Holiday Ad Demand Surges as Generative AI Transforms Shopping
As we approach the holiday season, the advertising landscape is experiencing a remarkable turnaround, driven by advances in generative AI. Recently, AdRoll, a connected advertising platform specializing in AI-driven solutions, released a comprehensive report detailing the growing demand for digital advertising. This surge comes at a pivotal time when marketers are eager to adapt to new shopping behaviors influenced by advanced AI technologies.
Significant Changes in Display Ad Costs
The report highlights a notable rebound in display ad costs, with metrics indicating a substantial recovery. Specifically, the cost per mille (CPM) for display retargeting has considerably improved. In fact, the decline in CPMs for August was mere 3%, a remarkable change from the 18% decline noted in the previous quarter. Similarly, display prospecting CPMs made a comeback, reducing their year-over-year deficit from a concerning 31% to a more manageable 14% as summer transitioned into early fall.
Contrasting Trends in ABM Campaigns
While certain sectors of advertising are recovering, not all segments share this upward trend. Account-based marketing (ABM) campaign CPMs have unfortunately widened their gap, dropping from 11% below the previous year's figures in Q2 to 20% in Q3. This downturn may reflect typical seasonal slowdowns, but it also suggests that marketers are becoming more cautious with their budgets in the face of economic uncertainty.
The Impact of Generative AI on Consumer Behavior
One of the most striking transformations noted in the report is the shift in consumer discovery behaviors, heavily influenced by generative AI technologies. For instance, traffic from AI-driven platforms surged dramatically—by an astonishing 4,700%—year-over-year on retail websites. This indicates that more than half of U.S. consumers have either already used or are planning to utilize AI tools for shopping purposes. These tools are not only helpful for generating gift ideas but also crucial for researching products and uncovering the best deals.
Marketers' New Strategies for Success
Vibhor Kapoor, the chief business officer at AdRoll, articulated the evolving marketing terrain succinctly: "As generative AI transforms search, marketers can no longer depend solely on website traffic to drive discovery." This statement underscores the importance of diversifying advertising strategies. Branded channels like connected TV are becoming vital for ensuring brand visibility and recall, especially during the frenetic holiday shopping period. Companies willing to invest early in recognition efforts are poised to reap the rewards when consumers are ready to make purchasing decisions.
Optimal Timing for Marketing Campaigns
Interestingly, research indicates that September and October may yield more significant sales than the traditionally high-spending months of November and December. This insight suggests that waiting for the standard peak season could result in lost opportunities. Furthermore, as generative AI reshapes how products are discovered, brands must prioritize awareness strategies and AI-driven campaign optimizations to maintain visibility in increasingly complex shopping journeys.
B2B Marketers: A Focus on Future Preparations
For B2B marketers, the final quarter of the year isn't just about holiday promotions; it's an essential time for influencing budget decisions for the upcoming year. By embarking on ABM campaigns early in the season—specifically in September and October, when CPMs remain competitive—companies have the opportunity to keep their offerings top-of-mind for decision-makers as they finalize their strategies for 2026.
Conclusion: Embracing the Future of Advertising
The insights provided in the report from AdRoll highlight a dynamic shift in the advertising landscape. As generative AI continues to influence consumer behavior and advertising strategies, companies that adapt quickly and creatively are likely to find the most success this holiday season and beyond. For marketers at various levels, this is a pivotal moment to harness the power of AI-driven advertising and prepare for the future of retail and consumer engagement.
Frequently Asked Questions
What is the current trend in display ad costs according to AdRoll's report?
Display ad costs are showing significant recovery, with a narrowed decline in retargeting CPMs and improved prospecting CPMs as marketers gear up for the holiday season.
How has generative AI impacted consumer shopping behaviors?
Generative AI has transformed discovery behaviors, leading to a 4,700% year-over-year increase in traffic from AI search engines to U.S. retail sites, showing widespread consumer adoption.
What advice does AdRoll give marketers for the holiday season?
Investing early in brand recognition strategies, especially through connected TV and AI-driven campaigns, is crucial to maintaining visibility as consumers make purchasing decisions.
How do CPM trends compare between display ads and ABM campaigns?
While display ad CPMs are recovering, ABM campaign CPMs have widened their gap, indicating a more cautious approach among marketers in the B2B sector.
What should B2B marketers focus on during Q4?
B2B marketers should prioritize launching ABM campaigns in the early part of Q4 to position themselves favorably as businesses finalize their budgets and plans for the coming year.
