AI Video Ads Are Growing 120% Yearly – Detailed Breakdown

The AI video ads segment is growing at a rapid rate – according to the market research companies, there are estimated to be nearly US dollar 600-720 million market value in the year 2024 and the estimate is a high growth of digits every year (CAGR of approximations of 19-20 percent until the end of 2020s).

The 120% number is often applied to refer to engagement lift (video vs. other formats) or dramatic adoption-growth in pockets – not the consistent global market-size CAGR. In a similar case, industry summaries show that the video ads are doing better than other formats by approximately 120 percent in terms of engagement metrics.

Video generative AI adoption is gaining momentum: an IAB report has estimated that in 2025 approximately half of all advertisers will be using GenAI to create video ads (rapid adoption), and other sources indicate that an estimated 30 percent of all online video ads generated in 2024 were created with the help of generative AI.

Case studies show measurable performance improvements: e.g., an EdTech start-up reported a ~40% improvement in ad performance/ROI after switching to AI toolchains.

Where the “120% yearly” claim comes from – interpreting the number

Many headlines and “AI boom” summaries toss around huge percentage numbers. The two common origins:

1. Engagement uplift comparisons – Multiple articles and statistic collections in the industry mention that video advertisements are more effective than any other format of advertisements by approximately 120 percent on engagement rates (shares, watch time, CTR uplift in certain situations). This does not imply that the market doubles annually, it is a relative performance figure.
   
2. Small-sample, short-term adoption spikes – Some of the platforms or campaigns utilizing AI products can demonstrate year-over-year growth at an extremely high rate (100 per cent and above) in the volume or amount of ads created or watched by a limited group, which is generalized in the headlines.
   

Bottom line: It is reasonable to think of “120%” as performance/engagement increase in some summaries – but market-size growth in AI video generator is market-researchers to report at a more stable 20% CAGR. We will look at the two figures and reconciliation in the following. 

Market-size snapshot & projection (what the data says)

Multiple market-research sources estimate the AI video-generator market’s value and forecast strong growth:

• Grand View Research – Reports says that the market size of AI video ads generators will be approximately USD 659 million in 2024, and the forecast period is about 19.9% as a CAGR.
  
• Fortune Business Insights – Paints a similar picture (market range of USD 614-717M with anchors year varying) and businesses growth to multi-billion within early 2030s with a 20 percent CAGR.

Using a 20% CAGR baseline gives the following quick projection (USD million):

• 2021 ≈ 381
• 2022 ≈ 457
• 2023 ≈ 549
• 2024 ≈ 659 (reported)
• 2025 ≈ 791
• 2026 ≈ 949
• 2027 ≈ 1,139
• 2028 ≈ 1,366
• 2029 ≈ 1,639
• 2030 ≈ 1,967

Interpretation: That 20 percent CAGR growth represents market saturation, enterprise subscriptions, platform licensing, and rising per-campaign budgets – not 120 percent a year growth in total market value.

Chart & data files (download):

• Download market line chart PNG
• Download market data CSV
  

Adoption & on-the-ground performance metrics

Here are the most meaningful adoption/performance stats you should know:

• Adoption of GenAI in video creation: IAB results show that about half of advertisers are already using GenAI to create video ads (or are already experimenting with it) and half of advertisers who use genai to create video ads by mid-2025. It is a fast rate of adoption in one channel. 
• Share of digital video ads using generative AI (2024): Ad share with generative AI (2024): the industry overview and vendor profile indicate that this is a 30 percent share in 2024, and the adoption is increasing per year. 
• Performance improvements (case evidence): Improvement in performance (case evidence): there are published case studies in which companies have stated that they achieved about 40 percent improvement in ad performance/ROI when they switched to AI tools to create and refine video creative (e.g., Headway applied Midjourney/HeyGen and reported a 40 percent performance improvement). 
• Video vs other formats — engagement uplift: aggregated ad-stat roundups report ~120% better engagement for video vs. other formats in many contexts (social share, watch-time, CTR lifts with embedded CTAs) — this is where the “120%” figure commonly originates. 

Why AI video ads are driving higher engagement & adoption (mechanics)

AI video-ads tools affect the funnel in several practical ways:

1. Speed & scale: AI saves time significantly in production. The number of variants that can be created by teams in a short amount of time is impressive (A/B creative testing at scale). The more the creative iteration is faster, the higher the performance. (Case studies indicate high ROI boosting).
   
2. Personalization & dynamic creatives: Generative tools allow individual variants of the video to be generated depending on audience segments (language, product, region), which enhances the level of relevance and CTR/engagement.
   
3. Lower cost per creative: Reduced price per creative Small businesses can now create near-professional content without huge production budgets (Spectrum Reach + Waymark examples), expanding to a broader audience than major brands.
   
4. Platform-level integration & programmatic buy: Since platforms (DSPs, CTV publishers) integrate pipelines based on AI, distribution and dynamic creative optimization (DCO) will become easier.
   

Reconciling the “120%” headline with market numbers

• In case you consider that the definition of growth is engagement or performance (video vs other formats) – 120% is possible in several published summaries. It is an uplift of performance, not an overall market financial increase. 
• Assuming that the term growth is taken to mean market size (revenue generated by AI video ads generator tools) according to market reports, its growth rate is about 20 percent/year.
• Considering that growth is the number of videos the AI-enabled processes generate content in some companies – it can increase more than 100 percent in one year with the first-movers. Some of the sensational headlines are found here (rapid internal scale as opposed to overall monetary growth of the entire market).
  

Practical implications for marketers & agencies (actionable takeaways)

1. Test small, iterate fast: A/B test and make dozens of creatives with the help of AI. The upswing in better creative often exceeds marginal budget growth. ROI gains are measurable (Case evidence shows). 
2. Measure lift properly: Track CTR, view-through rate, conversion lift, and cost-per-acquisition per creative variant. Don’t conflate production volume with sustained ROI.
3. Use dynamic personalization: Take advantage of AI to develop localized/personalized creatives to high-value groups – this scales impact many times without a corresponding rise in cost.
4. Beware of low-quality scale: Poor-quality videos that have been produced in huge quantities can do worse. Ensure inventive controls and human-in-the-loop audit.
5. Consider platform & format: Short-form social (Reels, TikTok) and CTV are where video ad budgets are moving. Align creative lengths and hooks to channel behaviour.
   

Risks, limits & open questions

• Quality control & brand safety: Generative tools may generate wrong information or undesired images – human inspection is key.
• Measurement bias: It is possible that the short term lift does not match the long term brand equity gains, measure cohorts with time.
• Regulatory & IP issues: Use of synthetic imagery, likenesses, or copyrighted materials may raise legal questions.
• Overhyped numbers: Beware of generalizing small-sample wins into full-market forecasts. Always check source, sample size, and definition of “growth.”
  

Sources & further reading (key references used in this article)

• Grand View Research – AI Video Generator Market Report (market size & CAGR; 2024 baseline). 
• Fortune Business Insights AI UGC Video Generator Market overview and CAGR projection. Business Insights
• IAB – 2025 digital video advertisement spending and planning report (GenAI adoption values). 
• Business Insider – Case study: Headway edtech startup to improve the performance of ads (claimed to be 40 percent better) with the usage of AI tools.
• Industry roundup statistics – video ad engagement (video vs other formats 120% engagement uplift).

AI Video Ads Are Fueling Growth in CTV & Short-Form Platforms

AI video ad tools are indirectly driving the rapid expansion of highly visual platforms:

• Connected TV (CTV) is set to gain significantly, as advertisers prefer AI-created creatives of flexible quality in the form of TV.
• The AI-generated video ads are an ideal solution because they are experiencing the largest level of engagement in short-form platforms such as Instagram Reels, YouTube Shorts, and Tik Toks.
• Short, snackable video ads are predicted to keep on the rise, particularly, with the use of AI to automatically optimize the format, hook, pacing, and captions.
  

This synergy between AI creatives and video-first platforms is one reason behind the accelerated adoption rates across the industry.

Creative Fatigue is Dropping Because AI Enables Unlimited Variation

Creative fatigue – when an audience gets tired of seeing the same ad repeatedly – is one of the biggest performance killers in digital marketing.

AI directly solves this by enabling:

• Unlimited ad variations
• Weekly or even daily creative refreshes
• Personalized videos per demographic, location, or even keyword
• Micro-testing hooks, visuals, and pacing

Brands that use AI to refresh creatives more frequently typically see:

• Lower CPM
• Higher CTR
• More stable conversion rates
• Less audience fatigue across multi-week campaigns
  

This is another key factor behind the performance uplift often misinterpreted as 120% “growth” – in reality, it’s the creative refresh rate driving better ROI.

 Final Thought 

• Short answer: AI-led video ads are experiencing a boom in adoption and high performance growth (engagement and ROI), hence the reason why lots of individuals compose titles like the following: 120 percent. However, the growth in the revenue of the market is better illustrated with the help of the CAGR of approximately 20 percent – not doubling a year, but still great. 
• Actionable advice: Start small, test many creatives using AI tools, measure lift properly, and prioritise quality + brand controls. If your client wants a quick proof-of-concept, build a small test funnel with 3–5 AI-generated variations and measure CTR, conversion, and CPA over 2-4 weeks.