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How Artificial Intelligence is Revolutionizing the Ad Industry

Posted on 6.16.2017
Recall the scene in “Minority Report" in which Tom Cruise walks through an airport that automatically tailors digital ads to his personal interests. It’s meant to look futuristic — and in 2002, it did. Fifteen years later, this sort of personalization isn’t exactly science fiction.

Just search for a pair of shoes on Amazon, for example, and watch those shoes follow you around the Internet, thanks to retargeting technology for advertisers.

Artificial intelligence (AI) powers this personalization with complex algorithms and constantly improving technology. AI goes beyond that by using machine learning to pick up on consumer behavior and, in turn, enables advertisers to get much more specific and sophisticated with their targeting.

What’s more, AI is revolutionizing the ad industry by automating the more tedious work of media buyers. Informed by deep data, buyers use programmatic buying strategies to automate processes and save time to focus on big-picture thinking.

It’s smart to be artificial

AI is moving the advertising industry forward in another way too: It allows for scale without the need to staff up.

Now, agencies and brands can replicate the industry’s smartest media-buying brains through tech that makes the best ad optimizations. These systems also continue learning.

Computers are especially well suited for this task. Why? As the ad industry gets deeper into data, it can be overwhelming for junior buyers to spot complex correlations.

There are numerous variables that go into making a campaign successful — including segments, gender, age, geolocation, device, time of day, day of week and seasonality. Luckily, AI can run all these factors through multivariate testing, in effect splitting one campaign into hundreds of micro-campaigns to see which rise to the top.

Take seasonality alone. A media buyer fresh out of college might not know that it’s twice as expensive to advertise in December as it is in January. As a result, they might naively guarantee a client a $0.05 cost-per-view that turns out to actually be $0.10. When you put that into the perspective of a full campaign, you’re talking millions of dollars.

A machine’s deep data-mining capabilities help buyers avoid these pitfalls. All the data is right there in their AI-powered ecosystem. The algorithms then learn from that data and guide buyers through the best possible solutions.

Where does that leave humans?

All this talk of machines probably makes some people nervous, but AI doesn’t eliminate the need for human buyers entirely. There’s still a human element that’s essential to campaign management.

The buyer has to provide the high-level, cross-platform strategy, telling the computer which users they want to target on which platforms. The computer then takes that direction and does the tactical execution. As a result, brands get better at identifying the audiences that work best for them on, say, Facebook and then testing how that might translate to YouTube.

Ad management systems equipped with AI can also see, in real-time, which segments work and which don’t through what’s known as look-alike targeting. Suppose you want to target music lovers, for example. With machine learning, you are not only able to target an audience interested in music, but you can also identify and test audiences that perform similar to yours but may not be in the typical targeting plan, such as gaming fans or dramatic movie lovers.

Smart advertisers will invest in this new technology to drive better outcomes in their campaigns — because if they don't do, their competitors will. In fact, Gartner projects that the CMO will soon spend more money on tech than the CIO does. At the same time, this will be the first year that digital advertising surpasses that of TV.

We are living in a monumental era for our industry. Just think, not long ago, people would say, “We should start doing digital at some point.” Digital advertising is not a maybe anymore. It’s here and now.

Luckily, AI can help. Through it, advertisers get to know their audience better, and audiences get served with more meaningful impressions. The result is greater value for all.

About the Author
Mark Shore is co-founder and president of Strike Social, which provides social media advertising powered by artificial intelligence.
artificial intelligence

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