AI’s marketing clout spells end to advertising as we know it

By Caesar Keluro

The rise of social media is reshaping advertising, bringing an end to the whims and influence of traditional advertising agency as we know it. Now, giving rise to the age of nimble ad agencies with the skilled understanding of how advertising works, integrated with the force and brilliance of data and led by the fervor of creativity power. The past decade has brought upon us a new way to evaluate artificial intelligence (AI) growing impact on advertising, as social media data and personal assessment have enabled precision targeting of consumers like never in the history of advertising.

The arrival of the technology platforms that lubricates the wheels of digital advertising but now wield unprecedented power has unsettled the advertising world. These technology platforms have made it harder to deliver campaigns that can be customized for each advertiser, individual campaign or even targeting specific business goal. With this growing inflexibility, ad agencies are compelled to evolve or die. They may have to evolve into open innovation platform.

Presently, ad agencies have been forced to make a shift to a new model that is data-driven (AI and ML focused) automation of traditional advertising capabilities. But lots of ad agencies are still plagued by legacy construct leading to some global corporations building their own in-house ad agencies helping these businesses get closer to the demand side of their businesses (e.g. sales, operations, supply chain, finance, etc). It has helped them to drive an operational model that accomplishes lower cost, higher output, flexibility with potentially replacing external ad agencies whose value are misaligned as it relates to mutual value exchange.

More so, ad agencies have had to build open systems, as this more than innovation but must be seen as transformational, where they can take advantage of creativity that is available around them. Becoming or building open innovation platforms can help in crowdsourcing ideas which can be submitted to clients. This is one of the innovative ways to combine, build and use technology in a novel way that meets the changing world of advertising. For example, we can create fan-based advertisement by using social media app that asks fans to upload their images and using the images in adverts. This can turn fans into stars and lead to beautiful, profit-enhancing campaigns.

Where are we seeing this impact

The influence of AI will continue now and into the future, heralding amazing and turbulent times. But we are witnessing the most impact of AI on marketing in industries such as consumer packaged goods, retail, banking, and travel. This is because these industries are churning massive of customer transaction data and customer attribute data, made possible by the frequent contact with large numbers of customers.

This space is being influenced by information from external sources, such as social media or reports by data brokers. The advertising agency that will lead the future will have to marry data, or access data and harness it with the creative brilliance of its team.

A new factor of production

AI constitute a new factor of production, driving growth in the emergence of a new virtual workforce- ‘intelligent automation’, argumenting and complementing existing workforces capabilities and most significantly, like previous technologies, it’s driving innovations in the economy as a catalyst for broad structural transformations.

As a result of this, advertising agencies must plan to use AI in areas like segmentation and analytics (related to marketing strategy), use of data brokers, and messaging, personalization and predictive behaviours (related to customer behaviours). Yet, for marketers and ad agencies to compete with technology platforms or make judicious use of them, they would have to integrate and incorporate insights from psychology, economics and other social sciences.

The ethical dimensions

We must grapple with these twin ethical issues: first, data privacy and platform manipulation. Data privacy resides in firm’s strategy. Firms have to work hard to be trusted and exceed consumer privacy expectations, as well as to comply with local data regulations. We have to address threat of large-scale platform manipulation on social media platforms by watching out for obscene contents.

Today, the traditional ad agency model is going into extinction or would have to morph into hyper-specialized agencies or consultancies enabled by innovative technology capabilities. As the era of ‘media impression’ is gone, we have to rethink the premise on which the very foundation of the ad industry was built.

Finally, Ad agencies will have to shift their focus to accessing data, insights and technologies. They will have to see their clients as collaborators/partners as well as system integrators and platforms connected in the ‘creative process’. Developing bespoke ad technologies systems will be critical to salvaging ad agencies’ future. They will have to avoid sharing system logic as every client is unique. Bespoke buying and optimization strategies are key, aided by clear metrics and leveraging client’s data will help ad agencies remain relevant in this unprecedented times.