Data-driven advertising helps advertisers streamline their approach. But the sheer volume of data available today makes it impossible for humans to harness its true potential.
Artificial intelligence helps gather, clean, and interpret large volumes of data in real-time and promises to uplift data-driven advertising so marketers can continue to improve their strategies and bottom lines.
What is data-driven advertising?
Data-driven advertising is a customer communication approach that builds on available customer behavior and demographic data, offering customers more personalized experiences.
It optimizes brand messages based on this data and leads to more meaningful interactions between the brand and the customers.
The ads that stem from a data-driven advertising campaign tend to leave a more substantial impact since they are tailored according to the customer’s preferences, likes, and dislikes.
In this way, data-driven advertising takes the guesswork that plagues the advertisement industry and leads to numerous benefits that we will discuss further down.
AI in advertising
All the benefits that data-driven advertising boasts must be credited to artificial intelligence.
Data indeed helps streamline advertising efforts. But data, in its raw form, is as useless as any number out there.
It is artificial intelligence that helps clear this data and draws meaningful insights from it, in real-time and at scale, so that the humans designing the ad campaigns can actually benefit from the available data.
This is why AI is quickly becoming the future of ads. Marketers are adopting more and more AI tools to enhance their ad campaigns, optimize their performances, and reduce their marketing spend.
AI does a lot for data-driven advertising.
From helping in developing more successful ad campaigns to making ad creatives, from testing thousands of ad variations to optimizing performance, artificial intelligence uplifts the field of advertising in more ways than one.
AI machines can detect patterns in available data and make predictions about the outcome of any given effort.
When applied to advertising, this helps marketers build more successful ad campaigns.
And what truly makes AI better than humans is its ability to do all of that at mind-blowing speeds.
What a human would take months to sort through, AI-driven machines can do in mere minutes.
Hence, AI eliminates the lag in data analysis and empowers marketers to take action and make informed decisions in real-time.
Benefits of AI in advertising
With the use of personalization in creating customor experiences, 45% of seasoned AI adopters admit that AI has helped them gain an appreciable lead over their competitors. With the use of AI and ML in digital marketing initiatives, businesses are able to grow sales by 50% and workload of their employees decreased by 60%, resulting in significant cost savings.
Let’s go through all the benefits that advertisers and businesses can enjoy by incorporating artificial intelligence into their advertising toolkit.
AI helps build better customer experiences
In an era of increasing online business, customer experience can be the difference between a closed deal or a missed sale.
80% of frequent online shoppers, when asked in a survey, claimed that they only buy from brands that personalize their experiences. This shows how necessary customization is to your customers.
But more importantly, it also emphasizes the fact that people have the option of leaving you if your experience is not up to mark.
AI-run machines can gather relevant customer data from across the internet and help you craft more customized ads for your audience based on their demographic information, buying interests, intents, behavior, etc.
Ads can be personalized based on seasonality, weather, time of day or even what your customers like.
For example, an apparel brand can run ads for sweaters during winters and advertise summer dresses and hats during summers.
Once you manage to give relevant, one-on-one communication that your customers crave, you get a step closer to earning their trust.
Conversational AI is an example of using AI for uplifting customer experiences. Including chatbots and other technologies, this marketing approach helps to create personalized experiences across all customer touchpoints.
This warms your customers towards your brand and fosters healthier, more profitable relationships.
Effective audience segmentation is another example of how AI can help enhance your customer experience.
Building a personalized experience requires discrete audience segmentation, so you know the people you are talking to and tailor your messages for each one of the groups.
Machine learning, which is a subset of AI, helps advertisers find the similarities between customer characteristics and empowers them to develop more defined and refined groups.
It also uncovers the behaviors and characteristics of each group, so you can keep a pulse on their preferences and create messages that resonate with them at a deeper level.
Once you understand your audience and manage to shape your messages according to the different audience segments, you are more likely to hit the right engagement rates because they are more likely to engage with an ad they relate to.
This is probably why behaviorally-targeted ads seem to have a 5.3x higher CTR than those that are not targeted.
Increasing ad relevance does not only increase engagement, but it has the potential of increasing conversions as well.
AI can uncover your customers’ pain points from plain data. Capitalizing on this information, you can craft ads that target those pain points and promise to resolve them.
Imagine someone struggling with back pain from sitting in an office chair all day and coming across a back-support cushion ad that says something like “No more backache. Yes, even when you sit in your office chair all day.”
Won’t they be inclined to check it out? Of course, they would, right.
Apart from increasing ad relevance, AI also helps businesses capitalize on data to get them closer to the audience with a higher tendency to accomplish their goals.
For example, a famous chicken restaurant wanted to increase foot traffic to their restaurant. They used location data and the audience’s buying behavior information to run targeted social media ads for people who lived closer to their stores and were big spenders at such restaurants.
As a result of their hyper-targeted ad campaigns, they saw an 800% increase in ROI.
AI helps you go beyond traditional A/B testing and adopt a more proactive approach. It tells you, from pure data, what ads will work and which ones won’t, so you run precisely what is expected to work. You are no longer shooting in the dark, and with more accurate ads, your conversions and ROI both are bound to go up.
Better Performance Tracking
Performance tracking has been the bane of many marketers’ existence. They need a budget for running ads, and then they have to prove the ROI from these ads to the stakeholder.
AI eliminates the hassle of rummaging through hundreds of data points trying to find ROI and does all the testing for you.
Machine learning algorithms analyze the performance of each ad campaign across the various platforms, generating accurate results and recommendations on how the performance can be improved.
These algorithms clearly tell you what works in your ad campaign and what needs to go, making it easier for you to justify your spend and optimize your campaign for better results.
In some instances, AI might be able to automate your performance optimization process entirely and make independent decisions on what actions to take to drive your KPIs.
Imagine how much time this would save your advertising team.
One of the world’s largest investment firms, Vanguard, used AI to create hyper-personalized ads and tested them at scale to see what resonates with the audience.
And what happened as a result?
Their conversion increased by 15%!
Better Ad Creation
Regardless of how advanced the advertisement industry may have become, creating powerful, eye-catching, and meaningful ads remains at the heart of every successful ad campaign.
While AI helps you identify your audience type and create tailored campaigns, that’s not the only way it helps the ad creation process.
AI can determine the context of an ad for better placement of ad components, hence leading to more resounding ad creation.
Apart from that, AI systems can help create well-performing ads without the hassle.
Facebook Automated Ad Creation is an example of one such system that takes the tediousness out of ad creation and helps you run targeted ads by answering a few questions, writing an ad copy, and dropping down relevant images.
If that’s too much work for you, AI can also take care of that.
In 2018, Lexus famously revealed an Ad that was scripted entirely with the help of AI.
There are AI tools that can take care of all aspects of your ad creation, from text and fonts to colors and ad copy.
Powered by Machine Learning algorithms, these programs discover the components of successful ad campaigns and gain granular insights into them.
Which font worked better? What color theme garnered higher engagement? Which audience segment would be more receptive to a particular design?
AI-run programs find the answers to these questions and more in real-time and design optimized ads that are more likely to generate the right results.
This increases the speed of creative ad generation while bringing down the labor cost and effort investment involved in the process.
As influencer marketing gains fire, robotic followers and forged metrics also fight for center stage. As a result, 2/3rd brands who have used influencer marketing report influencer fraud.
Influencer fraud in this day and age is easy and surprisingly common.
Brands pay influencers according to their metrics.
Better metrics, better incentives.
Some influencers tend to forge their metrics and charge higher from brands.
Businesses who fall victim to these people pay them higher for less than satisfactory results and struggle with generating and maintaining an ROI.
Right influencer selection happens to be a massive challenge in the industry. But AI can help here as well.
AI-based machine learning algorithms use data from various influencers and generate a list of the right influencers for you.
These programs can also detect fake engagement rates and bots in people’s followers, hence preventing you from falling victim to influencer fraud.
Influencer fraud is one challenge. Finding and selecting the right influencer is another.
You need to find influencers whose messages and style align with your brand.
AI-based influencer selection platforms leverage Natural Language Processing or NLP to evaluate every piece of content an influencer posts and determine whether they are relevant to you or not.
And as with everything else, AI does this at scale.
Imagine going through each post of every relevant influencer out there manually. That would take months, if not more.
AI offers unmatched scalability as it can analyze multiple influencers at any given time and generate results in real-time.
Adopting AI technologies seems to be the only way for advertisers who need to maintain their ROIs and continue generating positive results.
Integrating AI-based programs can help develop tailored ad campaigns, create better ad creatives, and select the right influencers. As a result, AI can help increase conversions and engagements and make it easier for advertisers to optimize their performance and continue to improve their ad game.
However, AI is still relatively new, so lack of education and training remains the number one barrier to AI adoption.
Marketers who wish to optimize their ad spend and businesses that want to gain a competitive edge might need to invest more in AI-related training to enjoy this futuristic technology’s benefits.