AI Is Pushing Ad Dollars Back to Billboards as Trust in the Web Erodes

U.S. out-of-home advertising revenue grew 10.7% year over year in the second quarter to a record $3.16 billion, according to the Out of Home Advertising Association of America — and its digital segment, DOOH, grew even faster at 18.5%, now accounting for nearly 40% of the category's revenue. The resurgence, discussed repeatedly at Advertising Week, points to a structural shift: as AI degrades trust and traffic across the open web, physical space is appreciating in value for marketers.

Why is out-of-home growing while digital struggles?

Digital out-of-home is increasingly seen as offering the best of both channels: it is unskippable, like a billboard, yet targeted and programmable, like a display ad. New creative can appear on digital screens programmatically, giving marketers the flexibility they expect online while retaining physical advertising's defining advantage — you cannot scroll past a DOOH display.

The backdrop is less flattering for the internet. A 2024 Adobe report found that 87% of U.S. consumers said generative AI has made it harder to distinguish fact from fiction online. AI has also unleashed a wave of low-quality content — "slop" — whose provenance will only become harder to discern as the technology improves.

That erosion of trust was one reason Mariano Jeger, former executive creative director at Droga5, cited for his departure to Outfront Media in September. As digital and social content becomes easier to manufacture and harder to authenticate, brands have new reasons to reconsider the value of appearing in those environments.

What does AI mean for web traffic and ad inventory?

Answer engines such as ChatGPT, Claude, and Gemini increasingly answer questions without sending users to the originating websites. For publishers, that threatens to shrink referral traffic, audiences and, ultimately, advertising inventory across the open web.

AI agents could accelerate the shift. Products like Muse and Dots promise to accomplish tasks on behalf of consumers, potentially bypassing not just websites but the advertising that subsidizes them. Last week, Amazon blocked Muse from crawling its website — a dispute that highlights an existential problem for ad-supported destinations: an agent can extract the utility of a site without ever seeing the ads that pay for it.

The strain is already visible in media. OpenWeb, the adtech firm once valued at $1.5 billion with The New York Times as an investor, requested insolvency protections in an Israeli court last week, a byproduct of the open web's ongoing contraction.

Who can become a media owner next?

As more companies embrace media-business logic, the opportunity has expanded beyond billboards. Rideshares, airlines, grocery stores and retailers — any business with a physical footprint and a captive audience — can increasingly turn those environments into advertising inventory. In effect, the logic of retail media is escaping retail.

The parallel trend is already visible in events. Publishers from Condé Nast to Semafor to ADWEEK have invested significantly in live events, which in some cases now generate more than half of their revenue.

What is the cost to consumers?

The same forces making physical space more valuable to advertisers risk making it less pleasant for everyone else. In New York, public spaces increasingly host kiosks and screens running a constant stream of advertising.

New York Times journalist Ezra Klein addressed it on his podcast: "A column I have wanted to write—and have not written, in part because I've been afraid of the reaction to it—is that as a newcomer to New York City (I moved here three years ago) I find the presence of the advertising on the New York City subway and on the buses really sad." He noted the M.T.A. receives only about 1% of its operating revenue from advertising, raising the question of whether riders would accept a modest fare increase for an ad-free system.

Unlike online channels, out-of-home offers no frequency caps and no opt-out. A person can close a browser tab or delete an app. They cannot close a subway platform. For two decades, advertising followed consumers from the physical world onto the internet; AI may now push that value back in the other direction — and the open question is how much of the physical world consumers are willing to give it.