The cost of doing business in digital advertising isn’t just about media budgets and creative assets—it’s about the infrastructure that powers the ecosystem. Every ad impression, bid request, and machine-learning model relies on energy-intensive data centers. Now, with rising energy costs and global economic uncertainty hitting key components like servers and semiconductors, the financial pressure on Ad Tech is escalating.
The Energy Squeeze: AI’s Growing Appetite for Power
Data centers are among the largest energy consumers in the U.S., and demand is growing rapidly. By 2030, they could consume up to 9% of the country’s total electricity, nearly doubling from 2024 levels. This surge is fueled by artificial intelligence, which requires immense computational power. Training just one large language model (LLM) consumes as much energy as thousands of homes in a year.
Energy costs are tightly linked to oil prices, which remain volatile due to geopolitical tensions and supply disruptions. As fuel prices rise, the cost of electricity follows, putting cloud-reliant Ad Tech firms in a tough spot. Unlike industries that can adjust operations to absorb energy cost fluctuations, digital advertising platforms must maintain speed, scale, and uptime to stay competitive.
Infrastructure Costs in an Uncertain Economy
Beyond the unpredictable impacts on critical ad tech infrastructure, there is another layer of financial strain: supply chain disruptions are driving up costs across multiple sectors. Servers, networking equipment, and semiconductors—critical to programmatic advertising—are already facing pressures with semiconductor shortages potentially worsening as well. Cloud providers like AWS, Google Cloud, and Microsoft Azure may pass these increased costs to customers, further squeezing budgets.
For Ad Tech, infrastructure is the backbone of real-time bidding, audience modeling, data processing and programmatic efficiency. Rising costs could force recalibration of business models, especially for Ad Tech, that depend on high-volume, high-speed data processing.
The Domino Effect on Digital Advertising
With cloud pricing poised to rise, the impact on digital advertising budgets could be significant. Higher CPMs are likely as infrastructure costs trickle down, making ad placements more expensive. Tighter margins across platforms, agencies, and publishers will add further strain. Brands already scrutinizing their ad spend may push back on rate hikes, leading to more intense negotiations.
Meanwhile, platforms like Meta and Amazon could feel ripple effects from economic shifts. For example, if e-commerce giants reduce their U.S. marketing spend in response to rising operational costs, performance-driven advertising could take a hit.
What Comes Next
Ad Tech is entering an era where infrastructure costs are no longer predictable. They are a moving target shaped by global trade patterns and energy markets. While there’s no immediate solution, companies that rely on cloud computing may need to rethink efficiency, whether by optimizing machine-learning models to reduce unnecessary computational waste, exploring lower-cost energy regions for data center operations, or reevaluating business models to account for fluctuating operational expenses.
With mid-year expected to be the most volatile period, brands and agencies are preparing to tighten their belts, negotiate flexibility, and focus on measurable results in an uncertain economic climate.