AI could slash video ad production costs — just as TV opens more doors for small businesses

Ad budgets are on the precipice of a seismic change — should two major shifts to video and TV play out as envisioned.

A new crop of fast-improving AI video-generation tools, such as Runway, MiniMax and OpenAI’s Sora, could make video ad production exponentially cheaper and faster than it is currently, experts said during the Cannes Lions International Festival of Creativity.

At the same time, TV players like Comcast are investing to make TV ad buying more accessible to small- and medium-sized businesses (SMBs) and new-to-TV brands.

The one-two punch of AI potentially lowering production costs, along with TV players simplifying media buying, could dramatically lower the bar for SMBs to advertise their businesses.

“AI video content creation … is only going to get better from now” said Tanzeen Syed, managing director and head of consumer internet and technology at General Atlantic — a venture capital firm and investor in Runway — onstage at Cannes Lions.

“We’ve gone from a world where video production was very linear — you film, you edit, you have sets — to one that is multimodal, infinitely scalable and real time. And what that ultimately leads to is … a drop in content-creation cost and an explosion in commercial volume,” Syed said.

Not only are streamers and traditional broadcasters turned streamers set to attract new media dollars, but cheaply produced TV ads that can drive performance through hyper-personalization could convince marketers that they need not sacrifice the premium environment of TV in search of “performance” inside social media’s murky walled gardens.

“To be able to interactively edit with your model and tell them to change one thing and change another, and the model can exactly follow your prompt. … That is the ultimate goal. It’s as if you have an entire Hollywood crew at your fingertips,” said Linda Sheng, general manager of global business at MiniMax.

‘No longer limited by budget’

Onstage at Cannes Lions, Sir Martin Sorrell, executive chairman at S4 Capital, showed an ad for Puma made almost entirely with AI agents.

The ad “caused a lot of controversy,” Sorrell said, and won’t “win awards necessarily at Cannes.” But it shows “where things are going from an agency and industry point of view,” he added.

Sorrell said the Puma ad would have cost millions of dollars and taken a couple of months to produce without the use of AI.

But these commercials are now “created, produced and distributed literally in days. We’re talking about 10 or 11 days, and you’re talking about hundreds of thousands of dollars,” he said.

Still, $100,000 to create one ad is something that most SMBs cannot afford. But what about $10,000, or even $1,000? That may happen soon, as OpenAI’s Sam Altman predicts AI usage costs will drop by 10 times every year.

“What we are expecting to see with … AI video generation … is that anyone who has an idea and a concept is no longer limited by budget, equipment, access to studios, access to creative,” Syed said.

“That means that a small brand that has three or four people can have one person come up with a marketing campaign that completely changes the paradigm and can rival a Super Bowl campaign that costs $20 million to do,” Syed added.

Taking back share from performance marketing

For marketers of small or large brands alike interested in adopting AI video-generation tools, the best way to start the conversation is about “how to increase revenue, how to expand your reach,” according to Sheng.

AI could help marketers increase the ROI from their brand ads on TV by helping them create hyper-personalized ads at scale with minimal costs.

“The whole concept of, ‘I know half my brand spend is successful, I just don’t know which half’ … AI actually has the opportunity to fix that by hyper-personalizing content at scale,” Syed said.

“AI used strategically by agencies and brands allows the power of personalization to drive better efficiency, to take a lot of that share back from pure performance marketing,” he added.

But this is Cannes Lions, where creativity is king. For advertising creatives worried about AI’s impact on jobs, Sheng shared a tip: “Focus on the message. That’s the most important, and that’s the part AI will never replace.”