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How to Use Artificial Intelligence in Advertising
Blog Feature

By: Mike Kaput

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June 23rd, 2020

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 marketing professionals 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 marketing professionals can use artificial intelligence to advertise better.

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

How AI Is Used in Advertising Today

So, how is AI 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

Programmatic advertising exchanges and platforms all use artificial intelligence and machine learning to regulate the purchase and sale of advertising in real-time. That includes nearly every ad exchange, third-party network, and advertising product on platforms like Facebook, Instagram, and Snapchat.

You won't find these exchanges, services, and platforms telling advertisers how their AI works anytime soon. But that's the point: Even behind the scenes, artificial intelligence dictates how your budget 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 every ad platform 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 the algorithms that power Facebook ads 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:

Advertisers' campaign 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 Budget 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 spend, and significantly beat out human agencies. The tool also, using the insights it learned from sufficient amounts of 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 ad copy 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 ad copy 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 and Marketing

Make no mistake: AI is changing the advertising industry as we know it.

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's a great way to accelerate AI adoption in your career and your company:

Access our AI Academy for Marketers, an online education platform that brings the power of artificial intelligence to you.

The Academy is designed for manager-level and above marketing professionals, and largely caters to non-technical audiences, meaning registrants do not need backgrounds in analytics, data science or programming to understand and apply what they learn.

Available now, the Academy features deep-dive Certification Courses (3 - 5 hours each), along with dozens of Short Courses (30 - 60 minutes each) taught by leading AI and marketing experts.

The Academy will have 25+ Courses, including at least five Certificates, all available on-demand. The content is structured by marketing categories, and we plan to offer recommended Learning Paths as well for specific industries and job roles.

New content will be regularly added to the platform, and all Members get access to an exclusive online community to foster collaboration and knowledge sharing with their peers.

AI Academy for Marketers is an online education platform that helps you understand, pilot and scale artificial intelligence.

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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