‘Levels the playing field’: How AI is helping SMEs break into TV advertising

Generative AI has come a long way since the 2023 video of an AI-generated Will Smith eating spaghetti went viral, becoming shorthand for the technology’s early limitations. Today, the same tools are being used to produce advertising fit for TV.

Whether marketers welcome AI-generated advertising or not, adoption is growing. In 2025, 57.5% of brand marketers were already using AI to generate content, according to Marketing Week’s Language of Effectiveness research.

Meanwhile, 30% of ads, social videos and online videos in 2025 were built or enhanced using generative AI tools, up from 22% in 2024, according to the IAB. This is expected to rise to 39% in 2026.

One of the most high-profile examples is Coca-Cola’s AI-generated iteration of its iconic ‘Holidays Are Coming‘ Christmas advert. The brand released the first AI version in 2024, followed by a second iteration in 2025, which Coca-Cola said aimed to “push the boundaries of technical precision, cinematic storytelling and production quality”.

There was some criticism among consumers, but regardless, the 2024 version scored the maximum 5.9 star rating on System1’s Test Your Ad platform, suggesting consumer response to AI-led advertising is more nuanced than outright rejection.

Democratising access for SMEs

For small and medium-sized businesses, AI-generated advertising could be a route into television that was previously unattainable. Access to AI-created ads “levels the playing field for smaller businesses”, according to Spirit Studios co-founder Matt Campion.

Spirit Studios is a multi-platform production company and was the first to use Channel 4’s Smart Ad Engine, a service designed to allow SMEs to create AI-generated TV ads.

The ad was created to promote Spirit Studios’ podcast ‘The Good, the Bad and the Healthy’ (later renamed ‘The Unprocessed Truth’). Titled ‘Dream Mart’, the 30-second spot had every element, from script and lighting to sound design, created by Channel 4’s creative team, with AI used as a collaborative tool.

Spirit Studios is relatively advanced in its use of AI, applying it across the business from operational efficiencies to production, making the partnership a natural fit, explains Campion.

“We’re using it in a grown up way,” he says. “There’s a lot of AI slop about and with everything we do, we want to feel like we’re ethically working in a great way. It is additive, rather than taking stuff away.”

Channel 4 offers a tiered model with varying levels of human and AI involvement. Spirit Studios’ ad sat at the higher end, using a human voiceover and creative oversight, while lower-cost tiers rely more heavily on automation and existing brand assets.

“There’s a large untapped market there for us,” explains Channel 4’s senior commercial product development lead Sean Griffin. “Because there certainly has been a perceived cost barrier for these brands to be able to access TV.”

The focus of your budget is now where you spend it rather than how you spend it – that changes everything.

Matt Campion, Spirit Studios

Cost remains one of the biggest barriers to TV advertising, but AI has the potential to reduce this significantly.

“The focus of your budget is now where you spend it rather than how you spend it – that changes everything,” says Campion.

Maria St Louis, head of strategic initiatives at media agency Guerillascope, agrees. St Louis worked with inclusive Christmas decorations brand March Muses to launch its first TV campaign on ITV, using AI to keep production costs down.

“We were able to use the budget that they did have for actual media space, and then create the advert at an accessible price,” she says. “We were able to purchase really specific spots that were going to actually have a great impact.”

March Muses, founded by Alison Burton and Natalie Duvall, wanted to compete with major retailers over Christmas. Its TV ad, ‘The Best Looking Tree on the Street’, tells the story of a Christmas tree dressed in decorations inspired by characters and cultures from around the world.

The ad aired on ITV in the run-up to Christmas and took around four weeks to produce from inception to delivery, with AI used throughout the creative process.

“We didn’t think this was possible for us,” says Duvall. “You assume TV costs £100,000. We didn’t understand the technicalities or the acronyms – it just felt unattainable.”

The brand was familiar with the impact of TV, having previously appeared on Dragon’s Den and ITV’s Lorraine, which generated around £15,000 in sales in under 24 hours.

In terms of results, Burton says the brand had seen a noticeable rise in sales as well as an increase of social media messages after just one week on air. “We always knew the power of TV,” Burton says. “But we’d never managed to run a TV advert. All our activity had been on social media.”

Challenges and ethical concerns

Despite, its ability to cut production costs and open up TV advertising to smaller businesses, AI-generated video content still raises significant ethical questions. Just this week, X faced backlash after its AI tool Grok honoured requests from users to digitally alter images of other people by undressing them without their consent.

Meanwhile, on TV, AI used by major brands can be received poorly. McDonald’s removed an AI-generated Christmas advertisement in the Netherlands after it was criticised online.

Titled ‘The Most Terrible Time of the Year’, the ad depicted festive chaos, including a Dutch cyclist slipping in the snow and Santa stuck in traffic. Viewers highlighted obvious AI errors, such as missing limbs and distorted visuals, prompting criticism on social media. One user wrote: “Good riddance to AI slop.”

However, Marketing Week columnist and VP of brand strategy at Jellyfish, Tom Roach, urges people not to dismiss all AI ads as slop.

In partnership with System1, Roach tested 18 AI-generated ads across categories including automotive, FMCG, technology and travel. The ads received an average System1 star rating of 3.4, compared with an average of 2.3 across System1’s wider database of 123,000 video ads.

When asked about production style, around a third (32%) of respondents thought the ads looked like a ‘typical professionally produced ad’. Another third (33%) had an even more positive view that the ads ‘had a distinctive or unusual style that stood out’.7 trends that will impact media and marcoms in 2026

One recurring theme among better-performing campaigns is avoiding the use of AI to replicate realistic humans. This was a key criticism of McDonald’s Christmas ad, and an area where Coca-Cola adjusted its approach between 2024 and 2025, replacing ‘uncanny valley’ human characters with animals.

March Muses took a similar approach, deliberately steering away from realistic human representation and instead opting for an animated style.

“It almost felt like Toy Story,” says Duvall. “It was more Pixar than AI.”

Broadcasters are also taking a cautious approach. ITV launched its own AI-generated ad service in September 2024. At the time, commercial director Jason Spencer told Marketing Week the broadcaster would avoid AI-generated people, instead using real actors.

“We’ve been quite selective in the criteria,” Spencer says. “What we want to do is make sure that we are using this alongside voiceover artists or actors where there’s the opportunity to do so.”

That production style was important for Vistry, another brand that entered TV advertising for the first time last year, also previously held back by high production costs.

“Being able to utilise AI has been an absolute game changer for us in terms of moving into this space,” says Jenny Edwards, head of digital at Vistry.

Making TV accessible opens the door not just to visibility, but to economic inclusion – it allows businesses to do more than survive; it helps them thrive.

Maria St Louis, Guerillascope

The UK home builder, which encompasses Countryside Homes, Bovis Homes and Linden Homes, used Channel 4’s Smart Ad Engine, to launch its first TV advertising campaign for Countryside Homes.

The campaign ran across Channel 4’s streaming platform for the first two weeks of December to capitalise on post-Budget demand, followed by a second two-week burst from Boxing Day.

The ads appeared across the broadcaster’s portfolio of home-related programming, using Channel 4’s ad-targeting technology to reach viewers within a 10-mile radius of Countryside developments.

‘Unlock the Door to Something New’ showcased a selection of the housebuilder’s developments, using source material drawn from existing website content. The final execution was produced by Vistry’s in-house creative team in collaboration with Channel 4 Sales’ creative team.

Property advertising brings added complexity due to strict compliance and ASA governance requirements around ensuring the specs in the ad match the real building. This meant maintaining human intervention at key stages to ensure accuracy and compliance.

“There’s an extraordinary amount of commentary around the potential negatives of AI,” Edwards adds. “We went into this project with a really being really cognizant about making sure that we did it in a very transparent and very genuine way.”

The campaign came at a pivotal moment for Vistry, following a brand refresh designed to better differentiate its three housing brands.

“We needed to start leveraging media channels that could help enhance our brand awareness,” Edwards explains. “Placing the campaign on TV was important because it’s a highly trusted platform and gives us the opportunity to achieve real breadth of reach.”

Despite declining advertiser investment in linear TV, it continues to be one of the most trusted advertising environments, and evidence suggests it still delivers significant brand impact.

A major 2024 study, Profit Ability 2, commissioned by Thinkbox, analysed £1.8bn of UK media investment across 10 channels, 141 brands and 14 categories, and found TV remains the most profitable medium.

TV accounts for 54.7% of total advertising-generated profit, with an average ROI of £5.61 for every £1 spent. Of that, linear TV accounted for 46.6% of payback and BVOD 8.2%.

The campaign has opened up TV as a viable channel for Vistry, with connected TV likely to play a bigger role in the media mix going forward, according to Heather Connearn, managing director at Space & Time, the brand’s media agency.

The future of AI advertising

Broadcasters’ push into AI advertising for SMEs also opens up a new revenue stream at a time when traditional TV advertising is under pressure.

“TV once held the holy grail of the ad market and it doesn’t anymore,” says Campion. “With that in mind, broadcasters have to find new ways to generate revenue. AI creates a more level playing field – it’s anyone’s game.”

While AI lowers the cost barrier for SMEs, questions remain over whether broadcasters such as Channel 4 and ITV are equipped to support an influx of smaller businesses, according to Burton.

“I was contacted by one of the broadcaster’s and didn’t understand probably half of what he was saying, because he’s speaking to me as if I know how the ad world works,” she says. “He was a salesperson. So when I was asking what I thought were specific questions, he couldn’t answer them, because he’s just there to bring the brands on.”You can’t dismiss AI ads as slop when they’re winning in testing

Despite the potential challenges, accessibility for smaller brands, particularly black, female-owned businesses such as March Muses, grows.

“Some brands don’t even consider TV,” St Louis says. “Making it accessible and spotlighting businesses like March Muses shows that it is possible. That opens the door not just to visibility, but to economic inclusion. It allows businesses to do more than survive; it helps them thrive.”

Meanwhile, Campion stresses that AI does not replace human creative skills. Human input remains essential, he argues, particularly when it comes to prompting AI with directing camera angles, movement and setting.

“Someone still has to feed the machine,” he says. “Content creation still needs to happen – otherwise everything just becomes the same soup.”

He also questions how the industry prepares future talent for this shift.

“What does education look like for our industry?” Campion asks. “Maybe it becomes more theoretical than practical. There may come a time when people look back and say, ‘Can you believe they used to take cameras into the field to film lions? That seems so dangerous.’”