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How to Use Artificial Intelligence in Advertising
Blog Feature

By: Mike Kaput

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October 1st, 2019

How to Use Artificial Intelligence in Advertising

You can start using artificial intelligence to dramatically improve your advertising performance today, even if you don’t know the first thing about AI.

At Marketing AI Institute, we’re marketers just like you. We got interested in AI because we were curious how the technology could drive marketing results. So we spent years investigating AI use cases, experimenting with the technology, and tracking thousands of AI vendors. And, in the course of our work, we found a number of ways marketers can use artificial intelligence to advertise better.

This post details what we’ve learned about how marketers can use AI for advertising today.

A 2-Minute Definition of AI

You don’t need to be a rocket scientist to understand the basics of AI.

If you ask 10 different experts what artificial intelligence is, you'll probably get 10 different answers. But one simple definition we like comes from Demis Hassabis, CEO of DeepMind, an AI startup acquired by Google.

Hassabis calls AI the "science of making machines smart."

We can teach machines to be like humans. We can give them the ability to see, hear, speak, move, and write. 

Those machines would be called AI if they could then teach themselves to get better at seeing, hearing, speaking, moving, and writing—without human involvement.

That’s exactly where we stand with AI today.

Thousands of AI tools exist that have the ability to see, hear, speak, move, and/or write, then get better at those things without being explicitly programmed to get better.

A voice assistant like Alexa is a great example of this.

Let’s say you tell Alexa to “Play my workout playlist on Spotify.”

Alexa hears your words, processes them, then responds and takes action. At no point is Alexa being directly told by a human how to interpret your words, how to respond, and how to take action.

Alexa is using artificial intelligence to make predictions on its own about what your words mean, how to respond to them, and what action you’re requesting.

Alexa is not being programmed explicitly to get better after each user’s query. Instead, Alexa is using data from each interaction with users to improve its interactions with the next one.

Which is why, in December 2018, Alexa improved its answers to queries by 12 percentage points (up to 73% accuracy) compared with July of that year.

So, how is this different from traditional software?

Traditional software needs to be explicitly programmed to improve.

If Alexa were not powered by AI, it wouldn’t exist as a consumer product. If you asked Alexa to play your workout playlist and it didn’t understand, a human would have to manually correct it before it could improve and get it right next time.

That is impossible with millions of Alexa users giving millions of commands in real time.

But, with AI, Alexa can use machine learning algorithms to learn from data at scale, then improve at speed.

As we’ve heard it put:

It’s not magic, it’s math.

AI can improve its accuracy at speed and at scale, which both destroys the traditional, non-AI competition (human or machine) and unlocks entirely new capabilities.

And AI is doing just that in advertising today.

How AI Is Used in Advertising Today

So, how is artificial intelligence actually used in advertising?

We’re seeing a few major use cases for AI-powered systems that are being deployed by marketers and advertisers today.

Ad Platforms

Digital advertising exchanges and platforms all use artificial intelligence to regulate the purchase and sale of advertising in real-time. That includes programmatic exchanges, third-party networks, and advertising on platforms like Facebook, Instagram, and Snapchat.

You won’t find these exchanges, services, and platforms revealing how their AI works anytime soon. But that’s the point: Even behind the scenes, artificial intelligence dictates how your ad spend gets used, who sees your ads, and how effective your overall campaigns are.

That means if you run paid advertising, you need to understand the terminology around artificial intelligence (this resource is a great place to start) and ask the right questions about how the AI used by ad platforms may be affecting your spend.

A very basic example of this is: 

Facebook advertising, specifically ad frequency and relevance score. These two numbers are key pieces of data that Facebook’s algorithms use—without human involvement—to dictate how much you pay and how your ads are displayed.

You might think showing your ad more frequently is good. But it’s not.

As Social Media Examiner puts it:

Traditional advertising research has shown that optimal ad frequency is at least three exposures within a brand purchase cycle. Traditional advertising schools say that you need to “hit” your audience with the same ad as many times as possible. However, repeat exposure on Facebook might actually hurt your campaign.

That’s because Facebook’s algorithms take into account user feedback. If you show your ad too often, and it’s rated poorly by users, your relevance score may go down. “In most cases,” says Social Media Examiner, “the higher the frequency, the lower the relevance score.”

A high relevance score means your ad is more likely to be shown to a target audience than the other ads you’re competing with. That translates into better performance and lower costs.

The point here is this:

Your entire ad performance and budget effectiveness are likely dictated by the complex interplay of data points used in the AI systems that power today’s ad exchanges.

Optimize Ad Spend and Targeting

Artificial intelligence tools exist today that can automatically optimize advertising spend and targeting. AI can process your ad spend and targeting data, look at your results, then learn what actions (spending changes, targeting changes, etc.) will drive better performance. It can do this at scale, too, across a large number of complex campaigns.

In one example we learned about, travel company RedBalloon used artificial intelligence from Albert to automatically optimize their paid advertising. The results were impressive. 

Albert was able to identify ways to optimize spend and targeting that dramatically raised return on ad spend, and significantly beat out human agencies. The tool also, using the insights it learned from sufficient amounts of ad spend data, actually found new audiences for RedBalloon’s wares that the company didn’t even know were relevant customer segments.

Overall, the ability of AI to learn and improve without human involvement gave the brand a massive competitive advantage over both human-powered ad programs and those using traditional software.

Ad Creation and Management

AI dictates how your ads perform, and can even help you dramatically boost performance. But it’s also used today to substantially streamline the work that goes into building ad campaigns.

Platforms with advertising components, notably Facebook, have AI that will help you create ads and ad variations much faster than through manual labor alone, using content you’ve already uploaded. 

But, some commercially available tools take that one step further. AI-powered tool Phrasee actually writes Facebook and Instagram ads for you, from scratch, and the ads are designed to convert into clicks based on what’s worked in the past. The tool gets better over time on its own, as it learns from each new ad what language leads to better performance.

AI-powered tools can also help you save time on overall ad campaign management. WordStream uses machine learning to quickly and efficiently analyze your ad campaigns, then pairs it with the ability to make changes across ad campaigns on Facebook, Google, and Bing with a few clicks.

How to Get Started with AI in Advertising

If you're an advertiser or marketing relying on paid ads, chances are that AI can help you increase revenue and reduce costs. That means now is the time to get started with AI, no matter your skill or comfort level.

To do so means you build a potentially insurmountable competitive advantage. To delay means you risk getting left behind.

Good news, though:

There are two ways to accelerate AI adoption in your career and your company.

The first is by accessing our free Ultimate Beginner's Guide to AI in Marketing.

The Ultimate Beginner’s Guide to AI in Marketing is a free resource with 100+ articles, videos, courses, books, vendors, use cases, and events to dramatically accelerate your AI education. It's based on the years we spent on research and experimentation—and you can access this knowledge in a fraction of the time.

The second is by attending our Marketing AI Conference (MAICON).

MAICON brings together top authors, entrepreneurs, AI researchers, and executives to share case studies, strategies, and technologies that make AI approachable and actionable for marketers.

Last year's event brought together 300+ marketers, including attendees from 12 countries and 28 states. The conference is simply the best way to learn how to adopt AI, straight from marketing leaders already using the technology.

Get free access to the Ultimate Beginner's Guide to AI in Marketing: https://www.marketingaiinstitute.com/beginners-guide-access

About Mike Kaput

Mike Kaput is the Director of Marketing AI Institute and a senior consultant at PR 20/20. He writes and speaks about how marketers can understand, adopt, and pilot artificial intelligence to increase revenue and reduce costs. Full bio.

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