The Zhitong Finance App learned that Breakingviews analyst Jennifer Saba believes that the next major event in the tech sector will also be driven by advertising funding. This trend is already showing around the world, and Google, Facebook, and Instagram are rapidly expanding their popularity and profitability by leveraging the brand building budgets of major manufacturers. Even companies such as Netflix (NFLX.US) and Amazon (AMZN.US), which until recently relied mainly on subscription businesses, have begun to profit heavily from advertising. Artificial intelligence (AI) business models are also destined to take a share of the advertising market.

Many business breakthroughs ultimately rely on advertising. At one point, newspapers received two-thirds of their revenue from retailers, car dealers, and recruitment employers. Internet giants are also using large and small sponsors to drive search and video businesses. Since the initial public offering in 2004, the revenue of Google's parent company Alphabet (GOOGL.US) has increased nearly 160 times, and has exceeded 300 billion dollars by 2023. Machine learning will follow a similar path.

The current advertising market is already huge and growing rapidly. According to data from media investment group GroupM, from 2019 to 2023, global advertising spending increased by nearly 50%, exceeding 900 billion US dollars, exceeding the 20% GDP growth rate during the same period. New small businesses are an important enabler. From the well-known Airbnb (ABNB.US) to the lesser-known Chaakan Shoes, many companies are using social media to attract customers.

Digital services are quickly eating up existing media. In 2014, television advertising accounted for more than one-third of total advertising expenditure, with sales of approximately $155 billion. GroupM predicts that in 2024, the share of TV commercials in the larger market will fall below 17%, equivalent to about 165 billion dollars. In the same decade or so, the share of online channels grew from 29% to 70%.

Digital ads attract more ad money than TV ads

Assuming that by 2029, artificial intelligence becomes a new player and accounts for about one-fifth of the market share, which is faster than digital technology that took about 15 years to occupy 30% of the market share. Further assuming that ad spend is growing at an average rate of 9% per year, rather than GroupM's predicted slowdown to 6%, this is partly due to the fact that trained models can accurately target, which should make ads more valuable. According to Breakingviews' calculations, there will be a big cake of 900 billion dollars waiting to be contested in the next five years.

Saba of Breakingviews believes that Alphabet, Facebook, and Instagram's parent company Meta (META.US), OpenAI's ChatGPT, and Microsoft (MSFT.US) will occupy part of the market share. A new generation of startups will also profit from it. The only constant is that all roads will eventually lead to Madison Avenue.

According to information, Madison Avenue is located in the Manhattan district of New York, and the headquarters of many advertising companies in the US are concentrated on this street, so this street has gradually become synonymous with the US advertising industry.