whitepaper

Smart Advertising Campaigns through Artificial Intelligence – How does it impact Advertising Procurement?

by Sravani Reddy , Lead Analyst, Marketing Agencies

17 November 2019

Abstract/Business Case

1.Introduction

According to Gartner’s research on “Hype Cycle for Emerging Technologies, 2018”, artitifical intelligence has been identified as one of the most prominent and emerging technological trend that would enable marketers across industries to thrive in the digital economy over the next five to 10 years. Hence, it is highly important for the marketers to be aware of this technological megatrend and its impact on advertising procurement which could result in overlooking a golden opportunity to optimize advertising spend, have leaner marketing operations via automation and improved consumer engagement through personalization.

2. Main

This whitepaper focuses on providing various components that contribute for implementing smart or intelligent advertising campaigns. It also focuses on understanding the possible agency engagement scenarios while considering the engagement with advertising agencies and artificial intelligence firms.

3. Recommendation

With the help of this whitepapar, marketers across the industries would understand the importance of artificial intelligence in advertising. This whitepaper focuses on how artificial intelligence changes the advertising agency engagement landscape.

Problem Statement / Introduction

Increased efficiency in campaign management, effective personalization by targeting the right audience at the right time has become very crucial for the marketers in order to gain competitive edge. With the advent of artificial intelligence systems, that would process structured and unstructured data including text, speech, images, and videos and perform sophisticated modelling and analysis, right targeting has become lot simpler. Usage of artificial intelligence systems in advertising (AI powered advertising) would help the marketers in providing ways to optimize their advertising spend, ease the implementation process and reduce the turn-around time.

For instance, Toyota has used artificial intelligence in order to generate ad scripts and create 300 unique videos based on world’s top 1000 activities by partnering with IBM Watson through the advertising agency Saatchi & Saatchi. Also, it is interesting to know that McCann Japan has introduced Creative Genome Project with an aim to create world’s first AI creative director capable of directing a TV commercial. This gives an idea on the extent of human replacement by robotic systems through artificial intelligence in advertising industry.

This whitepaper focuses on the process of creating smart advertising campaigns along with various ways that marketers can look at, for engaging with specialized tech firms while implementing AI in their advertising campaigns.

Proposed Solution(s) /Implication(s)

The latest developments in AI and automation would enable marketers in turning the ambigous and subjective process of advertising into a predictive and efficient process through real data and intelligent systems. The various applications of AI in advertising and media include efficient ad targeting, content creation/dynamic pricing, predictive cutomer service and product recommendation, programmatic buying, sales forecasting, and web/app personalisation.

Marketers/Agencies need to look at four critical components in order to create intelligent advertising campaigns as shown in the figure below:

critical-components-to-create-intelligent-advertising-campaigns

Data: The backbone of any intelligent campaign is the data, which need to be feeded into the process initially. According to a recent research held by The Drum Network, 79% stated that data analysis has taken more prominence for right targeting of the customers. AI systems excel at crunching massive volumes of data from various sources, that include Data Management Platforms (DMPs), data warehouses, data lakes and other repositories of structured and unstructured data. This data combining with AI intelligence would help marketers in enhancing business intelligence, market research and forecasting accuracy.
AI and Machine Learning: Machine learning is a specific category of artificial intelligence that involves computer programs (developed using algorithms), that can learn and advance on their own based on the new data. These computer programs can then apply these patterns obtained from new data for making predictions. Marketers who use predictive analytics are very accurate in identifying their high-value customers and to target them with the right message.
Automation: Programmatic systems apply algorithms to make real-time bids in order to buy ad inventory. The process of automation would help marketers in selecting the right places for displaying advertisements. This would in turn enable the marketers to spend less advertising budget on underperformaing ads.
Creative Relevance: Along with better understanding and targeting of right audience, smart advetisements need to ensure that there exists creative relevance for the customers that marketers want to reach. AI and data collection tools can provide insights on the right colors, words, and symbols to be used in the advertisements.

Agency Engagement Landscape: How are marketers engaging with specialized tech firms for implementing AI in their advertising campaigns?

Advertising gencies are still going through the various stages of learning about and adopting AI. Few agencies claim that they specialize in AI, while others have become adept at using off-the-shelf tools or partnering with specialized tech firms. Given below are the two scenarios of engagement how marketers can look at.

agency-engagement-landscape

The table below provides the details on various AI firms catering to advertising and the advertising agencies partnered with them.

AI Companies in Advertising	Marketers engaging with the AI companies directly	Advertising agencies partnered with AI Firms	Solution/Platform
Persado	Vodafone, Verizon, Travelocity, Goldman Sachs	None	Cognitive content generation solution
Rocket Fuel	Brooks Running, Company, Pinnacle Food Group	Horizon Media, Havas, Mindshare Profero, Agency 21	Programmatic Marketing Platform
Albert	Harley Davidson, EVISU, Cosabella, and Made.com	None	Media Buying, Audience Targeting
LiftIgniter	NTT Docomo, The Telegraph, Tableau	None	Dynamic and Real-time content
MarianaIQ	Juniper, Bell Laboratories, GE, McKinsey & Co., Ford	None	MarianaIQ Platform – Social Targeting
Retention Science	Target, Dollar Shave Club, Honest Co., BCBG, Microsoft	None	Website personalization, predictive targeting
Thunder	Kimberley Clark, Logitech, Intercontinental	JWT, Anagram, Dex Media	Dynamic Creative Optimization, Creative Management Platform
Spongecell	Porsche, Canon and Microsoft in Japan	BBDO, Grey and Starcom	Dynamic Creative Optimization
IBM Watson (AI Platform)	HSBC, Lloyds Banking Group	AKQA, Saatchi & Saatchi LA	Cognitive content generation solution, Chatbots

Predominantly, marketers engage with advertising agencies that have partnered with AI Firms, which in-turn help them in implementing smart advertisement campigns. However, it is highly essential to consider certain key factors prior to the engagement as given below:

Price Difference Proposed: Predominantly, most of the advertising agencies could get great discount while engaging with AI Firms due to their bulk volumes, but, they would add high mark ups on the top of the base price while charging the clients. Clients could better leverage the discounts by comparing the prices proposed by AI Firms and the advertising agency.
Complexity In Setting Up A New Account: If the client is highly satisfied with the AI platform, but is dissatisfied with the advertising agency, it becomes hard to terminate the relationship with the advertising agency without also cancelling the relationship with the AI Firm, since the advertising agency is responsible for all the contracts.

Considering the difficulties in technology integration and complexity in setting up a new account, clients need to have proper KPI’s and service level agreements in the contract documents that would reduce the risk of ruining agency relationship.

Conclusion

According to a Grand View Research, AI applications related to advertising and media make up the largest share (20%) of the global AI market. However, many of these AI applications are still in its infancy. There are huge investements in this area by various marketers and advertising agencies (traditional and digital). Marketers/Agencies who invest in AI and learn how to leverage, stand to win big for their brands and clients.

“Eight in 10 retail marketers worldwide believed that AI would revolutionize the marketer’s role, and had the potential to improve efficiency and effectiveness, make marketing more strategic and enable staff to focus on valuegenerating tasks” – Forrester Research

With benefits including cost savings on ad serving, leaner marketing operations via automation and improved consumer engagement through personalisation, marketers are putting a lot of effort in building in-house AI capabilities. However, achieving AI maturity requires heavy investments in hardware, software (data collection and processing), and talent (for the invention of algorithms, as well as the training and evaluation of models). Hence, marketers need to to cautiously take steps to progress. Few of the steps in the process include, automation of basic data processes and the implementation of integrated analytics.