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AI in Advertising: What You Need to Know
Blog Feature

By: Mike Kaput

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September 25th, 2018

AI in Advertising: What You Need to Know

The way you advertise is going to change—dramatically—thanks to artificial intelligence.


You can already start to see the transformation happening right now. In fact, modern digital advertising as we know it today wouldn’t exist without AI.


Behind most online ads are sophisticated delivery systems powered by AI technologies. These systems place ads in front of internet users. The coordination process happens in real-time, and is largely automatic.


It’s called programmatic advertising.


With programmatic, AI is used to profile visitors to a website or app, then that information is used to target and deliver ads thanks to a complicated network of platforms and services that play different roles at each stage of the ad supply chain.


You don’t need to understand the tech behind programmatic to understand this:


AI-powered programmatic advertising is a dominant form of digital advertising today.


In fact, it’s predicted that more than 86% of US display ads will be “bought via automated channels,” according to eMarketer. And eight in 10 mobile display ads are already bought programmatically.


AI also powers the advertising products offered by Google and Facebook. Those firms captured a full 90% of new advertising business in 2017.


Today, brands are able to advertise online efficiently at scale thanks to artificial intelligence.


But this is just the beginning.


Because scale alone isn’t enough.


Brands are under more pressure than ever to deliver advertising that is relevant, contextual, and personalized to individual consumer preferences.


As it turns out, the only way to do so may be by using artificial intelligence—and that will have significant implications for the advertising industry.

Why Brands Fail to Advertise Effectively

Anyone who’s closed a pop-up ad or ignored a banner ad—which is everybody—knows that online consumers are still bombarded with largely irrelevant messages.


Despite the scale provided by artificial intelligence in advertising, advertisers still fail more often than not to provide relevant ads at the right time to the right people.


It’s why ad blockers are in vogue And it’s why plenty of brands have brought programmatic in-house to avoid problems with their ads showing up on sites with offensive content.


Consumers expect personalized advertising communications delivered on their terms, and that is a departure from business as usual, notes Adweek:


“Advertising done well is not a volume per unit price game, as the advertising industry has traditionally operated. It’s a targeted, intelligent offering that serves a need. It gives the customer the control they’ve been asking for and increases the effectiveness of ads in a way that traditional advertising has only dreamed of until now.”


Consumer attention used to exist in large, uninterrupted chunks of time spent in a couple of places—at home in front of a TV or radio, outside, in a store, or in front of a newspaper.


As a result, advertisers spent millions on generalized TV, radio and print ads designed to capture as many eyeballs as possible to justify the money spent.


Now, millions of online destinations capture consumer attention 24/7 across many devices and channels.


As a result, advertisers now use programmatic to bid in real-time for seconds or milliseconds of fragmented consumer attention across millions of sites and apps on desktop and mobile devices.


AI—combined with consumer attention moving online—has made it possible to scale advertising efficiently.


But brands still fail to personalize those ads to a consumer’s unique preferences, purchases, and buying situation.


Consider a typical ad experience delivered online at scale.


As a consumer, you might see a set of display ads throughout the day that want you to check out a new car model.


No matter where you see the ads, each ad has a gorgeous photo of the vehicle. The automaker’s marketing team spared no expense on creative, after weeks of internal meetings to brainstorm and create the most appealing photo angles and scenarios.


You even chuckle at the clever ad copy and headlines that convince you to stop scrolling for a second. That’s because a team of copywriters spent serious time and energy wordsmithing the perfect taglines.


And no matter which channels you use most—Facebook, Instagram, Snapchat, Business Insider, The New York Times, wherever—the ads follow you around the internet. The automaker’s media planners and buyers spent plenty of time testing, targeting, and optimizing to make sure you saw the ad.


There’s just one problem.


You have zero interest in this car.


This car is designed for a growing family, based on the smiling parents and kids in the ads. You just got engaged, but kids are a long way off.


Not to mention, you live in a dense urban area and don’t feel like turning this behemoth down narrow city streets.


In fact, lately you’ve been thinking about ditching a car entirely and biking to work, based on your Amazon shopping history.


Relevance at scale still escapes this, and many real-life, ad experiences.


We’re using new tools to create the same old outcomes.


The real promise of AI in advertising is just beginning. AI-powered tools and technologies have the ability to make ads more intelligent and more human at scale.


It’s the outcome Google calls “one of advertising’s most-sought goals.”


And we’re already starting to see it come to pass.

 

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How AI in Advertising Will Help

Humans are great at personalizing messages in a one-on-one context with people we know.


Chances are, we know enough about a coworker, friend or family member to communicate with them in ways they respond to most effectively. We usually have at least some data on their behaviors, preferences, and desires.


But to personalize and tailor messages at scale, we’d need contextual data on thousands or millions of people. Then, we’d need to analyze this data and use it to create the right communications for each person.


Humans don’t have the time, resources, or intellectual bandwidth to do this. But AI systems do.


That’s why more and more companies are turning to AI as the solution to creating advertising relevance at scale.


It’s still early, but already several examples exist of AI’s potential effects on advertisers.


For instance, AI already has the power to overrule advertising decisions made at the corporate level, no matter how much money and time your team spent on them.


Consider, anytime you advertise on Facebook, an AI-powered algorithm determines a relevance score for your ad. This score directly impacts ad delivery, and is highly influenced by the experience your ad delivers to Facebook’s users. If users don’t like the ad or it isn’t strictly relevant, expect a lower score.


This decision is made by a machine your brand doesn’t control, completely independent of any strategic or creative decisions made by your team.


And soon, you may not rely solely on humans for those strategic or creative decisions.


For example, marketing company Phrasee has launched an AI tool that writes Facebook and Instagram ads for you.


The AI used by the tool assesses a brand’s voice and copy, then produces machine-written language in minutes. Their ad product recently reduced one client’s cost-per-lead by 31%.


Ads are already being written by machines that perform better than human-written ones. This will fundamentally alter how companies pursue ad strategy and what skills they hire for.


Another AI-powered advertising tool is Albert, and it automates media buying, targeting, and testing and optimization. This technology has been used by brands like Dole and Cosabella to improve ad performance by delivering even more relevant ads to the right audiences, more efficiently and effectively than human-only teams.


So, it appears that relevance at scale may be possible in advertising, starting today.


But it won’t be possible by relying on humans alone.

The Marketing Artificial Intelligence Conference: www.maicon.ai

About Mike Kaput

Mike Kaput is a senior consultant at PR 20/20 who is passionate about AI's potential to transform marketing. At PR 20/20, he creates measurable marketing results for companies using data-driven strategies, market-leading content, and scalable marketing technologies. Full bio.

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