AI (artificial intelligence) is a popular topic these days, with conversations about it arising frequently. This widespread presence raises significant questions for advertisers, primarily centered around the potential impact of artificial intelligence on the future of advertising.

Many advertisers are already using AI technologies to drive personalization and automation. In this blog, we go on a journey to explore how AI is transforming the advertising industry and what to expect in the near future.

The Rise of AI in Advertising

We’re seeing a remarkable rise of AI in the advertising industry as more and more companies invest in this concept. Q3 2023 saw the largest investment spike for a long time as almost $7 million was spent on AI advertising. Compared to Q3 2022, that’s a 60% increase in spending!

Why are advertisers investing in artificial intelligence? Primarily, it helps address many challenges within the industry. Most notably, AI can save time, reduce errors, and help optimize advertising strategies. As more companies see success with AI in advertising, the more prominent it’ll become throughout the industry. We predict that the coming years will see an even larger increase in AI usage.

Personalization through Artificial Intelligence

Analyzing the applications of artificial intelligence in advertising, personalization stands out as a top priority. Given the current landscape, the importance of personalized advertising is evident, with 90% of leading advertisers affirming that personalization “significantly contributes to business profitability.”

Click-throughs on ads are elusive unless they resonate with advertisers’ specific target audience. Achieving this requires personalized content that captures the user’s attention and aligns with their interests. AI algorithms are now making it easier for companies to analyze user data and deliver targeted content. It takes all the data sources and immediately figures out what ads should be shown to which users.

There are real-life examples of this in action, with the Calm App being an excellent case study. It leveraged AWS’s Amazon Personalize AI technology that took user data and helped them find the right content within the Calm app. As a result, they managed to increase their daily app usage by 3.4%.

Automation Revolutionizing Ad Operations

Gone are the days of manually handling ad operations. Artificial intelligence paves the way for automation, allowing advertisers to streamline the entire process. AI-driven automation improves efficiency in ad placement while encouraging better ad targeting. Again, it uses a large quantity of data to figure out the best processes to automate, helping advertisers optimize their campaigns.

Automation not only saves valuable time but also empowers businesses to efficiently manage multiple campaigns simultaneously, eliminating the necessity for an extensive team. At ADvendio, we’ve worked with customers and shifted them to an automated advertising process with great success. One notable success story is AutoScout24, where we utilized automation to save time and seamlessly integrate various processes. This not only improved overall efficiency but also simplified the management of advertising expenditures for them.

AI-Generated Content and Creativity

Alongside automation and personalization, AI is used to create advertising content. This means display ads or video ads are made in an instant by artificial intelligence. The upside is quicker advertising content production, but it comes with some ethical challenges – more on that later.

We’ve already seen Meta introduce an initiative called the AI Sandbox that lets advertisers use AI tools to create advertising text, provide backgrounds for images, or automatically crop an image. It’s designed to save time while helping to make ads look more professional.

This is poised to become a standard practice across various channels in the near future. While Generative AI is gaining widespread popularity, the use of AI algorithms to generate content ideas is equally compelling. In essence, this approach holds the promise of fostering greater creativity, enabling the creation of ads that truly stand out.

Predictive Analytics and Decision-Making

Predictive analytics in advertising strategies is all about getting ahead of trends. Businesses can identify patterns in user behavior and then reflect this with their advertising content. According to IBM predictive AI can help people make better decisions and stay ahead of consumer trends in a competitive market.

Companies can elevate their campaign planning, mitigating changes in user behavior with the proactive use of AI. Remarkably, this process is automated, requiring no manual intervention. Drawing insights from diverse datasets, AI effortlessly offers precise forecasts, empowering companies with clear expectations based on existing data.

To see an example of this in action, look at WNS. This company uses predictive AI to improve business outcomes. It did this by looking at different leads during an advertising campaign and determining which ones were worth pursuing. By predicting which leads were “hot” it managed to boost lead conversion by 38%.

Challenges and Ethical Considerations of Artificial Intelligence

Whenever we talk about AI, we must recognize the challenges and ethical considerations. In advertising, the main concerns are:

  • Data privacy
  • Algorithmic bias
  • Transparency

Data privacy and transparency both have ethical connotations. AI revolves around data – so advertisers need to ensure that they are following the correct data privacy practices to obtain what they need. At the same time, there must be transparency in everything as there’s an argument that things like AI-generated content are unethical. Companies are effectively trying to sell something to a user that isn’t technically real. In the future, we may see rules brought into the advertising industry where advertisers must clearly state if an ad uses AI or not.

Algorithmic bias represents a broader challenge in the realm of AI. At times, these biases stem from the design of AI algorithms, leading to potential unfairness and discrimination. Addressing algorithmic bias is among the most pressing issues in the field of artificial intelligence.

The Future Landscape of AI in Advertising

In general, the future of AI in advertising is very bright. Generative AI is becoming increasingly popular as a means of streamlining ad campaigns and making better content. We’ll also see a huge increase in predictive AI as companies look to get ahead of the market and identify new trends.

As the years go on, and AI technology improves, we’ll see more advertisers invest in it. This could change the shape of some advertising channels by potentially creating new ad formats or content that adapts on the fly as the user engages with it. No one can know for sure what the future holds, but we’re confident artificial intelligence and advertising have a long way to go.

In conclusion, AI stands as an ever-expanding force within the advertising industry, and its trajectory indicates continuous growth and enhancement. The transformation it has already brought about is unmistakable, emphasizing the pillars of personalization, automation, and advanced decision-making. Staying abreast of AI advancements in the advertising landscape is not just a suggestion but a strategic imperative. Embracing the unfolding capabilities of artificial intelligence isn’t merely a choice; it’s a necessity for sustained success in the dynamic realm of advertising.