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The Future of Advertising: Leveraging Generative AI for Personalized Campaigns
The Future of Advertising: Leveraging Generative AI for Personalized Campaigns

June 14, 2023

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The global advertising industry has been experiencing a remarkable growth, driven by the increasing digitalization of media and the growing need for brands to connect with their target audiences effectively. According to eMarketer, the global digital ad spending is expected to grow by almost 11% between 2021 and 2026.

As the digital landscape continues to evolve and consumer behaviour continues to change, advertisers face a significant challenge when trying to engage with users on various platforms such as websites, search engines, mobile apps, online videos, direct mails, social networks, mobile games, and TV shows or movies online. Users have become adept at avoiding traditional ads, employing ad blockers, skipping pre-roll videos, or simply scrolling past sponsored content.

 

"What best describes your behaviour when you see or hear this type of advertising?"

(Respondents who selected "avoid")

 

 

This shift in user behaviour necessitates innovative approaches to capture their attention and deliver meaningful advertising experiences. This is where the transformative power of generative AI comes into play.

To understand the impact of generative AI on advertising, it's important to explore the components of the industry landscape. Advertising involves a complex supply and value chain, comprising advertisers, agencies, publishers, and consumers. Each component plays a crucial role in the creation, distribution, and consumption of advertisements. Traditional advertising methods require significant investments of money, time, and effort to develop and deliver campaigns that target specific consumer segments. Generative AI technology has the potential to revolutionize personalized advertising by automating and streamlining the process. By leveraging advanced algorithms and machine learning, generative AI tools can analyse vast amounts of consumer data and generate tailored ads at scale. These tools possess capabilities such as content generation, dynamic ad variations, and audience targeting based on individual preferences, demographics, and browsing behaviour.

Content Generation

Dynamic Ad Variations

Audience Targeting

These tools can generate ad content, including text, images, and even video, based on specific parameters and desired outcomes.

The algorithms can synthesize information from various sources and create compelling ad copies that align with the brand's messaging and target audience preferences.

 

 

Instead of creating static ads for different consumer segments, generative AI tools can dynamically adapt ad elements in real-time based on individual user data. For example, an e-commerce retailer can generate personalized product recommendations within an ad based on a user's browsing history and purchase behaviour.

 

 

By analysing vast amounts of consumer data, including online behaviour, demographics, and interests, generative AI algorithms can identify the most relevant target audience segments for a particular campaign.

 

 

This reduces the reliance on manual content creation and enables advertisers to produce a wide range of ad variations efficiently.

This level of customization enhances user experience and increases the likelihood of conversion.

This precision targeting ensures that ads are shown to the right audience, maximizing ad spend efficiency and minimizing wasted impressions.

 

The penetration of generative AI-backed advertising tools in the industry is on the rise. In April 2023, Google announced to offer generative AI for advertisers. The efficiency and effectiveness of Gen AI tools in delivering personalized campaigns can prove to be highly beneficial for advertisers. By reducing the time and effort required to create customized ads, generative AI can enable advertisers to allocate resources more strategically and focus on creative ideation and campaign optimization.

However, the adoption of generative AI in advertising can also pose challenges for players in the industry. Traditional advertising agencies and creative teams may need to adapt their skill sets to work seamlessly with generative AI tools. The role of human creativity and strategic thinking remains critical in leveraging the capabilities of generative AI effectively. Collaboration between humans and AI is also key to maximizing the potential of personalized advertising. As with any transformative technology, regulatory aspects and ethical considerations, with respect to Gen AI adoption in advertising, also come into play. Advertisers must adhere to privacy regulations and ensure the responsible use of consumer data. Transparency and consumer consent are paramount to maintain trust in personalized advertising. Additionally, industry-wide guidelines and standards may need to be developed to address potential concerns related to bias, fairness, and accountability in generative AI-powered advertising. By embracing generative AI, advertisers can unlock the full potential of personalized advertising and create meaningful connections with their target audiences in the digital age.


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Dhiraj Sharma
Principal Analyst

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