Digital Postcard from Cannes ’26: Advertising Enters the Agentic Era Amid a Relatively Healthy Ad Environment

A new Citi Research report from a team led by Internet analyst Ron Josey offers key takeaways from meetings with online platforms, software vendors, agencies and advertisers at the Cannes Lions Festival of Creativity. We came away with a more constructive view of both digital advertising and enterprise technology spending, while also feeling more conviction that AI is reshaping how brands are built, discovered, and monetized.

Our first and most notable takeaway was the relatively healthy state of online advertising. Across our conversations, demand appeared solid in Search, Social and Connected TV (CTV), with many participants describing increased activity and a greater willingness to spend. Industry fragmentation continues to create opportunities for advertisers, as brands increasingly need to reach consumers across multiple platforms and streaming services. Strong engagement around major events, sports and social content is also helping support ad demand.

Generative AI and LLM-powered search were at the center of nearly every discussion. While debate continues around where advertising budgets to fund this new channel will come from, we left Cannes with greater confidence that AI search can develop into a significant advertising market without materially disrupting Search or Social budgets in the near term. Advertisers consistently pointed to the measurement and attribution capabilities of incumbent platforms as a key reason. Industry forecasts discussed during the event suggest Generative Search could become one of the fastest-growing advertising categories over the next several years, though many attendees expect adoption to ramp somewhat more gradually than the most bullish projections imply.

Closely related was the growing focus on Generative Engine Optimization (GEO). As consumers increasingly interact with AI assistants and agents, brands are becoming more focused on ensuring they remain visible and relevant within AI-generated answers. Many marketers emphasized the importance of building presence across a broad range of platforms and communities. This growing complexity could benefit agencies, consulting firms and software vendors that help brands improve AI visibility and manage content at scale.

The importance of brand building was another recurring theme. Unlike prior years, when much of the discussion centered on lower-funnel performance marketing, marketers increasingly emphasized brand relevance and awareness. Many believe strong brands are more likely to be surfaced within AI-generated recommendations, creating renewed interest in upper- and mid-funnel marketing initiatives. At the same time, we didn’t hear concerns that this would meaningfully reduce performance advertising budgets, given their measurable return on investment.

While adoption of agentic AI remains in its early days, many participants are preparing for a future in which AI agents help consumers search, evaluate and purchase products. Increasingly, companies are designing products, advertisements and commerce experiences not only for end users but also for the agents acting on their behalf. We also heard growing optimism around agentic commerce, with several participants expecting early adoption during the coming year and broader traction thereafter as standards and protocols mature.

Perhaps the biggest shift in sentiment vs. last year was the industry's view on AI itself. In 2025, discussions often centered on disruption and uncertainty; now, the industry’s focus has largely shifted toward enabling AI. Companies described AI as a tool for accelerating creative development, improving campaign execution and enabling more personalized marketing at scale. While token costs remain an area of attention, organizational processes and change management were cited more frequently as barriers to adoption than infrastructure expenses.

From a software perspective, data infrastructure has emerged as a major beneficiary of these trends. As enterprises modernize their marketing and AI strategies, data quality, governance and accessibility are becoming increasingly important. We repeatedly heard positive commentary around modern data platforms and hyperscalers, while some legacy vendors continue to face pressure in cases where customers perceive slower innovation or weaker AI capabilities.

Finally, the agency model itself continues to evolve. Agencies increasingly appear to be organizing around integrated, AI-enabled capabilities rather than standalone brands or service lines. Marketers expressed a preference for unified solutions that combine data, media, technology and measurement. At the same time, we see growing convergence between agencies and software platforms as both move toward usage- and outcome-based business models.