As The Economy Goes, So Does Ad Spend; Microsoft AI Plays Nice With Pubs | AdExchanger

"Still, digital ad players might be a little too optimistic here. Sorry, guys, but your revenue isn't immune to economic cycles - especially since most of it comes from legions of smaller advertisers who are quick to cut discretionary budgets, namely marketing, when conditions worsen. And, unlike TV buys that get locked in by contract months earlier, online ad spending can be dialed down almost instantly."

"Microsoft worked with major publishers, including Condé Nast, Hearst and Vox Media - all of which have also announced strategic content partnerships with OpenAI, by the way - to develop the PCM framework, featuring usage-based reporting and publisher-defined licensing terms. Microsoft is already pitching PCM as a win-win: new revenue for publishers to offset lost search traffic and higher-quality content for AIs than they'd get from scraping the internet."

Ad-dependent businesses remain tied to economic cycles; advertising budgets are often among the first cuts when growth slows. Businesses increasingly treat advertising as a routine cost rather than brand-building. Digital ad platforms are vulnerable because much revenue comes from many smaller advertisers who quickly pull discretionary marketing spend in downturns, and online ad buys can be reduced instantly unlike TV contracts. Publishers shifted from suing AI companies to licensing content. Microsoft collaborated with major publishers to create the PCM framework with usage-based reporting and publisher-defined licensing, positioning PCM as a source of revenue and higher-quality training data for AI. Moltbook, a social site for AI bots, raises security concerns.

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