Consumers are tuning out ads more than ever. Big brands are betting AI can help them break through with better targeting and personalization.

Samantha Lee/Business Insider

AI shows promise in helping marketers automate models for proving return on investment across channels, but it’s most common application now is personalization and targeting of campaigns.
In the highly competitive online travel market, Best Western is using AI to personalize recommendations for shoppers by tapping into their most frequently asked questions.
This article includes an overview of the state of AI in advertising, the top three trends to watch, and a real-world example of AI as its being used by Best Western.
Read how AI is transforming health, transportation, investing, and more in other articles from our special report, How AI is Changing Everything.

The way marketers are serving their messages to people is going through a massive change — thanks to artificial intelligence (AI), which is deployed to adapt and personalize ad campaigns. The hope is that tailored messages will connect in ways that ad-adverse consumers will find more appealing.

AI techniques help marketers improve their understanding of how each medium used in a campaign contributed to the campaign’s results. Some brands are using the results to test different price offers to people to see how it impacts store visits and purchases.

Brands like Microsoft, Best Western, and Gap also are, variously, using AI to optimize creative messages and live campaigns to maximize business goals, like sales. IBM Watson, which builds AI tools for marketers, has 30 brands using its tools now, up from five brands three years ago.

Chatbots and voice recognition are other tactics that are becoming commonplace. Many marketers now outsource customer service to online chatbots to respond to simple, typed inquiries in natural language. As voice assistants gain popularity, AI has the potential to make sophisticated product recommendations to people when they speak to their devices. Brands like Mastercard and Pandora are getting ready for this shift by making sonic brands, or logos.

AI is far from solving all advertising’s problems, though. Humans still need to be involved in AI-driven campaigns to make sure the right data is being used and the right goals are being optimized for. An algorithm that’s set to drive, say, click-through rates, could end up recommending that ads run on unsuitable sites in an attempt to get the widest possible exposure. AI isn’t sensitive to brand-safety concerns the way humans are.

"All of them need to have significant supervision to do the task, and anyone who doesn’t say that is lying through their teeth," said Israel Mirsky, executive director of global technology and emerging platforms at the agency OMD Worldwide.

Campaign optimization is ideal for companies whose products are exclusively sold online, where they can track all the steps a shopper takes on the way to making a purchase. But marketers whose products are bought in person may not have the in-store data available to them, making it hard to know if the algorithm is working.

Marketers are still early in understanding how to use AI, and it’s still early in being able to predict campaign outcomes.

"As a marketer, I would love to have an AI-powered planning tool that would help me predict ROI. It’s still laborious and not as transparent as we would like," said Randi Stipes, CMO of IBM Watson Media and Weather, a big player in AI-informed advertising.

Voice is another area with seemingly enormous potential for AI, with 40% of people using voice technologies like Siri and Google Assistant at least once a month. But they increasing distrust such interactions, with nearly half saying they don’t have confidence in how their data is being used and the experience they get in return, according to an OMD study, "The Retail Revolution: AI Perceptions and Adoption."

Then there’s the creepiness factor. Remember when a TV news story blaring in the living room about Alexa’s ability to order products prompted people’s Alexas to send dollhouses to their homes?

"We’re in the midst of a handoff. They continue to get better, but they’re not a human," Mirsky said. "Getting over that last leap is definitely challenging."

ShutterstockTop 3 opportunities for AI in advertising

Attribution: Mature

Using artificial intelligence to improve understanding of how each channel used in a marketing campaign contributed to the business goals.

Campaign or creative optimization: Growing

AI used to optimize creative messages and campaigns while they’re ongoing to maximize business goals.

Voice: Nascent

Use of AI to learn from human voices to make product recommendations via voice technology.

Best Western is using artificial intelligence to personalize ads, and the results are crushing the industry average

In the competitive online travel market, brands struggle to keep people’s attention. A 2018 report by Expedia Group Media Solutions and Millward Brown Digital found people who are booking travel packages visit sites 38 times in the 45 days before they actually make a reservation.

Best Western thinks it has found a way to beat the odds with the help of AI. Using IBM Watson’s advertising products, it’s running a campaign that spits out personalized travel recommendations and tries to get people to click through to its site and book rooms by asking them about their travel plans.

"Travel is on the bleeding edge of customers’ digital experience," Best Western CMO Dorothy Dowling said. "So travel has been on the forefront of digital innovation. This is a dynamic ad unit that provides much more personalization."

Best Western also used AI last summer with an ad that supplied discounts and tips in response to questions like, "Can I stay at the beach?" and "Can I bring my dog?" People spent one to two minutes per session with those ads — twice as long as the average time spent with other IBM Watson ads, according to Best Western. Best Western is using results from that campaign to inform its recommendations this year, Dowling said.

"In travel, people are shopping longer and even after they purchase," Dowling said. "So we’re going for engagement and getting them to purchase, but also to make sure they don’t cancel and then repurchase somewhere else. We’re really on a journey to know our customers better."

Marketers are in the early stages of using AI. A report by Sojern Travel Platform, a programmatic advertising company for travel marketers, listed personalized ads and real-time offers as the top challenge for marketers surveyed, cited by 46%, followed closely by "achieving ROI and profitability targets for advertising investments," "targeting travelers during a specific point along their path to purchase," and "keeping up with the fast-paced advertising and technology landscape" (all at 45%).

Best Western still considers AI an experimental part of its ad mix, to reach people early in the travel planning process. For its loyalty program members, it also created an AI-driven chatbot last year to answer questions. Using any new technology also requires the marketer to work with multiple partners.

"AI is nascent in the travel vertical," Dowling said. "AI is another dimension we use to understand some of the signals the travel is giving us across the journey. It is a learning environment for us to see what the customer is bringing back to us — and it’s about refining the answers we give."

The Takeaway

IBM Watson

"Marketers are saying, help me connect in a way that’s meaningful, efficiently and at scale, and help me uncover something about my audience I didn’t know."

-Randi Stipes, CMO of IBM Watson Media and Weather

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