Ministers urged to seize opportunities in sector with 95% AI adoption as £40bn market faces pressure

Ministers are being urged not to overlook one of the UK’s most advanced AI sectors, as new research from IAB UK reveals digital advertising is already delivering artificial intelligence at scale across the economy, with 95% of businesses in the sector now using the technology.  

The findings highlight a significant knowledge gap between the UK’s ambition to “win the AI race” and the sectors currently driving real-world adoption. While just 16% of UK businesses overall report using AI, adoption in digital advertising has reached near-universal levels, making it one of the most mature and commercially embedded applications of AI in the economy today.  

The sector is not only leading on adoption but also delivering measurable economic impact. The UK’s digital advertising market is worth £40bn, positioning it as a globally competitive hub for AI-enabled services, while AI-powered advertising has the potential to unlock a further £12bn in value for UK businesses each year through improved efficiency, targeting and performance.  

This reflects the role digital advertising plays beyond its own industry. By embedding AI into widely used tools and platforms, it is enabling businesses of all sizes to access advanced capabilities that improve productivity and growth, effectively acting as a delivery mechanism for AI across the wider economy. From automating workflows to enhancing customer targeting and campaign performance, the sector is translating AI innovation into practical, everyday business outcomes.  

The research also shows that adoption is both established and accelerating. Seventy-two per cent of digital advertising businesses have been using AI for at least a year, while 46% say it will be a priority area for investment over the next five years, underlining the sector’s role as a sustained engine of AI-driven growth.  

Alongside rapid innovation, the industry is demonstrating a strong focus on responsible AI. More than half of businesses (57%) have already put governance or ethics frameworks in place to oversee the use of AI systems and data, rising to 76% among larger firms. These include internal review processes, clear policies on AI deployment and ongoing investment in staff training, indicating that innovation and accountability are being developed in parallel.  

However, the research warns that this position is not guaranteed. Poorly targeted or disproportionate regulation that does not fully consider the real-world ways that industries like digital advertising use AI could put up to £2bn of market value at risk, potentially undermining one of the UK’s most globally competitive digital sectors at a time when international competition in AI is intensifying.  

The findings suggest that achieving the Government’s AI ambitions will depend not only on supporting emerging technologies but also on recognising and backing the sectors already delivering at scale. Digital advertising is already functioning as both a testing ground for AI innovation and a channel through which those innovations are deployed across the economy, supporting productivity, business growth and competitiveness.  

The report concludes that if the UK is serious about leading globally in AI, it must ensure that digital advertising is recognised as a central part of that strategy, with a policy environment that supports continued investment, innovation and responsible growth.