost. According to Morgan Stanley research, generative AI could lead to cost reductions of 10 % across the media industry and up to 30 % in TV and film production. 
Morgan Stanley

This enables more experimentation and flexibility in ad campaigns—a key advantage in the fast-moving entertainment world.

Maintaining human-creative collaboration

While automation plays a growing role, human creativity remains essential. AI can generate variants and support ideation, but brand storytelling, emotional resonance and cultural context often require human input. The most successful entertainment-advertising teams blend AI tools with human strategic oversight to produce effective campaigns.

New Ad Formats and Immersive Experiences
 

Interactive and immersive ad experiences

In the entertainment industry, AI-powered advertising enables new formats beyond static banners or pre-rolls. Examples include interactive ads on streaming platforms, in-game advertising within video games (in-game ads), augmented reality (AR) overlays and ads embedded within content. These formats raise engagement and can integrate into the entertainment experience itself.

Contextual and seamless ad delivery

One of the most exciting developments is the ability to deliver ads that feel native to the content environment. For example, a streaming service could insert product visuals or calls-to-action based on the context of the show or movie, and target viewers in real time with messaging that aligns with what they’re watching. In fact, some platforms are already testing AI-generated ad placements integrated into show content. 
The Times of India

Such formats reduce the friction between entertainment content and advertising, making ads more acceptable and effective.

Monetisation opportunities for content owners

By embracing immersive, AI-powered ad formats, content owners—studios, streaming platforms, games companies—can unlock additional revenue streams. Ads become part of the storytelling or interactive experience, increasing value for advertisers while enhancing the user experience. This helps shift the business model for entertainment from purely subscription-led to hybrid ad-funded.
 

Balancing personalised ads and privacy concerns

With great targeting power comes great responsibility. The use of AI in entertainment advertising raises questions about data privacy, consent, algorithmic bias and transparency. Consumers are increasingly aware of how their data is used, and missteps can damage trust. Research shows that while 71 % of respondents are familiar with generative AI, only 18 % feel confident explaining what it does. 
Digital Content Next

Thus, entertainment companies must ensure clear privacy practices and ethical use of data.

Algorithmic bias and creative authenticity

AI systems can inadvertently create bias or reinforce stereotypes—if training data is unbalanced or algorithmic decisions lack human oversight. In the entertainment sector, this can affect ad targeting or creative representation. Firms must monitor their algorithms for fairness, diversity and cultural sensitivity.

Additionally, as creative automation grows, there’s debate about authenticity and human-centric storytelling. Some unions and creators question the use of synthetic actors or AI-generated content in place of human talent.

Regulatory frameworks and compliance

Advertising in entertainment is subject to regulation—both general ad laws and specific media regulation (especially in certain jurisdictions). AI-powered advertising introduces new challenges: attribution transparency, ad disclosures, algorithmic decision-making. Entertainment companies must stay ahead of regulatory changes and ensure compliance in the markets they serve.
 

Case Studies and Real-World Use Cases
 

Entertainment platforms leveraging AI ad tech

Numerous media and entertainment companies are investing in AI advertising solutions. For example, the Adobe 2025 digital trends report notes that leading brands in media and entertainment are using generative AI, smarter workflows and data-driven strategies to boost ROI. 
Adobe for Business

These companies are not only optimising ads but rethinking workflow, creative production and audience engagement.

Smaller creators and independent studios

AI-powered advertising levels the playing field: smaller studios and creators can use ad tech and targeting previously accessible mainly to major players. The Morgan Stanley report mentions that generative AI allows smaller companies to produce high-quality content and marketing at lower cost, threatening the dominance of large incumbents. 
Morgan Stanley

In the entertainment world, this means independent filmmakers, streaming start-ups and game developers can leverage AI-driven ads more effectively.

Cross-media and gaming integration

Game publishers and live-event platforms are using in-game advertising and interactive ad formats powered by AI to engage audiences. As in-game ad formats grow, AI ensures delivery to relevant profiles, optimises placements and measures performance in near real time. While in-game advertising is a separate field, its growth ties into the broader trend of entertainment ad formats evolving. 
Wikipedia

These examples show how AI-powered advertising is not limited to film and TV, but extends to gaming, live events, streaming and beyond.
 

Actionable Insights: How Brands and Media Companies Can Adopt AI-Powered Advertising
 

Start with data strategy and infrastructure

Before diving into AI campaigns, media companies should ensure they have robust data collection, management and analytics capabilities. Unified audience profiles, clean data sets and strong privacy compliance are foundational. Without that, AI-powered advertising will struggle to deliver. The Salesforce report emphasises data and AI investment as key priorities. 
Salesforce

Action: Audit your data sources, map audience segments, ensure privacy compliance, and choose an ad-tech partner with AI capabilities.

Experiment with targeted formats and creatives

One of the strengths of AI-powered advertising is the ability to test multiple variations quickly and effectively. Brands should experiment with dynamic creatives, device-specific ads, streaming-specific formats and connected-TV placements. By testing early and iterating, you’ll discover what works. Action: Run A/B tests of different ad creatives, message variants and placements, leveraging AI optimisation tools.

Collaborate across content and ad teams

In entertainment, the line between content and advertising is blurring. Content teams, marketing teams and ad-tech teams should collaborate, sharing insights from audience behaviour, creative production and monetisation strategies. Integrating AI­tools into this workflow ensures that the ad experience complements the entertainment experience. Action: Set up cross-functional teams that include creative, data science, marketing and monetisation to align on strategy.

Monitor performance and refine in real time

With AI, you can analyse ad performance in real time across many variables. Use dashboards and analytics to track conversions, engagement, cost per acquisition, viewer retention and creative effectiveness. Refine targeting, adjust bids and shift budget dynamically. Action: Create key performance indicators (KPIs) specific to entertainment ad campaigns (e.g., trailer views, binge-watch sessions triggered by ad, subscription sign-ups) and use AI-powered optimisation.
 

Integration of immersive technologies and metaverse-style experiences

Looking ahead, AI-powered advertising in entertainment will increasingly integrate with AR/VR, immersive storytelling and the metaverse. Ads may become part of virtual worlds, interactive content experiences, or live event overlays. As audiences engage in new ways, ad formats will evolve alongside.

Greater automation, creativity and audience co-creation

Generative AI will enable even faster creative production and more personalised ad experiences. At the same time, audiences themselves may become co-creators—AI tools might allow viewers to tailor ad experiences or choose how they are served. This shift will empower more dynamic, responsive and interactive advertising.

Ethical leadership and regulatory maturity

As AI adoption deepens, issues around transparency, algorithmic fairness, and human-centric creativity will come to the fore. Entertainment companies will need to address ethical questions head-on and build regulatory-ready practices. The success of AI-powered advertising will depend not only on technological capabilities but also on consumer trust and regulation.

The entertainment-advertising ecosystem becomes more fluid

With AI enabling faster innovation, the boundaries between content production, advertising and distribution will continue to blur. Studios may build ad-funded models, streaming platforms may embed product placements or interactive ads, and gamers may experience native ad integrations. The entire ecosystem will become more fluid and dynamic.