In the rapidly evolving digital marketing landscape, video advertising continues to be one of the most powerful tools for brands to engage their audiences. However, with the recent rise in popularity of AI-generated video ads, many marketers are beginning to question whether traditional video advertising still holds its ground. As we dive deeper into 2025, the industry has seen dynamic shifts in both approaches. So, which one truly performs better?
The Rise of AI Video Ads
AI video ads utilize artificial intelligence to automate the production, scripting, voiceover, and sometimes even the acting in video advertisements. These videos are often generated using machine learning algorithms trained on vast datasets to mimic the style, tone, and preferences of target audiences.
Key capabilities of AI video ads in 2025 include:
- Personalization at scale – AI tools can generate dozens of tailored videos for different segments of the audience based on demographics, behavior, or purchase history.
- Rapid production – What used to take weeks can now be created in hours or even minutes.
- Cost-effectiveness – By avoiding expensive shoots and editing, businesses save considerable amounts of money.
What Are Traditional Video Ads?
Traditional video ads refer to commercials produced by human creators—film crews, actors, editors, and marketing professionals. These types of ads typically boast higher production quality and storytelling depth. Think of high-budget commercials you’d see during the Super Bowl or mini-documentaries from renowned brands.
Key characteristics of traditional video ads:
- High production value – They often include professional cinematography, animation, and original music scores.
- Emotional storytelling – Crafted narratives that connect emotionally with viewers.
- Brand essence – A deeper and often more memorable reflection of a brand’s core identity and voice.
Performance Metrics: How Do They Stack Up?
When comparing AI video ads and traditional ads, marketers often measure performance based on engagement, conversion rate, cost-per-acquisition, and return on ad spend (ROAS). Here’s how each format fares across these metrics:
1. Engagement
In 2025, AI video ads are proving exceptional in grabbing user attention, particularly on social platforms such as TikTok, Instagram, and YouTube Shorts. Their rapid production means marketers can quickly test and iterate to discover what content works best.
However, traditional videos still dominate in longer engagement scenarios, especially where deeper emotional connection is needed. For example, brand stories and emotionally charged campaigns continue to thrive in traditional formats.
2. Conversion Rate
AI-generated ads—especially when personalized—have shown higher conversion rates in e-commerce and app-install campaigns. Their data-driven nature allows them to serve the right message to the right person at the right time. In contrast, traditional advertisements often work best for brand awareness rather than hard conversions.
3. Cost Efficiency
This is where AI completely changes the game. Traditional ad production can cost anywhere from $10,000 to over $1 million depending on its scale. AI videos, by utilizing machine learning and automation, significantly lower production costs, making video advertisements accessible to small and mid-sized businesses.
4. ROAS (Return on Ad Spend)
Due to their lower cost and ability to quickly iterate, AI ads generally produce a better short-term ROAS. On the flip side, traditional ads, though more expensive, often contribute to long-term brand equity—a value not always measured immediately but critical for big brands.
Industries Benefiting Most from Each Format
Some industries naturally lend themselves better to one form of advertising over the other. Here’s a breakdown:
Industries Benefiting from AI Video Ads
- Retail & E-commerce – Fast, scalable video creation for promos and deals.
- Mobile Apps – Quick iteration for app install promotions.
- Real Estate – AI can generate virtual walkthroughs and personalized listings.
- Education – Personalized course ads with dynamic text and graphics.
Industries Favoring Traditional Video Ads
- Luxury Goods – High production value enhances exclusivity.
- Automotive – Powerful storytelling and visuals convey sophistication.
- Travel & Hospitality – Authentic footage to inspire wanderlust.
- Charity & Non-Profit – Emotive storytelling creates deeper impact.
User Perception in 2025
One of the most significant factors in assessing ad performance is how consumers perceive each type of content. According to a 2025 consumer insights report, there’s growing user acceptance of AI in content creation. However, it comes with caveats:
Pros perceived by users for AI ads:
- Timely and relevant.
- Striking visuals and dynamic text catch the eye.
- Amusing and short-form formats that fit their screen time habits.
Cons perceived by users:
- Generic or inauthentic messaging.
- Over-saturation of similar-format videos.
- Lack of emotional depth.
Traditional videos, on the other hand, are still perceived as more trustworthy and heartfelt. Especially for high-involvement products or community campaigns, viewers tend to gravitate toward ads that feel “real.”
Technological Advancements Enhancing AI Video in 2025
Continual advances in AI tech are closing the gap between AI and human creativity. Tools equipped with natural language processing and generative video AI now craft narratives that feel less robotic than in earlier years. Deepfake technology, while controversial, allows for dynamic customization without requiring actors to re-record footage.
Additionally, AI tools can now read and interpret real-time data signals such as click behavior, demographics, and sentiment analysis to instantly adapt video content. This agility has given AI video ads a unique edge in performance-driven advertising.
Challenges Facing Both Formats
Despite the progress, both types of advertising encounter challenges:
AI Video Ad Challenges:
- Creativity limitations – AI can imitate, but still struggles with emotional nuance and originality.
- Brand safety – Automated content poses a higher risk of errors or unintended messaging.
- Ethical concerns – Synthetic human likeness levels raise questions about transparency and consent.
Traditional Ad Challenges:
- High costs and lengthy turnaround – In a fast-paced market, slow production is a hindrance.
- Limited personalization – One-size-fits-all storytelling may not appeal to segmented audiences.
So, Which One Performs Better in 2025?
The answer largely depends on your marketing goals. If your objective is quick conversions, rapid testing, and cost-efficiency, then AI video ads are likely the better performer. However, if your brand is looking for long-term positioning, emotional engagement, and brand storytelling, traditional video formats remain invaluable.
Many companies are now choosing a hybrid model—leveraging AI for mass targeted promotions while investing in traditional formats for brand-defining moments. In this way, marketers can stay nimble while preserving their brand image and emotional appeal.
Final Thoughts
As AI continues to evolve, it will undoubtedly reshape the boundaries between machine-created and human-crafted content. Rather than viewing AI and traditional video ads as competitors, the smartest marketers of 2025 are seeing them as complementary tools—each with its advantages, limitations, and role within an overarching marketing strategy.
Ultimately, the winner isn’t strictly one format or the other—it’s the brand that knows how to use both effectively.
