The Impact of AI in Advertising

In recent years, advances in machine learning have enabled artificial intelligence (AI) technology to enhance core aspects of the digital advertising marketplace. Acting as a supplement to existing digital marketing practices, AI has increased campaign efficiency and results, allowing marketers to go further and accomplish more by augmenting their efforts.

As machine learning continues to advance and play a larger role in the digital advertising sphere, it’s worth taking a closer look at the challenges and opportunities they present to marketing teams. We’ll also examine their impact on the advertising industry as a whole. Without further ado, let’s dive into the nitty-gritty details of how AI has transformed the digital marketing landscape.

How Artificial Intelligence Models Are Disrupting Your Advertising Campaigns

AI is capable of performing feats that humans simply cannot replicate. Unlike people, AI models can generate thousands of ad variations, testing effectiveness quickly and efficiently while accounting for important demographic information to drive campaign success through minute levels of finely targeted market segmentation.

Digital advertising isn’t here to replace human-driven advertising campaigns. Rather, it exists to make them more efficient. These efficiency gains have radically altered the advertising process by infusing human intelligence with artificial intelligence marketing.

9 Benefits of AI-Powered Advertising

AI technology has turned the marketing industry on its head. With access to vast amounts of customer data and computational powers that dwarf raw human capabilities, AI-led digital advertising has enhanced intelligence in marketing which in turn has led firms to make better advertising decisions. Here are nine of the ways that AI-powered advertising is transforming the marketing landscape.

1. Improves Customer Engagement

AI can enhance customer engagement by performing rapid A/B testing to create thousands of ad variations with the end goal of increasing efficacy. By generating and discarding blurbs and graphics, AI advertising can determine which ads produce superior customer engagement measured via metrics like click-through rates, bounce rates, and other aspects of online behavior.

Companies can incorporate AI into their advertising strategy by incorporating customer preferences into the AI’s machine learning algorithm to better understand what leads to superior customer engagement. By altering their marketing process to account for these advances, businesses can more easily attract and retain customers.

2. Generates Better Product Recommendations

AI technology can draw inferences about consumer preferences by comparing large groups of customers. For example, Netflix’s powerful AI program has spent years analyzing large data sets to uncover links between popular television shows and movies. If a large number of people who watched Titanic went on to view The Notebook, the AI would take note and recommend The Notebook to viewers as they’re finishing Titanic

This same methodology applies to e-commerce websites. For example, if Amazon’s AI program notices that shoppers who purchase bedsheets tend to go on to buy pillows, it might place pillow ads on the bed sheets results webpage. Not only do AI programs keep users on websites for longer periods of time, but they also increase overall customer spending by generating cross-sales and upsales.

3. Reaches Your Target Audience Faster

AI excels in using large datasets to break down large audiences into more narrowly defined customer groups based on niche interests and details. For example, AI programs can divide target groups by: 

  • Spending habits
  • Demographic traits like age and gender 
  • Geographic location  
  • Brand preferences
  • Interests and hobbies

This list is nonexhaustive, and a competent AI program can subdivide groups until it reaches a granular audience level.

4. Enhances Your Customer Experience

Customers crave personalized advertising messages. Unfortunately, manually tweaking ads to better serve individual audiences is time-consuming and inefficient. That’s where AI comes in. AI easily produces dynamic content by continuously altering ads as they appear across different channels to disparate consumer groups until it determines peak ad efficiency for a given group.

For example, an e-commerce store devoted to bathing and grooming products may show ads offering specials on men’s razor kits to mothers in advance of Father’s Day. As Mother’s Day approaches, the same store might advertise discounted women’s skin care products to fathers. By taking into account customer preferences and needs, AI delivers a superior customer experience.

5. Allows for Smarter Decision Making With Advertising Dollars

Running a manual campaign entails clunky decision-making. The person managing the advertising campaign has to track spending and analyze key metrics such as sales conversions and cost-per-click before fine-tuning advertising bids for maximum efficiency. This process practically guarantees that significant amounts of money will be wasted as the campaign manager creates successive ad iterations in pursuit of peak efficiency.

AI speeds up this process considerably, testing and discarding ineffective advertisements at a rapid-fire pace. Sophisticated AI technology can tweak verbiage and color schemes while analyzing user engagement to quickly arrive at an optimal ad design.

6. Betters Your Understanding of How To Segment Audiences

Machine learning has audience segmentation down to a science. Traditional advertising relied on clumsy, surface-level metrics such as age, gender, and geographic location. AI technology takes market segmentation a step further by tracking spending habits, browsing behavior, and other more granular metrics to paint a more accurate picture.

With data-privacy concerns driving changes in the marketing landscape — one prominent example would be Google’s upcoming elimination of third-party cookies — marketers have become increasingly reliant on sophisticated workaround methods such as the creation of look-alike audiences through high-value information gleaned from behavior analyzed within its context. 

7. Automates Content Creation

Content creation constitutes a cost center for many businesses. Art, product descriptions, blogs, and short videos all take time and money to produce. Advances in AI technology have led to the creation of high-quality content such as art or computer-generated product descriptions that can save businesses both time and money. AI can even create short videos showcasing a brand’s product or service.

Not only does content automation save companies money, but it also allows for fast, real-time alterations. AI programs can create and discard hundreds of variations on a single photo or product description, testing each to discover which will generate the greatest number of sales. Marketing teams don’t need much in the way of special training to get the most out of these content-generation programs. Simple UX design makes training easy without sacrificing quality.

8. Increases Customer Loyalty

Customer acquisition costs can range from five times to 25 times the price of retaining an existing customer. That’s why it’s vital to invest in customer retention. Traditional advertising methods might use flyers, email lists, and re-targeting ad sets. AI technology can more efficiently take over or augment these functions through enhanced computational mechanics. 

Unlike manually run advertising campaigns, AI-powered digital marketing allows for the rapid-fire creation of highly personalized, highly segmented data sets. Analytic data tools store customer information, allowing machine learning systems to create and display special offers that can drive superior customer retention. AI programs with customer loyalty features can reach out to past customers at regular intervals with special deals or news of holiday sales. They can also use tracking data to determine which customers are opening and responding to emails and other messages to finely tune their actions.

9. Provides Deeper Insights on Your Consumer Behavior

AI technology maps every step of the customer journey. From the top of the funnel awareness stage down, AI is there to track consumer behavior. These trends can be viewed and exported, providing marketing teams with tantalizing facts concerning their customer base. Marketers can use AI datasets to learn about key buying habits such as seasonal and weekly purchasing patterns.

AI can analyze the factors that cause customers to abandon online shopping carts and the reasons why customers navigate away from a sales page without completing their purchase. Rich datasets provide AI programs with the information necessary to understand the factors that influence purchases and what measures you can take to better reach your target audience. 

The Challenges Of AI in Advertising

Embracing AI can greatly enhance the success of your marketing team. However, AI adoption comes with unique challenges as well. Understanding the limitations of AI can help you better deploy it in pursuit of your marketing goals. Let’s take a look at four of the most common challenges faced by marketers utilizing AI technology.

Inadequate Infrastructure

Many smaller businesses lack the necessary IT infrastructure to put AI into practice. High-quality software is needed to process the large amounts of data culled by AI programs. This can entail purchasing and maintaining expensive hardware setups. Fortunately, cloud-based computing and vendor networks can help businesses navigate this stumbling block.

Poor Data Quality

Machine learning can turn out some truly incredible results when it has access to large volumes of high-quality data. Unfortunately, this also means that programs operating with a paucity of information or irrelevant data will not work as intended. Before you integrate AI into your marketing strategy, it’s important to understand which information is relevant and necessary.

Employee Training

While many AI marketing tools have been developed with ease of use in mind, a skills gap still exists, particularly with regard to implementing and using more complex AI solutions. It’s important that businesses invest in staff training. Hiring outside consultants or working with an advertising agency that has the requisite skill sets may constitute a short-term expense. However, over the long run, these decisions will pay for themselves, as AI-assisted marketing campaigns drive greater results.

In 2018, the European Union (EU) introduced the General Data Protection Regulation (GDPR). This legal framework severely curtailed the type and amount of information that companies could store on individuals living within the EU. Companies not in compliance with the GDPR can face heavy fines and restrictions on doing business within EU member states.

While the GDPR remains one of the most stringent laws regarding data privacy to emerge in a major market, growing concerns around data privacy have led some U.S. states to enact similar statutes. For example, the California Consumer Privacy Act functions similarly to the GDPR. Other developed countries around the world, including Canada, Britain, Australia, and New Zealand, have their own privacy legislation. Given the patchwork nature of these privacy laws, operating in different markets can pose real problems for companies that use AI technology built with looser regulatory frameworks in mind.

Real-Life Applications of AI in Advertising

AI has seeped into every crevice of the advertising landscape, and the results have been nothing short of spectacular. Netflix’s AI-curated recommendation watchlist has saved the company an estimated $1 billion annually in subscriptions that would have otherwise been canceled.

Virtually every company with an online footprint benefits from content marketing. This form of marketing consists of publishing written content that provides the reader with value in the form of new information. Large businesses may hire entire teams of content marketers for separate divisions within the company. Others may rely on networks of freelancers or on digital marketing agencies. 

AI technology obviates this need with natural language generation (NLG), a form of AI technology capable of creating coherent written works. While this might sound like something out of a science fiction movie, organizations ranging from Mastercard to the U.S. intelligence community have been using NLG to create content for years.

Artificial Intelligence Is the Future of Digital Campaigns

The machine learning field has increased by leaps and bounds over the past few decades, and there’s no reason to think it won’t continue to grow as more and more businesses recognize the efficiencies realized by AI technology. As AI continues to advance, expect to see more:

  • Automated routine tasks, freeing up marketing staff to pursue higher-level work
  • Finely targeted advertising campaigns
  • Highly engaging computer-generated content 
  • Sophisticated re-targeting and customer loyalty measures

If you would like to take your business to the next level with AI-augmented marketing, schedule a free consultation to learn more about how AUDIENCEX can help you navigate these tools and transform your marketing strategy through the power of artificial intelligence.