IAB UK asks the Government to create ‘right environment’ for AI-driven ad market growth
Digital advertising has acted as a “frontier adopter” of AI, and the industry should be seen as a “critical partner” to the Government in its ambition to “win the AI race”.
That is the view of IAB UK, as espoused in its latest white paper, Powering Growth: Why Digital Advertising must be central to the UK’s AI Ambitions, released ahead of its AI Growth Summit in London this Thursday.
It comes as last week’s King’s Speech outlined parliament’s plan to introduce legislation to “reduce the burden of unnecessary regulation through innovation” via a new “Regulating for Growth Bill”.
The IAB UK, in partnership with public policy research agency Public First, surveyed more than 250 “decision makers” and practitioners in digital advertising. It found that 95% of businesses engaged in digital advertising (including adtech firms, publishers and agencies) are already using AI. This compares to the UK business average of 16%, according to a Government survey published in February.
The survey also found that 46% of such businesses expect AI to be their single largest area of investment over the next five years. 42% said they expect to use AI to improve audience targeting, and 41% said they expect it to improve the effectiveness of creative.
Business and ethics
“If the UK is serious about leading globally in AI, it must actively support the sectors that are already investing at scale, rapidly deploying real-world use cases, and delivering measurable productivity gains”, the report reads.
The report claims that AI-powered personalised advertising “could increase the effectiveness of adspend by £12bn”. When asked for clarification on how this estimate was reached, a spokesperson for IAB UK said the study considered both return-on-adspend (ROAS) uplift and “the AI ROI effect”, based on “public [sic] available industry studies”, which have purportedly estimated the adoption of AI tools could have a lower bound of 10% added ROAS.
The analysis did not consider the possibility that AI tools could lead to increased waste or fraud, a concern raised by critics of automated media buying practices.
The study, meanwhile, found that just 57% of digital advertising businesses surveyed have internal ethics or responsibility committees for AI use, though this rises to 76% among large advertisers.
Despite this being a slight majority, a spokesperson for IAB UK argued that this figure suggests “a proactive approach” to responsible AI governance within the wider digital advertising industry. Such internal AI committees include those that maintain an internal review process for AI deployment and clear policies on AI use and consumer protection.
However, The Media Leader has previously reported that AI development efforts have outstripped capacity and interest in measuring the impact of AI on carbon emissions.
A spokesperson for IAB UK also told The Media Leader that AI’s potential negative macroeconomic impact on jobs and increased energy costs was not taken into account in the scope of this study.
Push for lax regulation
Nevertheless, the trade body argues in the white paper that overzealous regulation of the nascent AI industry “could risk pushing the UK out of the top five global digital advertising markets and weaken its international competitiveness.”
According to analysis by Public First, “the introduction of new cross-cutting regulatory initiatives, on the scale of the introduction of GDPR, has the potential to reduce the UK’s market size in advanced advertising services by £2bn if not done in a proportionate and targeted way.”
IAB UK is therefore lobbying the Government to “continue with its regulatory reform agenda to ensure the system prioritises growth and innovation, and properly holds regulators to account on their actions to support this.”
That includes, in the immediate term, “lessen[ing] regulatory burdens around data protections by introducing low-risk consent exemptions for advertising” under new powers in the Data (Use and Access) Act, as well as reforming the Privacy and Electronic Communications Regulations Act of 2003 (PECR) to “allow cookies and other technologies used to measure ad performance and audiences to be used without needing consent”. This could generate an additional £200m in additional adspend for the digital advertising sector, IAB UK estimated.
The IAB is not the only organisation suggesting a rollback in “regulatory burdens” to online advertising amid the Regulating for Growth Bill. On Monday, the Information Commissioner’s Office (ICO) said the Government could amend the current regulation “to allow certain low-risk forms of online advertising to operate without consent, while continuing to require consent for advertising that involves intrusive tracking and profiling people over time and across services.”
ICO executive director of regulatory risk and innovation William Malcolm wrote: “There could be practical benefits for people. Over time, it could mean that websites and apps would not always need to request consent when you first visit them, where only low-risk advertising is involved. This could help reduce consent fatigue, while maintaining a requirement for valid consent where advertising relies on more intrusive tracking or profiling.”
However, Eilidh Wilson, head of policy and public affairs at the Professional Publishers’ Association (PPA), criticised the ICO position as a “profound disappointment”, warning the opportunity to review consent exemptions would be “squandered if reform is limited to contextual advertising alone”.
Wilson continued: “Responsible personalised advertising must be part of the solution.”