Advertisers Emerge the Winners in the 2024 AI Arms Race
2023 was the year that AI started to make bigger waves in advertising. GroupM estimates that AI will impact half of ad revenue this year. Meta announced increases in advertising revenue as more advertisers embraced their AI-enhanced campaign planning and reporting.
2024 will see a massive arms race across all corners of the market. From creative production to audience targeting to analytics and content creation, AI will become pervasive. Advertisers have the most to gain, including lower prices, more efficiency, more precision and better insight.
AI Competition Heats Up
Advertisers will see a proliferation of AI solutions across creative, targeting, buying and analytics. While generative AI has been in the spotlight most recently, other more "traditional" areas of deep learning are also finally being taken seriously.
The arms race will present itself in a few ways in 2024:
Creative. While publicly available tools like ChatGPT, DALL-E, and Midjourney are under scrutiny for training on copyrighted content, creative technology companies can use the underlying technology in ways that avoid issues. Creative tech companies will be releasing competing solutions to help brands repurpose their own creative catalogs, quickly configure new versions of their own creative, and make sizes that are compliant with platform specs.
Targeting. Whether the cookie is deprecated in 2024 or not, advertisers will see several AI based targeting options that emerge to build a bridge between third party and first party targeting. Identity resolution becomes more scalable across datasets with AI decisioning. AI will also be able to continue identifying new audiences, increase scale with predictive audience building and better combine and compare data sets for more targeting accuracy.
Media Buying. Custom algorithms unique to each advertiser will become popular in the mainstream as brands look for more effective, automated ways to reach their specific goals. Legacy DSPs have a limited number of parameters that brands can adjust, while custom algorithms present much more granularity, flexibility, and transparency. Brands will be able to test custom algorithms against one another for performance, scale and interoperability with their larger media buying approach.
Where Advertisers Win
These new AI capabilities are a boon to advertisers, giving them access to more precision, new audiences, and a wider array of inventory. They will be able to save time, have more insights and scale efforts across several different activities from creative development to campaign analytics.
Here are a few of the most important benefits advertisers can expect next year:
Advertisers will gain creative intelligence and abundance. AI-driven capabilities from generative AI like Midjourney help advertisers generate and iterate campaign and creative ideas much more quickly. Some ad-tech utilize AI to provide insights that help advertisers start to optimize campaigns based on creative data.
Advertisers will gain access to advanced targeting capabilities enabling the ability to find new customers at scale without trying to piece together dozens of small tactics that do not consistently perform.
Advertisers will improve their precision on programmatic media. Using custom deep learning algorithms, advertisers can reach their goals much more efficiently and agency traders will be able to spend more time with each of their campaigns.
Further, advertisers can achieve increased brand safety and suitability using advanced AI, which delivers a nuanced understanding of content, leading to more inclusive advertising that engages more diverse audiences. AI enables advertisers to get rid of their keyword based blocklists that unequally punish diversity-owned content producers.
Tending to the Ecosystem
AI will be available in a multitude of advertising solutions, and competition can breed lower prices and more choice for advertisers. Testing for outcomes that yield near-term and long-term success is key. There is a scenario where advertisers have better creative and better targeting, but they chase ever-cheaper impressions on AI sites and put a lot of reasonable publishers out of business. This erodes the quality of content online and could create long-term performance issues for advertisers.
Speaking of publishers, while advertisers get access to a number of new tools and capabilities, publishers are currently feeling threatened. It is estimated that 90 percent of all online content could be generated by AI by 2026. Algorithms have been trained on their content with no compensation, which could have legal implications. Google Search Generative Experience (SGE) could take traffic away from their websites, although it is currently inconclusive. Many are using AI to experiment with content creation, but they are simply flooding the web with even more mediocre content.
The AI arms race this year will not end in a broken internet. Advertisers will use their newfound AI powers for good, focusing on metrics that track near-term and long-term value and consciously buying media with partners that are invested in a healthy media landscape.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Jeremy Fain is co-founder and CEO at Cognitiv.