Hyperscale cloud service providers are becoming critical enabler of AI-driven advertising growth

As AI-driven technologies propel global digital advertising revenue toward a projected $900bn in 2025, hyperscale cloud service providers are emerging as the critical infrastructure powering this growth. In this analysis, Omdia explores how cloud vendors are becoming indispensable partners for social media, retail media, and streaming platforms, enabling the advanced campaign optimization and personalization strategies that are reshaping the industry.

Global digital advertising revenue is projected to grow 11% from $800bn in 2024 to $900bn in 2025, driven by advancements in advertising technologies across premium video, social and retail media platforms. Enhanced real-time bidding, personalized recommendations, and AI-powered campaign optimization are among the key innovations fueling this growth. Leading advertising platforms have already attributed their advertising revenue increases to these advancements, as evidenced by Meta’s impressive 21% year-over-year advertising revenue growth in Q2 2025 and Tencent’s 20% year-over-year growth during the same period.

AI and cloud technologies are transforming the advertising landscape, with hyperscalers driving innovation across industries like media, retail, and gaming. By enabling advanced real-time bidding, personalized recommendations, and AI-powered campaign strategies, cloud vendors are helping businesses optimize advertising performance with greater speed, scalability, and intelligence.

Cloud infrastructure has become a critical cost of revenue for advertising platforms, providing the machine learning and AI capabilities needed to boost content engagement and drive revenue growth. While companies like Meta rely on proprietary AI systems and infrastructure, social platforms such as Snapchat and TikTok depend on cloud service providers (CSPs) like Google Cloud and AWS.

The importance of cloud service providers is also expanding in tandem with the rise of retail media - a segment Omdia predicts will expand at a CAGR of 13% between 2025 and 2030, reaching $320 billion. This underscores the opportunity for global retailers to leverage AI and data to deliver more targeted and effective campaigns. Amazon Ads, for instance, uses its own hyperscaler, AWS, to power technologies like real-time bidding and personalized recommendations. AWS also supports other retail media networks by offering scalable solutions for ad targeting and campaign optimization. Walmart, on the other hand, leverages Microsoft Azure to power its retail media network, enabling advanced targeting and analytics for advertisers.

In the media and entertainment sector, developments such as the expansion of CTV advertising, free ad-supported streaming TV (FAST), and hybrid SVOD/AVOD video streaming are increasing demand for hyperscale CSPs. Streaming platforms like Netflix and Disney+ are expected to rely more heavily on cloud infrastructure as they expand their advertising initiatives, including personalized ad targeting, user engagement, and content recommendations.

Of course, this is just one perspective on the evolving role of CSPs. Their impact also extends to areas such as gaming cloud and ad tech intermediaries. As we look ahead, one thing is clear: the collaboration between advertising platforms and cloud service providers will continue to unlock new possibilities, redefine strategies, and drive growth across industries.