AI’s Competitive Edge in Advertising

Lizzie Ottenstein

AI’s Competitive Edge in Advertising

AI provides unprecedented insights into consumer behavior allowing companies to better cater to customers’ needs. AI provides insights into all levels of the advertising process, from ad generation to campaign performance ultimately bolstering their effectiveness, saving time and money, and allowing more successful campaigns in the future. Various functions include content recommendations, curation, search engine algorithms, email marketing language, among others. 

So, how does AI transform advertising, and what are the benefits? 

 

Who, what, when

There’s a reason 40% of sales and marketing teams rely on AI and machine learning techniques to carry out operations. From ad spending to targeting, AI has you covered. AI can dictate spending, who is exposed to your ad and how frequently, and how relevant the ad is to the viewer. Facebook uses these metrics, requiring no human involvement, to determine how costly a campaign will be and when and how often ads are displayed. Leveraging predictive analytics to generate these insights allows companies to strive towards better performance by strengthening future campaigns. 

 

Know your audience! 

Companies have a wide range of customers with different needs based on things, such as location, age, and past consumer behavior. Without leveraging the power of machine learning, it would be next to impossible to understand each individual customer and their consumer behavior and patterns. AI does this at scale. Specifically, AI targets defined segments of your customer population. For example, younger customers in warmer climates (one segment) may be more likely to buy a certain sunscreen than older ones in colder climates (another segment). AI can also boost audience profiles by integrating data from social media, search engines, or other third party platforms and help you discover new ones as well. AI systems can effectively evaluate past audiences and ad performance, weigh this against KPIs and real time performance data, and identify new audiences more likely to make a purchase. This ability to process large volumes of data accurately and rapidly is one unique to AI. 

 

All the while saving you time and money

Leveraging AI in advertising saves time and money on your overall ad campaign performance. It has the ability to increase your return on ad spending and reduce amounts spent on staff and ineffective ad budgeting. 

 

The hidden weapon behind major companies 

Huge companies leverage AI to boost ad campaigns, from Netflix to Instagram. After watching a show on Netflix, the AI algorithm recommends other shows based on what past viewers watched. For instance, after watching Breaking Bad, Netflix might recommend El Camino, the unofficial sequel to the hit show. It’s obvious that this recommendation is anything but random and based on large amounts of user data. Google evaluates user taste based on search results and displays ads accordingly. Based on likes and follows, Instagram displays advertisements that will be relevant to the user based on this information. For example, if a user follows a lot of beauty accounts, they’re more likely to see advertisements for beauty products. 

 

Use case: Kroger Product Management 

During the COVID-19 lockdown, increase in ecommerce continued and advertising has become all the more relevant as people spend more time at home, on the internet, and ordering essential items, like cleaning supplies and alcohol. Kroger’s proprietary platform PRISM brings AI in advertising to the next level. 

PRISM combines first party data assets with advanced machine learning models to identify the most qualified audience for every campaign. In short, it combines machine learning with predictive data. The types of data collected are layered. It collects behavior data, such as customer engagement with brands and audience segmentation (household data, loyalty, types of products more likely to purchase). The platform then produces product category profiles which are the dimensions on which products are scored. This includes items such as perceived healthiness, convenience, price perceptions, flavor adventurousness, and so on. It will measure this data against historical ad performance, including performance during holiday periods, past campaigns, results at the household level, and expectations of future performance. Even more specifically, it will evaluate when and how long a campaign was in market, customer engagement, and which households are expected to perform best. 

The next step is to combine the variables. The machine learning model compares these variables against 2,000 different variables, and the models produces a score (e.g., propensity to purchase) and ranks households for inclusion or exclusion in future campaigns. 

There are various things you can come to expect from these models. The machine learning model discovers the optimal indicators of success and determines which mix of customer attributes makes them more likely to purchase. It can also generate recommendations for the optimal mix of households. Using AI to make these recommendations is a lot faster than a traditional back and forth approach, allowing companies to get to market as soon as possible. 

 

What can YOU do?

We’ve heard how big companies leverage AI in their ad campaigns, and now you might be wondering how you can do the same. Luckily, there are plenty of tools and platforms available to help you leverage AI in your advertising campaign. These include Adobe Advertising Cloud, Albert’s AI powered ad space, GumGum’s AI powered computer vision system, WordStream analysis, and Pathmatics. Visit their websites to learn more. 

The power of AI makes it possible to personalize your advertising campaigns and produce better results the more you do. This allows you to better connect with and engage your customers and increase brand loyalty in the process. This is why AI is the competitive advantage of today’s global market. This is a phenomenon that is growing rapidly and will continue to in the future.

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