CICC: The advertising sector shows differentiation; focus on AI empowerment across various industry segments
I'm LongbridgeAI, I can summarize articles.CICC released a research report indicating that the advertising industry is experiencing moderate overall growth, but there is a differentiation in advertising types and advertisers. In 2Q25, the growth rate of internet advertising is relatively high, while offline advertising is affected by the macro environment. The application of AI technology in various stages of advertising has improved effectiveness, especially in recommendation algorithms, which has driven precise matching of advertising content with customers. In the second half of the year, attention should be paid to the sustainability of instant retail advertising and the structural growth in segments such as automotive, telecommunications, and AI
According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that the overall advertising sector's revenue performance in Q2 2025 met expectations. By advertising type, online advertising maintained a low double-digit growth rate; offline advertising and advertising service providers faced revenue pressure due to macroeconomic conditions and adjustments in their own businesses. Looking ahead to the second half of the year, the focus for internet advertising will be on the sustainability of growth in instant retail spending; for segmented advertising tracks, the focus will be on structural growth in sectors such as automotive, telecommunications, and AI; regarding new advertising model space, the focus will be on the incremental space brought by Focus Media's "Tap," multi-channel advertising, AI search advertising, and other new models.
CICC's main viewpoints are as follows:
The advertising industry is experiencing moderate growth, with certain differentiation among advertising types and advertisers
Moderate industry growth: The macroeconomic environment in Q2 2025 was relatively stable, leading to moderate growth in the advertising industry. According to CTR Media Intelligence, overall advertising spending in the first half of 2025 slightly increased by 0.6%. By advertising type: 1) Internet advertising showed higher growth, with QuestMobile data indicating a 7% year-on-year increase in internet advertising revenue in Q2, driven by several companies leveraging e-commerce and community content ecosystems to boost advertising revenue. 2) In offline advertising, traditional media performed well, with CTR data showing rapid growth in LCD and poster advertising, and Focus Media's growth rate accelerated in Q2 2025.
By advertisers: The automotive industry, internet (instant retail), and emerging content (short dramas, mini-games) saw increased spending, while there was differentiation within the consumer goods industry. From the 618 shopping festival, many companies received incremental budgets, driving overall industry growth in Q2.
AI empowers all aspects of advertising, with quantifiable effects
In Q2, companies actively embraced AI, applying it comprehensively in areas such as material production, material review, recommendation algorithms, and automated placement. Particularly in recommendation algorithms, many companies reported that AI models facilitated precise matching of advertising content with clients, ultimately reflected in improved click-through rates, conversion rates, and eCPM. Additionally, companies like Kuaishou optimized recommendations to empower the content ecosystem and indirectly increased advertising revenue by enhancing viewing duration. The overseas advertising market is accelerating AI applications, with Meta and Google optimizing search models through AI to enhance conversions, and AppLovin automating the entire advertising process from gaming to e-commerce. It is recommended to continue monitoring the technological iterations of AI recommendation models, the progress of full-scale applications of AI-generated materials, and their contributions to revenue.
Risk factors
Macroeconomic fluctuations, adjustments in advertiser budgets, and AI application effects falling short of expectations